Ohlone Community College District. State Budget Update. February 3, 2014 Presented to the Budget Committee

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1 Ohlone Community College District State Budget Update February 3, 2014 Presented to the Budget Committee

2 THE GOVERNOR HAS A RELATIVELY GENEROUS BUDGET PROPOSAL FOR THE CALIFORNIA COMMUNITY COLLEGES (CCC), INCLUDING FUNDING FOR 2 PERCENT ENROLLMENT GROWTH, A 1.6 PERCENT COST-OF-LIVING ADJUSTMENT, AND $200 MILLION FOR STUDENT SUPPORT ALL ON TOP OF A $125 MILLION UNALLOCATED BASE INCREASE... THE GOVERNOR ALSO WOULD RETIRE ALL PAYMENT DEFERRALS FOR COMMUNITY COLLEGES AND PAY OFF MOST OF THE COMMUNITY COLLEGE MANDATES BACKLOG. - LEGISLATIVE ANALYST S OFFICE JANUARY 13, 2015

3 US economy continues to show positive activity International Monetary Fund projects healthy increase in annual GDP growth Stock Market Rebounding Globally becoming more self-reliant

4 Annual Change in the Gross Domestic Product (GDP)* 10% 8% 6% China 7.1% 4% 2% 0% U.S. 3.1% Eurozone 1.3% Japan 0.8% -2% * Estimated for 2014, projection for 2015 Source: International Monetary Fund (IMF) October Work Economic Outlook The Wall Street Journal

5 Dow Jones Industrial Average Source: CNN Money

6 Exports as a share of the GDP, 2013* South Korea 54% Germany 51% Eurozone 44% U.K. 31% Russia China India 26% 25% 28% Japan U.S. Brazil 15% 14% 13% Sources: Eurostat. U.S. Federal Reserve; CEIC Data; IMP; China s National Bureau of Statistics via CEIC; Japan Center for Economic Research; European Central Bank, Bank of England; World Bank; U.S. Labor Department; People s Bank of China via Xinhua *2012 for the U.S. and Japan The Wall Street Journal

7 California s Economy is Rebounding Job growth increasing, although still soft-ish when compared to the broader US numbers Manufacturing output has surpassed prerecession levels with broad-based gains in motor vehicles, machinery and petroleum Record levels of Exports Housing markets are booming especially along the coastal areas Personal Income Stock market gains translate directly into robust capital gains Forecasts for personal income growth are healthy Lower energy prices result in more discretionary income Income disparity is a growing concern

8 California Unemployment Rate 14.0% 12.0% 10.0% 9.7% 11.7% 12.3% 12.4% 12.1% 11.9% 11.0% 10.6% 9.8% 8.7% 8.9% 8.7% 8.3% 8.0% 6.0% 5.9% 7.3% 7.0% 6.3% 4.0% 2.0% 0.0% Jan July Jan July Jan July Jan July Jan July Jan July Aug Oct Jan Dec Projected Source: Employment Development Department, 2014

9 California Personal Income Forecast Personal Income (Percent Change) 7.0% 6.6% 6.7% 6.0% 5.0% 4.0% 5.0% 4.6% 4.4% 4.5% 4.2% 5.1% 5.2% LAO, November % UCLA, December Governor's State Budget 2.0% 1.0% 0.0% Source: School Services of CA, Inc.

10 CA General Fund Net Activity $10.0 $0.0 -$10.0 -$20.0 -$30.0 -$40.0 -$50.0 Source: Governor s Budget Summary

11 $75.0 Investment in K-12 and Community College Education (Proposition 98 Funding in Billions) $70.0 $65.0 $63.2 $65.7 $60.0 $56.6 $57.9 $58.7 $55.0 $50.0 $49.2 $51.7 $49.6 $47.3 $45.0 $ Source: School Services of CA, Inc. Proposed

12 General Fund Budget Summary Prior-Year Balance $5,100 $1,423 Revenues and Transfers $108,042 $113,380 Total Resources $113,142 $114,803 Total Expenditures $111,719 $113,298 Fund Balance $1,423 $1,505 Budget Reserve: Reserve for Encumbrance $971 $971 Special Fund for Economic Uncertainties Budget Stabilization Account / Rainy Day Fund Source: Governor s Budget Summary $452 $534 $1,606 $2,826 Proposed Expenditures of $113.3 Billion

13 I. Pays Deference to CA s Cyclical Economic Cycle A. Proposition 2 B. Proposition 30 II. Restores the massive cuts to Public Education A. Prop 98 increase of 4% B. Elimination of all Apportionment Deferrals C. Commitment to Adult Ed& CTE III. Restores the Fiscal Health of Public Employee Retirement Systems A. CalSTRS and CalPERS B. Significant Increased Employer Contributions IV. Supports Public Transportation A. Funds the high speed rail project B. Funds ATP Proposed Expenditures of $113.3 Billion A good start but we ve got a ways to go!

