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Demystifying theBudgeting Process

Pierce College AFT 1521February 25, 2010

Ken TakedaVice President, Administrative Services

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Presentation Outline

Budget Allocation Process Funding of K-14 Education Funding of Community Colleges LACCD Budget Pierce College 09/10 Budget Budget Calendar Questions and Answers

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Budget Allocation Process

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Funding of K-14 Education

California Community Colleges (CCCs) are part of state’s Master Plan for Higher Ed but are not funded same way as UC and CSU systems

For funding, CCCs are linked to K-12 districts Minimum annual funding for K-12 and CCCs is

determined by Proposition 98 Proposition 98:

Amendment to state constitution passed in 1988 Purpose: Guaranteed funding source that grows each

year with economy and number of students Source: General fund, local property taxes

One of three formulas (“Tests”) is used to determine funding each year; which test depends on how economy and General Fund revenues grow from year to year:

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Funding of K-14 Education

Test 1—Share of General Fund. Provides 39 percent of General Fund revenues. Had not been used since 1988-89.

Test 2—Growth in Per Capita Personal Income. Increases prior year funding by growth in attendance and per capita personal income. Operative in years with normal to strong General Fund revenue growth.

Test 3—Growth in General Fund Revenues. Increases prior-year funding by growth in attendance and per capita General Fund revenues. Operative when General Fund revenues fall or grow slowly.

Suspension: Legislature can suspend Prop 98 guarantee with 2/3 vote for one year and provide any level of K-14 funding.

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Funding of K-14 Education

By definition, Prop 98 sets maximum funding available to other state programs

Prop 98 general fund commitment = about 45% of state general fund

Weak economy and slow revenue growth create budget pressures for all programs; K-12 and CCCs are not insulated from this because of Prop 98

Declining Prop 98 guarantee due to ADA and economic trends

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Funding of K-14 EducationOngoing Proposition 98 Funding ($ in millions)

Program 2008-09 2009-10 2010-11

K-12 Education

General Fund $30,260 $30,844 $32,023

Local property tax 12,726 13,237 11,950

Subtotals 42,986 44,082 43,974

Community Colleges

General Fund 3,918 3,722 3,981

Local property tax 2,011 1,953 1,913

Subtotals 5,929 5,675 5,895

Other Agencies 105 94 85

Total Proposition 98 $49,019 $49,851 $49,954

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Funding of Community Colleges

Community colleges’ share of Prop 98 allocation = 11-12%; balance goes to K-12

State Chancellor’s Office allocates CCCs’ share of Prop 98 funding to local districts based on SB 361 (Scott, 2006), which: Replaced complex and outdated funding formula “Equalized” funding rates across districts Recognized fixed operating costs of colleges; fairer

allocation to smaller colleges Established (in Ed Code) beginning funding rates for

credit, non-credit, and career development and college preparation (CDCP) non-credit full-time equivalent students (FTES)

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Funding of Community Colleges

1 FTES = 525 Contact Hours Standard Measure Used Statewide for…

1 student, enrolled in 5 classes per primary term, at 3 hours per week, per class for 17.5 weeks per primary term, attending 2 primary terms, yields

Funding Key performance indicator Productivity measure Program Review

525 hours per year

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Funding of Community Colleges

Unrestricted General Fund

“Foundation” or “basic” funding per institution. For FY 2010-11: FTES=>20,000 (large college) $4,428,727 10,000<=FTES<20,000 (medium) $3,875,136 FTES<10,000 (small) $3,321,545

Revenue per FTES. For FY 2010-11: Credit $4,564.83 Non-credit $2,744.96 CDCP $3,232.07

Annual cost-of-living adjustment (COLA) Above funding = Base Revenue Enrollment growth and restoration funding

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Funding of Community Colleges

Concept Example Base 100 FTES = prior year funded total (base + growth)

Actual 110 FTES = reported: projected or actual

Actual Growth 10 FTES actual above base

Growth Rate/Cap 6% of Base = 6 FTES

Funded Growth 6 FTES actual growth to cap

Funded Total 106 FTES = base + funded growth

Over Cap 4 FTES not funded by apportionment, eligible for Over Cap funding

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Funding of Community Colleges

Unrestricted General Fund (cont):

Other unrestricted General Fund allocations: Lottery Apprenticeship Non-resident tuition Part-time faculty compensation Other state

Local sources: Interest income Dedicated revenues

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Funding of Community Colleges

Restricted General Fund

State separately funds 22 categorical programs that are part of CCCs’ “restricted” General Fund

Highest funded in 2009-10: Basic Skills, CalWORKS, CTE, DSPS, Economic Development, EOPS, Matriculation, Student Fin Aid admin

Other state support: block grants, SB1133 CTE Federal: Perkins (VTEA), veterans ed, work study Local: Community Services, Health Services,

Parking

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Funding of Community Colleges

Other Funds

In addition to the General Fund, community college districts maintain other funds: federally-supported, state-supported, locally-funded

