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Budget Projections for City College FY 2011-12

Budget Projections for City College FY 2011-12. CPBC Meeting and Board of Trustees PBC Meeting January 18, 2011. Major Issues that Impact 2011-12 Budget. Governor’s Budget Proposal = Reduced Funding Ongoing Cost Increases for Fringe Benefits Cost of Annual Salary Steps (gross cost)

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Budget Projections for City College FY 2011-12

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  1. Budget Projections for City College FY 2011-12 CPBC Meeting and Board of Trustees PBC Meeting January 18, 2011

  2. Major Issues that Impact 2011-12 Budget • Governor’s Budget Proposal = Reduced Funding • Ongoing Cost Increases for Fringe Benefits • Cost of Annual Salary Steps (gross cost) • Inadequate State Funding for Categorical Programs (internal subsidy that requires review) • Concessions/Reductions in compensation expire June 30, 2011

  3. State Budget Cuts Proposed for 2011-12 • Governor proposes cut to base funding and use of increased fee $ for growth • $400 million cut for “Apportionment Reductions and Reforms.” Assuming a successful June election • $10/unit increase in student fees = +$110M revenue • CCC League estimates net impact on CCSF at -$8.25M (assuming fee revenue is given out proportionately) • If fees are only used for growth impact on CCSF could be -$11.38M • CCSF growth cap for 2011-12 not yet known

  4. Sketchy Details on Proposed Cut • “…reforms to census accounting practices to provide better incentives for maximizing academic course sections available for …vocational certificates and transfer to four‑year colleges within the diminished level of funding.” …. “specific census date reforms and other changes to apportionment funding that result in equitably spreading reductions while rewarding colleges for ensuring necessary prerequisites to enrollment are met, assisting students in completing courses they enroll in, and prioritizing course offerings needed for transfer and vocational skills. …adjusting funding rates for priority courses, developing base apportionment adjustment factors related to course completion rates, and other strategies. …greater incentive to offer the courses necessary for transfer, vocational certificates, and other priority academic programs ….” (Eric Skinner SCO memo 1/10/11)

  5. If the June Ballot Measure Fails, Cuts Will Increase • $400 million cut to Community College’s could grow to as much as $900 million cut if June vote fails • K-12 would no longer be protected from cuts

  6. Range of Proposed State Cuts to CCSF

  7. Workload Standards and State Funding • Reductions in state funding can mean a reduction in workload measures • While it is not known whether CC workloads will be reduced in 2011-12, it remains critical that CCSF reach base enrollment and earn growth funding during 2010-11

  8. Increasing Annual Costs = Structural Deficit • City College faces annual cost increases for health benefits for current and retired employees (~$1.3m) and salary steps for current employees (~$2 m gross cost), even when revenues decrease • The last across-the-board salary increase for the College’s workforce occurred 7/1/07 • Pension contributions increased sharply for SFERS in 2009-10 and 2010-11 • Another large increase for SFERS (~$1.5M ?) will occur in 2011-12. Possible increase in STRS rates may occur as well (1% increase in STRS would cost $1.2m) • Software licenses, and utilities increase each year • Cash-outs for employees leaving service are increasing

  9. Pension Plans • “…there will be more pressure to make up that rate (lower investment returns) from the system’s other source of income- its employers, the state of California, possibly even its members…..even though rates may go up, or new members may be faced with 401k type defined contribution plans, or higher contributions, current members can count on the defined benefit they signed up for” Chris Ailman STRS Chief Investment Officer 12/10 • SFERS employer contribution rates will continue to increase reaching a projected high point of 29% in 2015. (Cheiron Actuarial Evaluation of SFERS 1/11)

  10. City College Projected Budget Gap for 2011-12

  11. Conclusion • State funding for CC’s was already inadequate and is now being reduced. It is likely to remain at a diminished level for several years • City College continues to face annual unfunded cost increases of about $6.5M per year • Without additional funding, balancing the 2011-12 budget will require severe changes

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