Approved Minutes

COLLEGE OF THE SEQUOIAS

BUDGET COMMITTEE MEETING SUMMARY

Thursday, January 24, 2013

Members Present: Debbie Castro (Co-Chair), Matt Bourez, Dianna Fauvor,

Tim Hollabaugh, Mary Schaeffer,

Exofficio: Brent Calvin, Vice President, Administrative Services

Leangela Miller-Hernandez, Dean, Fiscal Services

Linda McCauley, Chief Accounting Officer

Absent: Mike Skaff (Co-Chair), Lisa Brandis, Christina Enquist,

Omar Gutierrez, Robert Morris, Steve Renton, Roxanna Fagundes,

and Fidel Madrigal

Minutes: Karen Pauls, Executive Assistant, Administrative Services

The Standing Budget Committee meeting was called to order by Debbie Castro at 3:07 pm.

1. Approval of the December 6, 2012 and December 13, 2012 Budget Committee

Minutes

No Quorum - Item Tabled

2. Final Reading of Bylaws/Guidelines

No Quorum - Item Tabled

3. Determination of Voting Members per Constituency

No Quorum - Item Tabled

4. Working Budget

Brent told the committee that reviewing the working budget was a great idea because they can see the major changes on a month by month basis. Matt asked about two major expense change items on 1/14/13. Items c and e both refer to Achieving the Dream and he thought that was gone. Brent said we were no longer participating in Achieving the Dream and thought they might be from carry forward accounts. He said he would look into and get back to the committee. He also told the committee to e-mail him any other questions they might have about the working budget.

5. Governor’s Tentative Budget

Brent gave the committee a handout about the Governor’s January budget proposal and briefly reviewed each bullet point. He told the committee the budget is great news, if we can hold onto it. He pointed out that the proposed budget doesn’t restore all of what was lost last year, but it restore almost half (40%) of what we lost.

●$196.7M in increased apportionment funding.

For COS this increase would be about $1.5M to $1.6M. Even if the money does

come in, the format at which it would come back has not been determined. Will

it be growth/restoration or COLA? COS lost $4.1 M last year, so a lot of folks are hoping it will come back as restoration. The challenge with restoration is we’ll have some fairly significant costs for ramping back up. We’ll have to ramp up our offering immediately if we want to get that money because it’s tied to FTES. Being tied to FTES is not bad, but with cuts of $4.1M last year there are obviously things that need to be paid back. If the money comes back as growth/restoration we’ll be spending it on new offerings, just to claim it, and there will be no accounting for the money already lost. If the money comes back as COLA maybe the requirements won’t be the same and we can pay some things back.

The midsize college threshold went from 10,000 to $9,260 last year and with the 1% we got as part of Prop 30 ($366,000) it is anticipated that number will creep up to 9,350. If this were all taken as growth/restoration the 9,350 would go up 3.6% and maybe get back to 9,800.

Tim asked if the money came back as restoration would it affect the FON (Full-time Obligation Number). Brent explained that every year the Board of Governors (BOG) votes on whether or not to unfreeze the FON. He said our FON has stayed consistent because we’ve reduced offering and the percentage of classes taught by full-time faculty has stayed consistent. If the Board of Governors unfreezes the FON we will have to hire 8-10 more full-time faculty. This year we are looking at replacing 4, 5, or possibly even 6 full-timers, but the number has not been settled on yet.

●$179M to buy down existing deferrals.

Brent explained that deferral is the money that’s being pushed into the next years. He gave an example of how our State funding is determined and talked about how, over the last several years, the State has been holding our funds for up to three months. He pointed out that last year, in addition to being cut $4.1M, the State took almost $10M of our funding and didn’t pay it until August-September. Because of this the District has had to depend on Tax Revenue Anticipation Notes (TRAN), loans, muni leases, and other debt instruments so we could make payroll. That’s a little more than 20%, so the theory is instead of having $9M pushed into the next fiscal year we would only have 80% or $7.2M pushed into the next year. Every year, when the State has some money, it uses it towards buying back those deferrals, so that someday we will be whole and can get back to being paid in the same fiscal year.

●$50M to support energy efficient efforts.

They’ve talked about this being done on a block grant basis, but they’ve also talked about just giving community college districts the money based on their FTES. COS would get .8% of the apportionment or about $400K. The money can be used for energy projects on our own campus or it can be used to start energy related types of classes. There is a fair amount of flexibility with these funds.

Matt asked if this was in any way connected to the new parking lots in Tulare. Brent explained that we went with energy efficiency in Tulare because the more energy efficient you are the more likely you are to be the recipient of grants. Dianna asked if students were going to pay for the electricity at the fueling stations or if the District was going to pay for it. Brent explained that currently the owner of the refueling stations pays for it, so the District will be paying for the electricity. Dianna talked about putting meters at those stations, so students could pay. Brent said that is probably what the District would do if it became a problem.