Federal: Student financial aid, building State: capital outlay/special reserve, child

development (CDCs), student financial aid Local: Bookstore, capital outlay, cafeteria, debt

service, general obligation bond/building

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LACCD Budget—All Funds

FUND 2008-09 Budget 2009-10 Budget

GENERAL FUND $ (in thousands) $ (in thousands)

Unrestricted 604,022 574,052

Restricted 87,331 97,538

TOTAL GENERAL FUND 691,353 671,591

BOOKSTORE 38,818 40,211

CAFETERIA 3,726 3,303

CHILD DEVELOPMENT 4,153 3,864

SPECIAL RESERVE 136,303 153,910

BUILDING 1,037,917 825,864

FINANCIAL AID 115,995 156,029

DEBT SERVICE 410 7,310

TOT APPROPRIATIONS 2,028,675 1,862,082

Less Interfund Transfers 6,676 12,591

TOTAL AVAILABLE 2,021,999 1,849,491

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LACCD Budget—Allocation Model

Uses SB 361 funding formula to distribute state general revenue to colleges as part of Unrestricted General Fund

Each college receives base allocation based on college size + funding for credit, noncredit and enhanced noncredit FTES at state-funded rates

Small colleges received supplemental basic allocation of $500,000 to its basic allocation in FY2006-07, adjusted by COLA in future years; Trade-Tech receives $500,000 for high-cost programs

Colleges are assessed for District Contingency Reserve at 5% of unrestricted General Fund; college reserves additional 1% of its unrestricted General Fund

Each college is assessed for centralized and District Office services based on share of total FTES

Balances are retained by colleges and District Office

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LACCD Budget—Unrestricted GF

College 2008-09 Budget 2009-10 Budget

City 60,736,473 55,885,265

East 110,398,061 102,973,680

Harbor 28,910,982 28,080,909

Mission 26,661,625 25,718,121

Pierce 69,619,567 64,828,425

Southwest 22,277,746 21,011,252

Trade-Tech 50,789,838 48,062,358

Valley 52,229,540 49,659,130

West 31,464,972 28,911,467

ITV 1,458,644 1,493,111

College Total 454,547,448 426,623,718

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LACCD Budget—Unrestricted GF

Location 2008-09 Budget 2009-10 Budget

College Total Forward

454,547,448 426,623,718

District Office 26,375,297 22,765,233

Information Tech -- 10,761,712

Centralized Accounts 67,563,265 47,254,793

Contingency Reserve 27,182,613 25,690,166

Sheriff’s Contract 13,000,000 12,951,047

Categorical Support -- 12,951,536

Restricted Deficit 1,243,597 888,672

College Reserve 13,868,981 14,119,402

Total Unrestricted 604,022,201 574,052,479

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Pierce College 09/10 BudgetRevenue Source #FTES Rate Amount

Basic Allocation    $ $ 3,875,136

Credit 14,775.16 4,564.83 67,446,006

Non-Credit 296.83 2,744.96 813,695

CDCP -

3,232.07 -

Total Base Revenue     $ 72,134,837

Less: Workload Red     (2,714,406)

Net Base Revenue     $ 69,420,431

Non-Resident Tuition     1,524,843

Dedicated Revenues     719,318

Lottery     1,974,584

Interest/Other     641,651

Total Revenues     $ 74,280,827

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Pierce College 09/10 Budget

Adjustment #FTES Rate Amount

Total Revenues    $ $ 74,280,827

Assessment--DW, DO:      

• Total Credit 15,366 1,030.65 (15,836,928)

• Non-Credit 296 606.82 (179,881)

Sheriff's Contract     (1,583,948)

ITV redistribution     22,290

08-09 Balance Forward     8,488,659

Additional Reduction     (362,594)

Revised Allocation     $ 64,828,425

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Pierce College 09/10 Budget

Description 2009-10 Final % of Total

Certificated Salaries $35,142,515 54.2

Non-Certificated Salaries 12,438,227 19.2

Benefits 11,053,075 17.0

Printing & Supplies 991,222 1.5

Operating Expenses 2,191,933 3.4

Capital Outlay 479,377 0.7

Other 2,532,076 3.9

Total 64,828,425 100.0

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Pierce College 09/10 Budget

Description 2009-10 BudgetProjected

Expenditures

Certificated Salaries 35,142,515 30,710.336

Non-Certificated Salaries 12,438,227 12,193,328

Benefits 11,053,075 10,952,167

Printing & Supplies 991,222 1,172,094

Operating Expenses 2,191,933 3,441,690

Capital Outlay 479,377 408,088

Other 2,532,076 40,059

Total 64,828,425 58,917,763

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Budget Calendar for FY 2010-11

Jan 8: Governor’s Budget Mar 5: Preliminary Budget May 14: Revised Governor’s Budget Jun 30: Tentative Budget Sep 15: Final Budget

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Questions and Answers

Thank you for your time and attention

Contact information:

Bill de Rubertis, retireeBudget Committee Co-Chair EmeritusPierce College6201 Winnetka AvenueWoodland Hills, CA 91371-0002deRubeWA@piercecollege.edu