Chancellor's Message: The California budget 2020-21 safe harbor
The development of California’s FY 2020-21 budget has been a stormy ride, fraught with potentially massive reductions, as the state dealt with its enormous $54 billion shortfall due to the impact of the coronavirus/COVID-19 pandemic. With revenues seriously diminished in the categories of personal income tax, sales tax, and corporate tax, as well as some declines in the property tax arena, we were all facing a very difficult budget situation.
The Governor’s May Revision Budget proposed to mitigate the shortfall through judicious use of the Rainy Day Fund and other reserves. However, harsh reductions were also proposed, including a 10% cut to higher education, as well as severe reductions in the Strong Workforce Program and the Student Equity and Achievement Program, Part-Time Faculty Compensation/Office Hours, and the Academic Senate for California Community Colleges. We have all been addressing these potential outcomes while simultaneously dealing with the impact of the COVID-19 pandemic and the rise of social justice protests in response to the brutal treatment of African Americans and others by some elements of the police. This has been quite a ride.
The good news for us is that both houses of the California Legislature, the Senate and the Assembly, and the Governor have reached an agreement on a final budget for FY 2020-21, which brings community colleges to what I describe as a “safe harbor,” not freedom from budget constraints, but certainly a halt in what seemed to be a plunge into very deep budget cuts. We should all be grateful for this reprieve.
Outlines of the Budget Agreement
Overall, it is hoped that another federal stimulus package will be passed by Congress, which will provide funding to the states, including funding for higher education. Both the University of California and the California State University have been given significant “trigger cuts” in the amounts of $470 million and $500 million respectively, with the understanding that “the cut(s) would be restored on October 1 if federal funding is received by the state.”
Community Colleges and K-12 did not receive outright cuts of this magnitude, since the legislature rejected the May Revision proposal to cut apportionment funding. Instead, the mechanism of deferrals will be used whereby the state will withhold making apportionment payments to local districts for specified periods of time, requiring districts to use their own reserves to pay for compensation, benefits, and operations during these “dry” periods. It is the intention of the California government that the receipt of federal funding will allay this situation. The San Diego Community College District (SDCCD) has weathered state deferrals before, especially during the Great Recession, and we are preparing to do so again. However, this time will be more challenging since we also have to address the future, unforeseen impacts of COVID-19, as well as the continuing steep increases in the employer contributions to the two state retirement systems, CalSTRS and CalPERS.
In specific terms, here are some of the key provisions in the FY 2020-21 budget agreement:
- Approves a $332 million deferral from 2019-20 to 2020-21.
- Approves a $662.1 million deferral from 2020-21 to 2021-22.
- Approves a “trigger” deferral of $791.1 million, which will be rescinded if California receives federal funding.
- Approves a $120 million one-time block grant for student support expenses associated with COVID-19.
- Categorical programs in Strong Workforce, Student Equity and Achievement, and Adult Education will remain at the FY 2019-20 funding levels.
- Extends the hold-harmless period for the Student Centered Funding Formula (SCFF) by an additional two years.
- Preserves the Dreamer Resource Liaison Program with $5.8 million.
- Approves various capital outlay projects (none for SDCCD).
- Establishes as legislative intent that community colleges “can and should avoid layoffs of classified employees in the 2020-21 fiscal year” and “prohibits the governing board of a community college district from terminating the services of any permanent or probationary classified employees of the school district or community college district that either hold classifications in or are assigned to positions in nutrition, transportation, or custodial services.”
- Cuts the Calbright online college by $5 million in ongoing funds and $40 million in one-time funds.
Impact on the San Diego Community College District
The San Diego Community College District will be studying this budget agreement carefully. The budget agreement does not call for specific new cuts, with the result that the SDCCD will be able to rely upon many of the FY 2019-20 funding patterns, without having to reduce such programs as Strong Workforce and Student Equity and Achievement. However, because of the ongoing need to align expenditures with revenue more closely, we will need to continue the hiring freeze and a number of efficiencies to ensure that our budget remains in balance at all times. We will also need to ensure that our cash-flow is sufficient to carry our total operation during periods of apportionment deferral. Depending upon how this all plays out, we may be able to relax some of these constraints later in the year.
As soon as the books are closed for FY 2019-20 and more detail is provided from the state for FY 2020-21, there will be more information to share. In the meantime, we do have a safe harbor in which to catch our breath. We will have an opportunity to reflect upon how we want to address staffing issues and needs that have been affected by the hiring freeze, how we want to organize functions to fit the overall reduction of fiscal support, and how we want to develop plans for the future that address changing instructional and workforce-training needs.
The Board of Trustees and I are grateful for your support, your understanding, and your suggestions as we continue to ride out these storms and create a positive and constructive educational future for our students and our community.
Dr. Constance M. Carroll
Chancellor, San Diego Community College District