Potential $12 Million Budget Change for the 2018-2019 Year

Infographic By Ethan Lauren

Infographic By Ethan Lauren

The California governor’s office proposed a change to the current funding formula this January for community colleges; and during the May review on Tuesday, May 15, Santa Monica College will see if it will be positively or negatively affected by upwards of a $12 million drop in revenue.

Since 2014, the school had used a borrowing strategy when it came to calculating the number of full-time enrolled students (FTES). The state of California provides a certain amount of funding for each FTES, so schools can currently count those enrolled in summer for either the academic year before or after that summer semester. This strategy was implemented as a temporary measure to provide a safety net in the school's revenue.

During the 2015-2016 academic year, the state funded the school roughly $4,800 for each of its 21,264 FTES, even though only 20,951 were served. This means there were 313 students who were actually enrolled in the summer semester prior to this year who gave the school an additional $1,503,000 in revenue.

In the current 2017-2018 year, the difference increased to 2,361 students due to dropping enrollment rates. The school gets funded for 22,257 students, despite there only being 19,897 students in the academic year. For each FTES, the state is paying $5,300.

The school currently receives around 90-percent of its funding from student enrollment. With the new funding formula, rather than giving money solely for each FTES, the state will now consider how many students the school serves in general, how many receive financial aid, and how many students transfer, complete a degree or recieve a certificate. If the proposal passes, the school will receive less money than it currently does. If the proposal does not pass, the school will potentially see a drop of $12 million unless enrollment increases to match previous numbers.

During the school’s board of trustees meeting on Tuesday, May 1, projections for the budget and information on the funding formula were presented by Chris Bonvenuto, the Chief Director of Business Services. 

Trustee Dr. Louise Jaffe has previous experience in state operations. “There’s opposition pretty much across the board and the simulations have not been good,” Jaffe said. “[The state] needs to take the time to figure it out, they can’t just wipe out colleges.”

The proposed numbers are likely to fluctuate over the year. After the May review, it will be passed in late June and the school’s finalized budget will then be presented in September. As the borrowing strategy was always intended to be a temporary measure, the school has implemented changes to help the revenue, such as a supplemental retirement plan, retiring 78 employees which have saved $1.1 million and is projected to save $3.8 million next year. In the third quarter of the 2017-2018-year, original projections were showing a $6.6 million deficit, though it ended up being a $1.9 million surplus.

“If the worst happens, we’re going to know it before it happens because we’re planning on it and we’ll come up with another series of plans to help us deal with that,” Bonvenuto said. “It’s not a negative story, it’s a success story. It’s a success story with a warning, ‘now don’t go out there partying and start to give it away,’ we have to be aware, but this is a success story right here, that’s how I see it.”