Town Hall Meeting March 2011 1
State Budget Update and the Effect on Santa Monica College 2
State of the State Proposed Budget $26.4 Billion Shortfall Governors Proposed Solution: Approx. ½ Through Tax Extension Approx. ½ Through Expenditure Cuts All Cuts Budget 3
Scenario A Scenario B Scenario D Apportionment Reduction <400> M <620> M <1.085> B Increased Fees 110 M 110 M 280 M Net Reduction <290> M <510> M <805> M Projected Lost FTES 63,000 111,000 176,000 Projected Lost Headcount 150,000 264,000 417,000 Scenario A Scenario B Scenario D Apportionment Reduction <5.571> M <9.796> M <15.46> M Projected Lost FTES 1,243 2,185 3,449 Projected Lost Headcount 2,585 4,545 7,174 4
Scenario A Scenario B Scenario D Projected Fund Balance, Beginning 13,413,000 13,413,000 13,413,000 Projected Budget Current Operating Deficit (5,700,000) (5,700,000) (5,700,000) State Reduction per CC League (5,571,000) (9,796,000) (15,463,000) (Deficit) (11,271,000) (15,496,000) (21,163,000) Projected Fund Balance 2,142,000 (2,083,000) (7,750,000) Fund Balance @ 7.5% 10,700,000 10,700,000 10,700,000 Addt'l revenue and/or cut in expenditure needed to achieve 7.5% FB ratio $ 8,558,000 $ 12,783,000 $ 18,450,000 **Projected Fund Balance, Beginning Includes $413,000 for New Faculty Hires 5
Budget Objectives and Principles 6
Budget Objectives 1) Develop a budget plan guided by benchmarks that brings available ongoing revenues and expenditures into balance effective with the adoption budget for 2013-14. 2) Protect the College s ongoing operation by maintaining a fund balance that equals one month of salary for the District of 7.5% or more going forward from 2011-2012. 7
Budget Principles A. The College is committed to student access and success and service to the community. C. Ensure that enrollment targets are consistent with the state-funded FTES cap, and, to the degree that they are the basis for revenue projections, can realistically be achieved within the fiscal limitations of the College. E. Maintain course offerings that are responsive to student needs and consistent with the State priorities of transfer, career technical, and basic skills education. 8
Budget Principles D. Programs will not be eliminated or reduced without careful review. E. Establish and maintain an acceptable cost effective level of learning resources and student support services based on comparative performance data as determined by the College. F. Develop a variety of expenditure reduction strategies. 9
Budget Principles G. Expedite changes that may produce lower costs over time such as energy saving retrofits, alternative energy sources, reduction or consolidation of facility usage, etc. H. Where possible and practicable, use staff attrition and/or existing vacancies as one means of reaching budget targets. I. Seek to spread cost reductions equitably. 10
Budget Principles J. Avoid layoffs of permanent employees. Seek salary freezes, furloughs, salary reductions, and other temporary or ongoing adjustments. K. Continue to seek external sources of funding, such as grants, to support the College s core missions, but avoid those with matching, management, or reporting requirements that demand significant college resources. 11
12 Budget Principles L. Develop a budget process that manages the growth of expenditures based on: analysis of program need (rather than historical allocations); realistic expectations of revenues; updated market information; and performance measurements. M. In light of the current State-imposed funding reductions, review ongoing and future planning initiatives in terms of their long term advantages to the College in meeting public demand for services, improving student success outcomes, or to provide new revenues. Modify, defer, or abandon as appropriate those for which the costs outweigh their potential for furthering the College s core missions and goals.
Budget Principles N. Make effective use of the College s established planning structures and processes to recommend specific actions to reach the stated objectives, following the principles listed above. The College President shall clarify how these recommendations will be evaluated and the timelines necessary to arrive at a set of final recommendations for any particular budget cycle. O. Benchmarks will be used as a guide to inform the decision-making process. 13
What s Next? Monitor State Situation Advocacy For June Ballot 14
Continue working through the college planning process Downsize by 1,000 3,500 FTES 88% of expenditures are now in salary and benefits ($122.6M/139.5M) 12% in supplies, contracts, utilities, equipment, insurance ($16.9M/$139.5M) Cost of benefits has increased from 12% to 20% of expenditures Implement hiring freeze in February 2011 Continue savings in all areas Look for more ways to save 15