Continue to Scrimp and Save
With this year’s latest ever State Budget, more than ever before community colleges were required to fund operations in advance of receiving cash from the state. In order to help cope with this, many colleges deferred expenditures in order to conserve cash. We recommend that you continue to do this, but for additional reasons.
The ink is barely dry on the final State Budget for this year and already there is talk of a special legislative session to address midyear cuts. According to recent comments made by the Governor and his staff, the special session is anticipated to be called after the November 4 election. No matter when it occurs it is of significant concern for local agency budgets.
The State Budget and other legislation enacted this year included provisions to help the state’s cash flow problem by pushing the problem to the local level—additional deferrals of the state’s payments to local agencies.
In addition, we have already recommended that community colleges not plan on receiving the statutory cost-of-living adjustment (COLA) on base revenues for 2009-10. The Governor’s January proposal of the State Budget could look a lot like last January’s proposal, which included not only no COLA, but additional cuts to programs as well.
These are significant unknowns in the financial picture for local agencies, and the concern is that any surprises will not be good ones. It makes sense to scrimp and save wherever you can, such as:
Ø Reviewing allocations to colleges, centers, and departments; determining the level of expenditure that meets the most critical needs; and setting aside amounts beyond that in holding accounts or as a designation in the fund balance
o These funds can be released once more is known and your district’s financial situation indicates that it is appropriate
Ø Postponing expenditures, especially those that are for significant amounts, in all funds of the district—including capital funds—to conserve cash
Ø Setting aside any unanticipated revenues received during the year as a designation in the ending balance for contingencies
o For example, if your district’s adopted budget assumed that categorical program funding would be cut by 6.5% as in the Governor’s May Revision, the restoration of that 6.5% in the final State Budget can be recognized in your district’s budget as an augmentation to revenues and then set aside rather than allocated for expenditure (assuming that carryover is allowed in those programs)
Ø Reviewing each personnel vacancy to determine if the replacement can be delayed or held off indefinitely—or at least until more is known
Budgets are already tight, but conserving cash and reducing expenditures where you can will place your district in a much better position to handle what may be doled out in the coming months—and possibly years.
—Sheila G. Vickers