The Deferral

September
2012
Wheeler North, Treasurer

The title of this article sounds a bit like a John Grisham novel, when in fact it is really more like one of those circular logic problems that a math professor with a minor in philosophy might throw at you: no matter how you solve it, the answer always becomes the original question with a new twist.

Not long ago, the state could not afford to fund higher education at the existing rates, so those in power did several things. First, they reduced funding and reduced the number of students that colleges are expected to serve, a budget adjustment formally referred to as “workload reduction”. This situation meant growth dollars were also gone but did not relieve the obligation to assure that the now reduced targets were met. Initially they also made some significant cuts elsewhere, particularly in the areas of categorical funding.

Then they instituted delaying their payments, which did not specifically reduce funding, but it did transfer the cost of servicing that debt to the local agencies and it allowed the state to pass a budget that everyone could agree on.

Then, in the subsequent years following this, the state’s revenues never caught up to correct the deferral delays; in fact, the opposite has happened, where more is deferred for longer each year. In the short term, this strategy may have been viable. But over a long run, where the problem is compounding, cash flow and eventually solvency is becoming a problem for the local agencies.

Now for the 2012-2013 budget we have reached a point where, once again, the state has less revenue than even the current reduced spending, so the previous cuts will be added to with more cuts and more deferrals. However, because the Legislature had to pass a budget, they passed it with no new cuts, pending an increase in sales and income taxes that has to be approved by voters in November. After a great deal of haggling and signing, this initiative became Proposition 30. Meanwhile, a private attorney, Molly Munger, qualified a similar proposition (38) that will in effect make Prop 30 moot if hers wins by more votes. Her version does not support higher education, but it is likely to confuse voters and therefore undermines Prop 30’s prospects.

If Prop 30 passes, then State revenues will increase, but how much they increase will be unpredictable and will vary from year to year. Experts predict that the revenue increase to California community colleges will only correct some portion of the deferral problem. Hopefully, the first thing it will correct is the compounding aspect, so that the amount which gets deferred does not continue to increase. If the revenues do as expected, then they may in part restore funding so that most of the deferral is gone and local agencies are not paying as much to borrow cash.

By all estimates, the revenue increase will not restore funding that was the result of any budget cuts or workload reductions. In addition, the original problem of low revenues may continue to worsen because these revenues are in a large part reliant on our state, national, and global economy.

After four years, these revenues will decrease and finally cease in 2019 regardless of how the economy is by then.

So if Prop 30 passes, we do not know what will happen; it could be too little too late, or it could be as good as remaining status quo.

If Prop 30 does not pass, or Prop 38 gets more votes, then the California Community College System will be in very deep difficulties. Nearly every district in the state has reduced staffing either through attrition or by direct layoffs. In those cases where layoffs have occurred, they have been fairly small in percentages, but nonetheless this option was exercised by more than a few districts up to this point.

For the first time since inception of AB1725, which included the establishment of our minimum qualifications processes and processes for establishing faculty service areas (FSAs), colleges have initiated processes to lay off faculty. As a result, several court proceedings attempting to understand and resolve FSAs and how they play out in our due process have already begun. The internal procedural complexities of the California Community College System have not made things any easier at the judicial level.

If Prop 30 does not prevail, the number of districts having to lay off faculty is going to go up, possibly dramatically. Even the most solvent districts, which were just last semester touting that layoffs are the hill they will die on, are now being quite a bit more silent on the topic.

If ever faculty should be engaged, now is the time. Faculty need to be aware of their district’s situation with respect to being forced into drastic choices. Some indicators to look for are obvious. The first is the district’s reserves. This information is available on the CCC Chancellor’s Office website in the fiscal data abstract. However, much of this information might be one year out of date, which could be significant in today’s fiscal climate in terms of painting an accurate picture. Some districts are better at stockpiling money than others, but these reserves only go so far, and for most of us they are starting to run out.

Another data point to examine is the 75:25 ratio. If your district has already reduced your part-time faculty numbers drastically, then they have limited room to reduce instruction further. The same fact is similarly true of the ratio between faculty and staff. If natural attrition coupled with hiring freezes caused your staffing cohort to be slashed already, then the college has nowhere else to reduce. Certainly, your 50% law values will play a big factor in how and where the district needs to reduce. Senates should keep a very close eye on these numbers because they could lead to very tragic choices, forcing reductions in areas that do the most to serve students.

The picture is very glum, but we must all prepare for the realities we might be facing. Faculty need to understand their local FSA processes, the situation of their current programs, what happens to each one if more classes are cut and if the programs become no longer viable. Colleges can only reduce across the board so much. At some point, cutting programs may be the only path to survival. Academic senates should ensure that local processes are in place for such cuts to occur in a reasoned and professional manner.

The 2011-2012 budget is broken and will not be salvaged greatly by Prop 30. The 2012-13 budget is already very frightening, with yet another budget reliant on the will of the voters. The 2013-2014 budget may either redeem itself and us along with it, or it may implode entirely.

Proposition 30 will not solve all of the financial problems of the California community colleges. However, without the increased funds from Prop 30, the situation is indeed dire. The Academic Senate urges all faculty and all who serve and care about the community colleges to inform everyone they know about the importance of this proposition and to urge all of their family, friends, and neighbors to vote in favor of it.

The articles published in the Rostrum do not necessarily represent the adopted positions of the academic senate. For adopted positions and recommendations, please browse this website.