Managing Without a State Budget and in Uncertain Times
In addition to the cash flow issues caused by a late State Budget (see previous article TK), there are other considerations in the State Budget crisis that need to be addressed, especially given the bad economic times—nationally and locally—and the size of the looming State Budget deficit, which is estimated to be up to $15.2 billion without mitigating action.
To understand where we could possibly be headed, we need to revisit past state fiscal crises. We have seen years of underfunded cost-of-living adjustments (COLAs) and growth, no funded COLAs, and even cuts in state funding to community colleges. And, starting in the current decade, we have seen mid-year cuts enacted. Any or all of these are possibilities in the current fiscal crisis we now face.
What We Don’t Know
While we can all acknowledge that we are in yet another serious state fiscal crisis, there are too many things that we don’t know about state funding for community colleges:
· Will there be any funded COLA at all this year?
· How much growth funding will be provided?
· Will there be categorical funding cuts this year?
· Will there be mid-year cuts this year?
· Will there be a funded COLA next year or the year after?
· Will there be proposed cuts to 2009-10 in the Governor’s January Budget?
Community college districts are adopting their 2008-09 budgets this month without having answers to the questions about the current-year, let alone about future years. And many districts are starting their collective bargaining sessions for the current year with this uncertainty still looming.
Strategies for Dealing with Uncertainty
The fall term is getting underway and student enrollment numbers are starting to come in. At the same time, staffing levels are getting stabilized. These are two significant items that can be taken into account when updating your budget for this year. And, while there have been proposals to provide a COLA for 2008-09, the prudent course of action would be to plan on no funded state COLA on apportionments for the current-year.
Let’s assume for a moment that, sometime soon, the current year State Budget is signed, there is no COLA, categorical programs are funded the same as in 2007-08, and there is 2% growth provided. Let’s now fastforward to January. What if there are mid-year cuts proposed? What if there are more cuts proposed for 2009-10 with no funded COLA?
These “what if” scenarios should be played out now—don’t wait until January. If these scenarios would devastate your budget, you need to be prepared with a contingency plan. And if that plan includes a reduction in force, your seniority lists needs to be ready before January in order to ensure that the statutory timelines are met.
Lastly, if you are starting the collective bargaining process for 2008-09, work with your unions to delay reaching agreement until after January. Reaching an agreement that looks affordable now but becomes unaffordable after January is in nobody’s best interest. But if you must craft a settlement before then, craft it carefully enough to provide your district with a fallback plan if your fiscal situation becomes worse.
We all know that in an economic downturn more adults turn to community colleges for learning. At a time when greater access to community colleges is needed, funding uncertainties and even funding cuts make it very challenging to provide that access. Planning for financial contingencies, particularly those that may be looming over the next several months and perhaps years, can help to maintain sound and effective programs and services for students.
—Sheila G. Vickers