2008 Woodie Awards
Campus Finances May Remain Unstable
California has a budget, but FC could still suffer from income hardships.
Cindy Cotter
Issue date: 10/1/08 Section: News
California's community colleges could still face hard financial times, despite the end of the state budget impasse.
"We need to be prepared for mid-year cuts," said Fred Williams, vice chancellor of finance and facilities at North Orange County Community College District. "On paper it looks like not a bad budget for us, but it's a bad budget statewide in terms of addressing the structural problems."
Fullerton College has operated on reserves for three months, when disagreements over how to close a state budget deficit stalemated the legislature.
Governor Schwarzenegger approved a compromise budget Sept. 23. The state controller's office is trying to expedite overdue payments to schools, hospitals and day care centers.
But, the problem has not ended. At a district board meeting on Sept. 9, Williams said we could be headed for a "major crisis," due to California's ongoing financial woes.
If the budget estimates turn out to be overly optimistic, the state will find itself in financial trouble.
Schools are funded based on enrollment that is estimated for budget purposes. Community colleges are allotted money based on anticipated enrollment, not actual enrollment. If more students enroll that were planned for, the school
receives no money for the additional students.
The poor housing market also affects community colleges. A
portion of school funding comes from property taxes. If the legislature has overestimated property tax revenues, that will cause another budget shortfall.
California's lottery is a third source of uncertainty. The state is proposing to borrow against future lottery income, but that needs voter approval.
If the state's funds run low during the year, the state may reduce community college funding.
As a result, schools are attempting to spend less. Salaries and benefits make for 87 percent of last year's district expenditures. This year the district is not filling vacant positions. Salaries and benefits are down to 80 percent of the total budget.
Money that is not spent in one year can be carried over into a
reserve account the next year. When state money is not sufficient to pay a college's expenses, the school's only choice is to use reserves. Currently the district reserve is 7.8 percent.
"More money in reserves means more money in the classrooms"
Harris said, "because you avoid
having to pay interest on loans."
"We need to be prepared for mid-year cuts," said Fred Williams, vice chancellor of finance and facilities at North Orange County Community College District. "On paper it looks like not a bad budget for us, but it's a bad budget statewide in terms of addressing the structural problems."
Fullerton College has operated on reserves for three months, when disagreements over how to close a state budget deficit stalemated the legislature.
Governor Schwarzenegger approved a compromise budget Sept. 23. The state controller's office is trying to expedite overdue payments to schools, hospitals and day care centers.
But, the problem has not ended. At a district board meeting on Sept. 9, Williams said we could be headed for a "major crisis," due to California's ongoing financial woes.
If the budget estimates turn out to be overly optimistic, the state will find itself in financial trouble.
Schools are funded based on enrollment that is estimated for budget purposes. Community colleges are allotted money based on anticipated enrollment, not actual enrollment. If more students enroll that were planned for, the school
receives no money for the additional students.
The poor housing market also affects community colleges. A
portion of school funding comes from property taxes. If the legislature has overestimated property tax revenues, that will cause another budget shortfall.
California's lottery is a third source of uncertainty. The state is proposing to borrow against future lottery income, but that needs voter approval.
If the state's funds run low during the year, the state may reduce community college funding.
As a result, schools are attempting to spend less. Salaries and benefits make for 87 percent of last year's district expenditures. This year the district is not filling vacant positions. Salaries and benefits are down to 80 percent of the total budget.
Money that is not spent in one year can be carried over into a
reserve account the next year. When state money is not sufficient to pay a college's expenses, the school's only choice is to use reserves. Currently the district reserve is 7.8 percent.
"More money in reserves means more money in the classrooms"
Harris said, "because you avoid
having to pay interest on loans."
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