BUDGET WORKSHOP

2013-2014 Governor's January Budget Proposal

Budget AssumptionsBalanced Budget, no structural shortfall in

2013-2014 and beyondModest, steady growth in next five yearsLower debt service with repayments to

special fundsHigher revenue projections of over $6 billion

Prop 30 (temporary)Prop 39 (permanent)

5% spending increase in education and Medi-Cal

Affects on California Community CollegesIncrease in Prop 98 spending by $587 million

Increase of 5% over 2012-2013 Funding to grow over next several years

Increases in percentage of Prop 98 fund due to shifting of Adult Education to Community Colleges

Affects on California Community CollegesMulti-year Education Plan

Pushes down decisions to the local levelDecrease in student completion timeContinue to pay down the “wall of debt”

Reforms for rebuilding the system90 unit state subsidized cap on credit unitsReinvest apportionment funds based on

completionRequire BOG Fee Waiver applicants to

complete a FAFSAIncrease number of online coursesContinue to pay down “wall of debt”Implement Prop 39

Implementation issues still to be resolved

Theme of the budget:

Build an efficient educational system

ThreatsRevenue Volatility

Percentage of state revenue from income taxes has risen from 33% to 61%

Top one percent of income earners pay approximately 40% of income tax revenue

Capital Gains has historically fluctuated between $29 billion and $100 billion

Prop 30 (2012) raises incomes taxes for high income earners through 2018 only

ThreatsCalifornia economic recovery sputtersRising health care costsSequester/Debt Limit fightLocal revenue shortfalls

Timeline for State BudgetJanuary – May: Legislative HearingsEnd of January: Legislative Analyst Office

(LAO) releases its analyst of this budgetMay 14: May ReviseJune 15: Constitutional deadline for

Legislator to send budget to Governor