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Budget Update - July 26, 2009

Dear Members of the Cabrillo Family,

The new state budget.

As you have probably read or heard, the state legislature passed a budget on Friday. Again. (This is the third budget approved in less than a year.) For the moment, the 31 bills approved Thursday night and Friday cut the state budget by $15.3 billion. Not surprisingly, the budget includes the usual gimmickry and accounting tricks to partially close a deficit in excess of $26 billion. For example, the new budget purports to "save" $1.2 billion by moving the June 30, 2010 payday for state workers back a day to July 1, 2010, thus technically pushing the expense into the next fiscal year. While I always remain optimistic, there are many indications the latest budget will not be the last budget for the year. For a sobering analysis of the likelihood that the budget will "quickly crumble," I have attached Dan Walters' column from the Tuesday Sacramento Bee: "Another tricky budget devised for California."

The impact on Cabrillo of the latest budget.

The good news is that Cabrillo has been proactive in planning for budget reductions for many months. The bad news is that we are facing the largest reductions in our history. After working together last year (2008-2009) to reduce our operating budget by $3 million, Cabrillo entered the new fiscal year (2009-2010) on July 1st knowing our operating budget was still structurally out of balance by $2 million. We balanced the budget for the current new year by using "one time" funds, which means the revenues we expect to take in this year are actually $2 million less than our planned expenditures. As the economic and budget picture continues to erode, we anticipate we will need to reduce our operating budget for next year by $3 million or more. In addition, the state budget approved Friday includes devastating cuts to our categorical programs. Categorical programs receive funds for specific needs, such as DSPS (Disabled Students Programs and Services), EOPS (Extended Opportunity Programs and Services) and Matriculation. The budget approved will require us to cut $3 million or more from these vital categorical programs.

What Cabrillo is doing to face this unprecedented challenge.

We are taking a multi-faceted approach to balancing our budget in the face of the meltdown in Sacramento. Our commitment to shared governance, open communication and transparency will continue to be the foundation of our decision-making processes. As always, I encourage you to contact me directly with any thoughts or suggestions as we move forward together in the coming months. Much of our discussion focuses on budget reductions, but I know many of you are keenly aware that Cabrillo does a tremendous job in seeking private support from individuals and businesses in our community and region. Last year, the Cabrillo College Foundation received donations from more than 4,000 different individuals totaling more than $2 million. We are recognized statewide and nationally for our fundraising successes. Cabrillo also receives millions of dollars each year from various grants, and will continue to explore grant opportunities as they become available, including exciting possibilities related to President Obama's new initiatives for community colleges.

Enrollment Management Task Force.

At the same time our revenues have plummeted, enrollment is again on an all-time record pace for the fall semester. One piece of the new budget raises student fees from $20 to $26, and makes the increase retroactive. That means many enrolled students who think they have already paid in full will soon receive the unpleasant news that, because of the action of the legislature, they now have a balance due. To help us evaluate our enrollment goals and targets and implement a sensible enrollment management policy, Vice President of Instruction Renee Kilmer and new Vice President of Student Services Dennis Bailey-Fougnier will co-chair our Enrollment Management Task Force. We will do everything we can to continue to meet the needs of our students in a very difficult environment of rapidly declining state support.

Fee Payment Task Force.

To help communicate the increase in fees from $20 to $26 and to also explore ways to improve implementation of our fee payment policy, a Fee Payment Task Force will meet tomorrow, Monday, July 27, at 3:00 p.m. in Room 804A. Anyone interested is welcome to attend. With so many students already on wait lists, the Task Force will explore opportunities to encourage prompt fee payment. While this approach is sound fiscally, it is also student-centered in that we do not want students who do not have an intent to pay or enroll to occupy seats that could be filled by students on wait lists. We can also help student avoid incurring a balance due that can negatively impact their credit rating for years to come.

Managers and College Planning Council meeting throughout the summer.

Our Managers are meeting regularly to continue budget planning. The College Planning Council (CPC) has met twice in July to discuss the latest developments in the budget process and to continue developing our planning processes for the next round(s) of budget reductions. At Cabrillo, we are extremely fortunate to have outstanding leadership in every area of the college. I also appreciate that our campus leaders help communicate detailed information about the difficult challenges we are facing together. The lack of concrete information at times is tremendously frustrating for everyone, yet we have maintained a collegial, supportive tone in our meetings together.

Commitment to a fair approach to budget reductions.

The pain of the next round of budget cuts is inevitable. Our commitment is to share the pain throughout the college in a fair, equitable manner. We are one of many organizations in Santa Cruz County forced to make deep budget cuts, including the University of California Santa Cruz, Santa Cruz County, all of the public schools in the county, and all of the cities in the county. We are in regular communications with our friends and colleagues throughout the county and the state to collaborate about lessons learned during these painful times.

Thoughtful examination of compensation and benefits.

With reductions of this magnitude, it will be impossible to achieve the reductions necessary without a thoughtful consideration of college-wide compensation and benefits. Many government organizations in Santa Cruz County have already rolled back compensation, in some instances by 10% or more across the board. We do not anticipate salary reductions of this magnitude at this point, but are carefully exploring every possibility including consideration of furloughs for all employee units. For our represented employees, any changes to compensation will be part of the collective bargaining process. For our Managers and Confidential employees, the meet and confer process with the president has begun. To meet our commitment to fairness, any changes to compensation will have to be equitably applied throughout the college.

Like most organizations throughout the nation, the rising costs of health care is a tremendous frustration for Cabrillo. Each year, costs soar at the same time that coverage is either static or erodes. Our Benefits Committee has a formidable task in reviewing the various options for health insurance and balancing costs and benefits. Every option, including all of the "low cost" HMOs under consideration, will involve a significant increase in health care costs from last year. The question is how large an increase we can absorb with state revenues to Cabrillo slashed. For our employee units recognized by collective bargaining units, the discussion will continue in part in the process of negotiations in the near future. For our Managers and Confidential employees, the meet and confer dialog is already underway, with our non-represented employees expressing a unanimous willingness to consider a new HMO option. Human Resources is doing a wonderful job of making information available to all employees about the different plans.

Summary.

Our open discussion of Cabrillo's budget reduction processes will continue to be an important part of many meetings in the coming weeks, including:

-Fee Payment Task Force, Monday, July 27, 3:00 p.m. in Room 804A
- August Governing Board Meeting, Monday, August 3, 5:30 p.m. at Watsonville Center
- CPC Meeting, Wednesday, August 5, 2:00 p.m., SAC 225
- Governing Board Budget Study Session, Monday, August 17, 5:00 p.m.

As noted above, I very much appreciate and encourage you to share thoughts and suggestions you may have about anything I can do to help communicate the complexities of the ongoing budget crisis and also to continue to involve and engage our entire college community. Even in these unprecedented times of slashed budgets, Cabrillo's commitment to the success of our students will not waiver.

Thanks for all you do to make Cabrillo one of the premier community colleges in California and the nation.

Brian

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