On Oct. 8 the California State Senate set a record. One hundred days after the June 15 deadline, they passed the state budget. This budget relies on more optimistic projections of incoming tax reviews and more federal assistance then originally projected.
The problem the legislature and Governor Schwarzenegger faced was closing a $19.1 billion gap between state revenue and expenses. To close this gap they needed to cut spending and find new sources of funding for the state.
A large portion of this gap was closed by reducing the prop 98 guaranteed funds for education by $4.1 billion. Prop 98 established an ever-increasing minimum funding level for K-14 education, a category that includes community colleges.
Even with these cuts, the budget is good news for the schools. Without a state budget there was no money flowing out of Sacramento, which meant schools still had to pay their bills. Doug Roberts, vice president of business services, explained, “We were not receiving funds [but] we are still paying our full bills.” He went on to explain that without a state budget the district would have trouble-making payroll by March of 2011.
The SRJC is dependent on the state for nearly half its funding, with the other half coming from a combination of local property tax and student fees. With this dependence on state funding, late budgets put a strain on the college.
In addition to the reduction in prop 98 guaranteed monies, the 2010-2011 budget defers payment of $129 million in funding until next fiscal year. “It’s like this,” Roberts Explained “say you have a job and you do your job and you are expecting at the end of the week you are going to get paid. Then your boss tells you you’re doing a great job, but I can’t pay you till the end of next month.”
This means come next fiscal year the state will have a debt of $129 million to pay back to community colleges. This will create added stress on the budgetary process next year by reducing the funding available to meet next year’s expenditures. “We are borrowing from the future,” Roberts said.
The budget relies on the assumption that the state will receive an extra $5.4 billion in federal funds. This money includes a $1 billion increase in federal funding of special education as well as shifting $106 million in costs from both the California State University and University of California systems to the federal government via the American Recovery and Reinvestment Act State Fiscal Stabilization fund.
The budget solutions also include the development of new sources of funding. One of these solutions is the sale of 11 state-owned building. This proposal is expected to generate $1.2 billion. However, the state will then lease the property back from the purchaser for the next 20 years.
