State's ongoing budget problems create bleak outlook for AVC

California students will likely find it increasingly difficult to get a college education as the result of the state's ongoing fiscal crisis and cuts to community colleges.

That was the message delivered by chief business officer Tom Brundage to college trustees Jan. 31 during a special board meeting designed to provide a variety of budget scenarios to officials.

Brundage noted at the outset of the meeting how the state has made a structural change in how it deals with falling revenues by reducing the district's funded workload instead of simply applying a percentage deficit to apportionment.

"The most recent information indicates that not only will the triggers be pulled that cut our funding for the current year, but that we can expect significant reductions to our funded workload in 2012-13," Brundage wrote in an earlier communication. "This means the college will have gone from funded FTES of 11,517 in 2008-09 to a projected funded FTES of 9,917 in 2012-13. This equates to a revenue loss of approximately $7.2 million and does not include the additional loss of revenue from the deficits caused by the overestimation of student fees and property taxes in the state budget."

Even with passage of a November 2012 tax initiative advocated by Gov. Jerry Brown, there is still significant uncertainty with the budget.

Brown wants the money to be used to reduce college debt by paying off a portion of funding deferrals, while some advocates are pushing for a portion of any new tax revenue to restore classes. There's also continued uncertainty over inflated revenue projections used by the state.

Projections indicate the district would continue to spend more money than it takes in during the 2013-14 and 2014-15 fiscal years – even if voters approve more taxes.

The failure of the tax initiative without any further spending cuts by AVC would send the college's budget below the mandated 5 percent reserve in 2013-14, officials said.

Referring to the college as "our baby," board President Betty Wienke told the more than 50 people gathered at the meeting "we're not going to let it fail."

"One positive thing is the college has positioned itself well," Brundage said, noting the size of the college's reserve fund.

However, the reserves won’t be enough to sustain the college without additional cuts, according to figures released at the meeting.

In order to maintain a 5 percent reserve through 2014-15, the district would need to cut $480,000 each year for the next three years. Yet Brundage cautioned the projections are subject to any further potential budget shortfalls from the state. Such deficits have been common in recent years.

Wienke encouraged members of the campus community to provide trustees with any ideas employees have for significant budget reductions.

Wienke said any suggestion to not open the new Health and Science Building in the fall is not feasible. "Our current science buildings are so old, they don’t meet minimum standards. They've got to come down," Wienke said.

The opening of the Health and Science Building will create a net addition of 60,000 square feet of space even after the old science buildings are razed, according to Brundage.

Trustee Jack Seefus encouraged employees to talk to people in the community in an effort to convince them of the value of AVC and garner support for Brown's tax initiative.

Other facts presented at the meeting:

  • The district pays about $250,000 in interest annually due to funding deferrals imposed on all community colleges by the state, according to Diana Keelen, director of business services. The state currently delays $14.1 million in funding – roughly 32 percent of AVC's state apportionment – from one year to the next, prompting AVC to seek a credit line to maintain adequate cash flow. The deferrals – a strategy adopted by legislators to avoid cuts – amounted to less than $4 million for AVC in 2007-08, yet have increased dramatically. Statewide, the deferrals to community colleges amount to nearly $1 billion. The deferrals are part of what Gov. Brown has termed the state's "wall of debt."
  • AVC's state apportionment has been reduced $5.2 million in the current budget year. That equates to a loss of 869 full-time equivalent students or student headcount of 1,825.
  • AVC's supply budget has been reduced from $1.7 million in 2006-07 to approximately $800,000 currently.
  • The Health and Benefits Committee has been asked to identify lower cost options for employee health coverage. Trustees noted the district is no longer in a financial position to contribute more money to health costs above the current cap of $13,385.

The budget slide presentation from the meeting is available for review on the district’s website: http://www.avc.edu/aboutavc/common/documents/13112_BudgetPresentation.pdf