The Santa Monica Community College District board of trustees has approved a $324 million budget for fiscal year 2005-2006, which began Friday, July 1st.
Trustees approved the budget Wednesday, September 7th.
“This is not everything we had hoped for,” said district interim president Tom Donner.
“There are some disappointments that have come along, one of those being that equalization was not fully funded.”
Equalization funds are extra funds provided by the California Community Colleges Chancellor’s Office to ensure that all community college districts — large or small — are fairly treated.
The state’s regular funding formula is based on a community college district’s student enrollment.
Donner said Governor Arnold Schwarzenegger told community college districts that the state would provide $80 million for equalization this year.
Community college districts received a total of $30 million, of which $951,769 is Santa Monica’s share.
For the fiscal year, major sources of expenditures include academic and classified salaries and benefits.
“Eighty-eight percent of our budget is locked up in salaries and benefits,” said Reagan Romali, Santa Monica College associate vice president for fiscal services.
Academic salaries are 48 percent of the budget, classified salaries are 22 percent, and benefits are 18 percent.
“We settled the classified employees contract and there are new classified employee positions in the budget,” Romali said. “The administrators contract was settled, there are step increases for faculty, increases in the number of hourly faculty, and increases in instructional aides.”
In other community college districts, salaries and benefits are 80 to 85 percent of the budget, Donner said.
Other major expenses for Santa Monica are contract services such as utilities, maintenance and repairs, advertising and marketing, and starting up the new Bundy Campus.
“We are seeing lots of increases in any utility service that is natural-gas related,” Romali said. “Also, we brought new facilities into service.”
Romali said seven percent of the budget — $5.5 million to $6 million — is available for discretionary spending, to transfer funds from one budget item to another, or not to fund some items at all.
College officials will have to make budget changes if the district does not recover 550 borrowed full-time equivalent students (FTES) credits.
State funding is based on an actual head count of students and full-time equivalent students, in which one full-time equivalent student is worth approximately $1,800.
College districts use head counts to make budget estimates, while the state funding formula uses full-time equivalent students because not all students enroll full time.
The state allows college districts to “borrow” future FTES credits to balance another fiscal year’s budget.
Santa Monica borrowed 550 FTES credits from the 2005-2006 fiscal year to fund the 2004-2005 fiscal year.
If the college district does not enroll enough students by spring 2006 to recover the borrowed credits, the district will be placed on a state watch list.
If 550 FTES credits are not recovered, the district will lose some state funding and the general fund balance will fall below the state-mandated three percent reserve to 2.27 percent.
California recommends that community college districts save five percent of their general fund but legally requires districts to save only three percent.
“If a district is not able to cover for a rainy day, the state will not step in and cover for the district,” Donner said.
“In the spring, we will know quite well whether we are close enough because we can look at our calculations after winter session.”
Donner said the district has to wait until spring because the student head count schedule is on a calendar year from January to December and the FTES counting schedule is on a fiscal year from July to June.
“This [recovering the borrowed credits] has clearly been our goal,” Donner said. “Both the academic and student service areas have been doing everything they can to maximize the head count and FTES figures.”
The college district was on the state watch list because of low reserves in fiscal years 2001-2002 and 2002-2003.
But for fiscal year 2004-2005, the college district had a reserve of 5.24 percent.
If the college district recovers all of the borrowed 550 FTES credits, the district will end the 2005-2006 fiscal year with a 3.17 percent reserve.
College officials could make reductions in the budgets for discretionary spending or hourly instruction if the FTES credits are not recovered.
“We have to make sure we understand the budget process because the chancellor’s office is coming with a new funding formula,” said trustee Margaret Qui”ones. “We are going to see a lot more legislators telling us how to spend our money.
“Local control will be encroached upon because legislators cannot visit every campus and will tend to favor either rural or urban districts.”