SHORELINE COMMUNITY COLLEGE TAB 5
DISTRICT NUMBER SEVEN
BOARD OF TRUSTEES
REGULAR MEETING OF JUNE 27, 2007

Subject: FY 2007/08 Continuing Budget Resolution Page 2

SHORELINE COMMUNITY COLLEGE TAB 5
DISTRICT NUMBER SEVEN
BOARD OF TRUSTEES
REGULAR MEETING OF JUNE 27, 2007

ACTION

Subject: FY 2007/08 Continuing Budget Resolution

Background

The College’s current fiscal year (FY 2006/07) ends June 30, 2007, along with the fiscal year of the State of Washington. The budget currently in place, as approved by the Board of Trustees, gives spending authority only through this date. Ordinarily, a budget for the upcoming fiscal year should be approved prior to the beginning of that year. In some cases, however, it is not possible to prepare a realistic and accurate budget prior to the beginning of the new fiscal year. In these cases, entities typically adopt a “continuing budget resolution” as a means of allowing the organization to operate prior to the preparation of a new budget.

At this point in the process of preparing the FY 2007/08 budget for Shoreline Community College, the administration is faced with two significant challenges. First, as we have informed the Board of Trustees throughout this past academic year, the College’s enrollment target will be “rebased” downward due to low enrollments in the past two academic years, which continues a trend longer than those two years. This rebasing is currently expected to have a downward effect on revenues of somewhat more than one million dollars. The College has already taken steps to address the anticipated loss of funding by cutting anticipated expenditures on salaries (and associated benefits), goods, and services. In this sense, much of the budget preparation for FY 2007/08 was accomplished earlier in calendar year 2007. We will not know until early to mid-July, however, what the actual rebasing figure is. This is because the State Board for Community and Technical Colleges cannot provide further information until Spring Quarter enrollment data has been transmitted through management information system reports. We need more accurate operating revenue information in order to provide a balanced budget that will allow our scarce financial resources to be deployed most effectively.

Second, this has been a relatively good year at the legislature in terms of funding community colleges in Washington as a whole. With this added funding, however, we are seeing more strings attached. Each year following the legislature’s adjournment sine die, the State Board for Community and Technical Colleges is tasked with allocating legislative appropriations among all community and technical colleges in the state while abiding by the legislative appropriation language, including requirements for performance measurement. The State Board prepares a series of allocations throughout each fiscal year, with each allocation informing colleges of their share of appropriations. For the current fiscal year, FY 2006/07, we are still getting allocation refinements and are up to Allocation 14. For the upcoming fiscal year, FY 2007/08, we have received Allocation 2. Typically, line items in allocations converge around a set of figures, with each successive allocation becoming more definite. That we are on Allocation 14 for the current fiscal year does not particularly cause a problem for our budget staff, because the changes at this point are minor. We are not seeing such convergence in the early allocations coming out of the State Board for the upcoming fiscal year, however. This is probably due to the complexity of this year’s legislative appropriations language and the fact that this is an odd-numbered year in the state’s fiscal biennium, one in which major appropriations bills are passed. In particular, we have some significant questions about salary-related allocations. Since salaries and associated benefits amount to almost seven-eighths of our budget, lack of solid information in this area makes it difficult to know how much funding will be available for goods and services once salaries are adjusted according to legislative mandate. à

Some other community and technical colleges in the state have enacted budgets for the next fiscal year provisionally, with the intent to change them once the State Board allocations begin to converge. These colleges are typically passing conservative budgets, an approach that works well for colleges in a growth mode. Shoreline Community College, however, is not in a growth mode. For this reason we recommend adopting a continuing budget resolution to allow expenditure over the summer on essential items, while we continue to prepare a permanent budget that can be adopted either at the regular meeting of the Board of Trustees at its September 26, 2007, regular meeting or at an earlier special meeting, should the Board so desire.

The Board of Trustees has taken this action earlier, most recently in 2005. Another college in our area that is also not in a growth mode has also adopted a continuing budget resolution.

The continuing budget resolution allows the College to spend according to the existing budget. This creates a reasonable “placeholder” for the next three months. Although revenues are anticipated to decline overall, as noted above, changes have already been made in the College’s staffing levels to ensure prudent spending. The other assurance of prudent spending is the requirement in the resolution that the administration inform the Board of material variances from the Budget during the period prior to adoption of the FY 2007/08 budget.

Recommendation

That the Board of Trustees adopt the FY 2007/08 continuing budget resolution by means of Resolution No. 98.

Prepared by: Stuart Trippel
Acting Vice President for Administrative Services
Shoreline Community College
June 22, 2007