●$16.9M to enhance online education.

The Governor would like to have one central on-line portal for all community college on-line classes. Brent said this hasn’t been flushed out yet and he feels it will take a considerable amount of time at the state wide Academic Senate and our local Academic Senate. He said he thinks the State will want a comprehensive on-line program. The way Brent believes this will work is a student would have one ID that all community colleges would have to recognize, the student would be able to take classes at any California community college and ultimately get a degree, which has huge ramifications and implications. Tim talked about the single sign-on and the effort to create a Federal ID. This is an ID a student would use no matter where they go to school, including UC’s and CSU’s. Dianna talked about the Financial Aid aspect and said they are going to have to figure out how to track this on a Federal level because students get their Financial Aid at the college where they have the majority of their units. Brent said we’ll have to wait for the trailer language to come out to figure out which direction they are planning on going with this.

●$300M in a shift of responsibility for Adult Education from K12 to CCCs.

Five years ago the State paid out about $1B to K12 districts to run Adult Ed. Then three years ago there was a change in the law that allowed for more flexibility with that money. It was more like a block grant where they could choose how to use the money and because K12 districts, like us, have been cash strapped, they chose to divert about $700M of it into other areas, leaving about $300M being spent on Adult Ed. The LAO’s office has been critical about running Adult Ed out of the K12, but also paying community colleges to educate adult learners, so the Governor is trying to consolidate Adult Ed. On this surface this looks great because .8% of that is $2.4M. The funds may come as block grants, they may be based on your ability to serve students or based on what you’re already doing. There is no trailer language out to explain what more responsibility comes with this.

●$15.7M in a shift of responsibility for Apprenticeship from K12 to CC.

It’s the apprenticeship program and it’s a back to work initiative. So, $315M is proposed to go from K12 to community college and on the surface our system is excited, but we’re just waiting to see at what cost.

●5-year phase-in of funding apportionments on completion rather than census date

This is something Dr. Scroggins was pushing for a number of years. This obviously has huge implications. This proposal is supposed to be cost neutral, but could change in the next few months to something not so favorable. It is supposed to be cost neutral in that the difference between our census FTES and our completion FTES will be given back to us in another form of funding. They may give it back to us in categorical funding and tell us what we have to spend it on and that could be a challenge because the money would go from general fund uncategorical to categorical.

●90 unit cap for students.

There would be a way for students to get a waiver, but they will be case by case waivers and there is nothing out yet to say what those waivers would be. In this scenario, once a student passes the 90 unit cap, can’t get a waiver, and still has units to take to finish their degree they would have to pay what they are calling the actual cost of instruction. The actual cost of instruction has not been defined for us. But, every year we have to calculate and submit to the State what we are going to charge for out of state and foreign/international students and that cost is $190.00. Brent believes the actual cost of instruction would be something like what we’ve traditionally done for out of state and international students.

●Part B BOG fee waiver to require students to complete a FAFSA.

Last year there was a significant shortfall in anticipated revenue from cash students. The state estimates its budget each year and one of their revenue streams is students paying for their classes. Normally half of our students, system wide, pay for their classes and the other half get waivers. However, last year with the economy and rise in tuition about 70% of students, system wide, got BOG waivers and it created a hole in the statewide budget, so we were given the February surprise of a $1.4M or $1.5M cut. That brought our total cut of $4.5M. However, late in the year the state back filled a piece of that and we got back $400K making our total cut for last year $4.1M.

The committee talked about the FON being unfrozen and the costs associated with hiring 8-10 new faculty members. Brent said with all of the benefits it’s about $100K per person and if we don’t meet the FON there is a fine of $65K for each full-time person missed.

There was discussion about the cost to educate adult learners at a community college versus K12 and why they want to transfer that responsibility to community colleges. Brent said he didn’t know enough about it or what their expectation is, so we’ll have to wait for the trailer language to come out.

Debbie asked the committee if there was anything they wanted to look at or talk about at next month’s meeting. She informed the committee that they will be reviewing a mid-year report at the February meeting and asked if anyone would be interested in having someone from another department make a presentation at the March meeting. The presenter could talk about what they do, how they operate and how it affects the budget. Maybe have one of these meetings in the fall and one in the spring. She also discussed moving the April meeting to May, so the committee can review the Governor’s May Revise.

6. Date of Next Meeting

The next meeting is scheduled for Thursday, February 21, 2013. The meeting will be

held in the PCR.

The meeting was adjourned at 4:05 pm.