The Chabot-Las Positas Community College District board of trustees approved a tentative budget that will be revised in coming months, after getting some relief from deeper funding cuts in the latest state budget.
State tax collections in July this year, as well as possible revisions in federal funding, will also impact the district’s final budget.
The board unanimously approved an unrestricted general fund budget of $126.4 million, well above the $115.3 million in revenue from state and federal sources under Gov. Gavin Newsom’s May budget revision. However, state lawmakers and Newsom agreed on a revised budget last week that avoided many of Newsom’s cuts to education. It uses a combination of delayed spending and cuts to colleges, courts and state worker salaries, temporary tax increases, and taps the state’s “rainy day fund.”
The board is required to adopt a tentative budget by July 1 every year. Depending on potential changes from state budget revisions and a federal stimulus package, approval of a final district budget could drift as late as October.
A public hearing will be held before the final budget is approved.
The district’s approved budget would reduce the district’s ending fund balance to 7.1% of expenditures, below the board’s 8% goal.
“It’s wise to budget based on the worst-case scenario of the governor’s May revise,” Trustee Tim Sbranti said at the June 16 board meeting before the latest state budget negotiations. “It can only go up from there, and there are still a lot of uncertainties.”
Indeed, Newsom declared a “budget emergency” last week, giving the Legislature permission to take nearly $8 billion from the state’s primary savings account to avoid even deeper spending cuts.
The state budget still calls for delaying a significant portion of the community college district’s budget for the 2020-2021 school year until the 2021-2022 year, said Doug Roberts, acting vice chancellor of business services.
“That tends to create a cash flow problem for a lot of districts,” he said. “So, depending on our cash flow, we may need to borrow money.”
Still, it will remain unknown how long the economic downturn will last. “Deferrals are kicking the can down the road,” Roberts said.
The Legislature’s revisions last week avoid deep cuts to the Strong Workforce Program, intended to increase the number of students enrolled in career education programs in demand by regional labor markets.
The budget that the district approved in late June assumes retiree health benefits increase 6.4% from the prior year to $7.8 million.
Also, utility costs are projected to rise from the prior year to $3.1 million, despite moving to distance learning.
That’s because departments had previously been making budget requests based on previous year’s allocations, not their actual expenditures, Roberts said. This year, the budgets were based on actual spending.
The difference between Newsom’s budget and the Legislature’s original proposal a couple of weeks ago was about $11 million for the district, Roberts told the board of trustees.
A big unknown is the economic toll of the pandemic and shelter-in-place orders on state revenue. The state might revise the budget in August after tax receipts come in, since tax payments aren’t due until July this year.
“It’s highly expected we’ll see an August revise,” Roberts said.
It also remains to be seen what happens in terms of federal assistance.
“Every state in the union is hurting, and most states do need additional money for their essential infrastructure, which includes education,” Roberts said. “I do believe we’ll probably see some additional funding from the federal government, but it’s not going to be as rosy as the state Legislature’s budget.”
Board members expressed hesitation in approving the budget.
“The board isn’t in the habit of approving a deficit budget, especially one that drops the fund balance below 8%,” said Trustee Hal Gin.
Roberts explained that the new school year begins July 1, so they are required to have a budget to fund expenditures.
“I don’t think anybody is unaware that this isn’t a great budget,” he said.
Roberts further noted there’s a wide range of possibilities at this point, depending on what comes of the Legislature’s budget or changes in federal spending.