14 $65.7 Billion in Prop 98 Funding (4% increase over 2014/15 revised levels) $28.7 Billion Higher Ed funding Additional $4 Billion for K-12 Local Control Funding Formula Base augmentations of $120 million to UC and $116 million to CSU to avoid a student fee increase (TBD) Additional $4.0 Billion of one-time funding to education (Amount in Billions) K-12 CCCs Proposition 98

15 Restoration/Growth Funding, increase of $106.9 Mil Up to 2%. Priority given to districts identified as having the greatest unmet need in their respective communities Based on the new funding model, Ohlone would certainly be limited in its growth cap--tbd Cost of Living Adjustment (COLA) of 1.58%, increase of $92.4 Mil Approximately $675,000 to Ohlone College Additional Base Allocation, increase of $125 Mil (approx. 2%) To assist Colleges with increasing operating costs including STRS and PERS increases, technology and converting PTto FT faculty Approximately $900,000 to Ohlone College

16 Student Success, additional $100 Mil To increase orientation, assessment, placement, counseling and other education planning services. Allocation formula to be developed by the Chancellor s Office Impact to Ohlone College TBD Student Equity, additional $100 Mil To close achievement gaps in access and achievement of underrepresented student groups Allocation formula to be developed by the Chancellor s Office Impact to Ohlone TBD Apportionment Deferrals, $300 Mil To completely eliminate all remaining deferrals No impact to Ohlone College

17 Adult Education, $500 Mil To support continued development of CCC and K-12 consortia efforts Ohlone College participating Deferred Maintenance & Instructional Equip, $350Mil Through the reimbursement of Mandated Claims Other one-time expenditures may be eligible Ohlone College share est. at $400,000 to $500,000 Prop 39, Clean Energy Act, $39.6 Mil To encourage energy efficiency projects Ohlone s share $150,000 to $200,000 Career Technical Education, $48 Mil To support Pathways Program at Chancellor s Office To expand and develop programs to help CCCs meet regional labor market demands No direct impact to Ohlone College

18 CalSTRS Employer Rate Ohlone College s REQUIRED Annual Contribution % $1.4 Million % $1.7 Million % $2.0 Million % $2.3 Million % $2.6 Million % $2.9 Million % $3.1 Million Based on staffing levels and annual step & column increases

19 CalPERS Employer Rate (est.) Ohlone College s ESTIMATED Annual Contribution % $1.8 Million % $2.1 Million % $2.3 Million % $2.5 Million % $2.7 Million % $2.9 Million % $3.2 Million Based on staffing levels and annual step & column increases

20 CalSTRS CalPERS Ohlone College s Annual Contribution BASED ON THESE NUMBERS, OHLONE COLLEGE WLL EXPEND $1.4 Mil $1.8 Mil $3.2 Mil $1.7 Mil $2.1 Mil $3.8 Mil IN AGGREGATE $10.6 Million MORE DOLLARS in the next six(6) fiscal years COMPARED TO WHAT IT EXPENDS IN on RETIREE HEALTH BENEFITS FOR ITS EMPLOYEES $2.0 Mil $2.3 Mil $4.3 Mil $2.3 Mil $2.5 Mil $4.8 Mil $2.6 Mil $2.7 Mil $5.3 Mil $2.9 Mil $2.9 Mil $5.8 Mil $3.1 Mil $3.2 Mil $6.3 Mil Based on staffing levels and annual step & column increases

21 February 2015 Mar April 2015 May 2015 May/June 2015 Budget Trailer Bills Budget Subcommittees Governor s May Revision Budget Subcommittees June 2015 Arm Wrestling in Sacramento (Big 5) June 30, 2015 Final Budget

22 Questions?

Sources: School Services of California, Inc., KCSOS, Dave Walrath, and Michael Hulsizer

Sources: School Services of California, Inc., KCSOS, Dave Walrath, and Michael Hulsizer Overview National Economy California s Economy and the State Budget Governor s Proposal for Education Funding Budget