Budget workshop summary

On Feb. 15-16, 2011, a team of Steve Kinsella, Joe Keeler, and Susan Cheu gave workshops on this year's budget situation to interested employees; a similar presentation had been given to the District Board of Trustees last week. I have asked for copies of the information presented and when those come, I would be happy to send them to anyone who emails me.

My (admittedly perhaps idiosyncratic) notes follow; please understand that I am not an expert, may not have reported all salient information, and do not pretend to accept, reject, judge or interpret this information; it is merely what the district has provided, and I thought other faculty who missed it might be interested. I take sole responsibility for any errors, and would appreciate corrections if anyone is in a position to make them.

--Leah Halper, GCFA President:

Workshop content:

--Susan walked through this year's budget and actuals. No big surprises so far, everything on track as we are halfway, and no big surprises anticipated.

--Joe explained how the state funds colleges, including the concept of base funding which is like compounding interest, growing as we get growth monies from a previous year added to make the following year's base bigger. We get some miscellaneous income aslo, for example from the lottery. Property taxes and enrollment fees we collect are deducted from what the state gives us, and the state then funds the rest. This year we are expecting to work with approximately $27 million. Expense-wise, we have constantly growing salary needs as many faculty climb up the salary schedule automatically. Joe said that Gavilan spends more than the state mandated 50 percent on instruction, and is within the norm in terms of what it spends on salary. Next year's budget is usually based on last year's actual spending. This year Gavilan's expenditures per sector are estimated at: administrative salaries and benefits 6 percent, faculty 48 percent, classified staff 29 percent, supplies and materials 2 percent, general operations 11 percent, and utilities 4 percent.

--Steve talked about the future. He is looking at a 3-5 year cycle (when asked, he said the 10-12 years some economists are predicting is not convincing to him) and takes a position quite different from what other college presidents are taking. He estimates that the situation at the state level will probably require colleges to decrease the number of students they serve (as the state can't pay for so many); the decrease at Gavilan he estimates will be about 5 percent. This could decrease our future base, and thus future funding from the state, unless the state opts to give growth monies this year. We are well positioned to grow, and he is hoping that will be the case. Neighboring colleges have cut programs and decreased enrollment; some are facing layoffs. Because, he said, our college board long ago adopted fiscal management standards that include keeping salaries and benefits at around 80 percent of expenditures, having a ten percent ending fund balance each year, and maintaining enough support staff to keep the college functional, Gavilan is in good financial shape. Why are other colleges in so much trouble when we are so comfy? He said: 1. other district boards have not made tough choices and have lived beyond their means without putting adequate reserves aside 2. some districts have figured that the state would rescue them if they served all students who came, and until now, the state has 3. other districts have not done good planning based on accurate information about needs and demographics in their districts 4. under Steve's leadership, Gavilan has planned ahead by building its base funding when times were good, so Gavilan's base is now very strong.

As a result, Steve said that he feels comfortable as four full-time faculty retire in moving to hiring four new full-time faculty in fall 2011 and adding 2 percent (about 20) more classes onto the class schedule for fall 2011. Even if that is a mistake, he said, and the economy continues to tank, "we have the latitude to make big mistakes and survive" by rebalancing the books within a year. But Steve does not think that he is wrong; he says that companies are making record profits, and eventually will want to use those monies to start hiring again. He also noted that CCs will be training the re-entry workers who need to get back into the workforce. He points to indicators that the federal economy is improving, and says that the Obama Administration is aiming a lot of money towards community colleges, though we will need to apply for it competitively (and thus may need the services of a contract grant-writer.) He also expects that our base will in fact increase with growth monies, and there may possibly be "salary increases for all faculty...though salary increases are hard in this political environment." He also said that increased per-unit fees, being discussed in Sacramento, will drive away students--they always do--but that we still have more students than we need to reach growth caps. In Steve's opinion, politicians are interested in making the situation seem as negative as possible so they can win voters' approval for longer term solutions such as taxes.

He said that the state hiring freeze announced yesterday could help education by taking other agencies' competition for funds away. He indicated an interest in having department chairs begin again with a new five-year hiring plan, and said that the process for hiring support positions/classified staff to fill vacancies would be part of the work of the college Budget Committee and Strategic Planning process.