2013 -14 TENTATIVE BUDGET 1 OVERVIEW 2012

2013 -14 TENTATIVE BUDGET 1

OVERVIEW 2012 -13 GCC BUDGET PROJECTION n 2013 -14 STATE BUDGET n 2013 -14 GCC BUDGET DEVELOPMENT n REVENUE ADJUSTMENTS ¨ EXPENDITURE ADJUSTMENTS ¨ PENDING COLLEGE ISSUES ¨ BUDGET RISKS ¨ n CONCLUSION 2

2012 -13 GCC BUDGET PROJECTION 3

2012 -13 Enrollment (at P 2) Category CREDIT CAREER DEVELOPMENT COLLEGE PREP NONCREDIT TOTAL *Includes workload restoration Actual FTE’s Base FTE’s* Growth/ Unfunded FTE’s Growth Revenue to Date 12, 069 12, 232 (163) ($744 K) 2, 606 2, 276 330 $1, 066 K 371 425 54 $148 K 15, 046 14, 933 113 $174 K 4

2012 -13 GCC Revenues Category Budget Projected Difference Base $69, 297 K $69, 867 K $ 570 K Prior Year Adj. $ 0 $ $ 285 K Fee/Tax Deficit $ 0 $ Part Time Faculty $ 467 K $ Lottery Other State 285 K $ 0 467 K $ 0 $ 1, 950 K $ 0 $ $ $ 466 K 0 649 K 183 K 5

2012 -13 GCC Revenues (Page 2) Category Budget Interest $ Non-Resident 200 K Projected $ Difference 491 K $ 2, 600 K $ 2, 776 K $ 176 K Other Student Fees $ 363 K $ 366 K $ 3 K Other Local $ 62 K $ 65 K $ 3 K Interfund $ 403 K $ 0___ Total $ 75, 808 K $ 77, 319 K $ 1, 511 K 6

2012 -13 GCC Expenditures Category Budget Projection Difference Certificated Salaries $32, 679 K $33, 184 K $ (505 K) Classified Salaries $17, 220 K $17, 188 K $ Benefits $16, 531 K $16, 131 K $ 400 K Supplies $ $ $ Services $ 6, 081 K $ 6, 623 K $ (542 K) Equipment $ $ 182 K $ (9 K) Other/Interfund $ 3, 655 K $ 0 K Reserve $ 3, 772 K Total $80, 703 K 592 K 173 K 530 K 0____ $77, 493 K 32 K 62 K $ 3, 772 K $ 3, 210 K 7

2012 -13 Projected Ending Balance Beginning Fund Balance (7/1/12) Projected 2011 -12 Revenues Projected 2011 -12 Expenses Ending Fund Balance (6/30/13) $ 4, 895 K $77, 320 K ($77, 493 K) $ 4, 721 K* *Equivalent to 6. 09% of expenditures 8

2013 -14 STATE BUDGET 9

2013 -14 State Budget On January 10, 2013, Governor released his proposed budget for 2013 -14 n With the passage of Proposition 30 and improvements in the economy, State no longer has a structural budget deficit n For the first time in five years, Governor’s January budget has augmentations for community colleges. n 10

2013 -14 State Budget - continued n $579 million in additional funding for community colleges ¨ $196. 7 m in increased apportionment funding. BOG to develop recommendation ¨ $315. 7 m to transfer adult education and apprenticeship programs from K-12 to community colleges ¨ $49. 5 m to support energy efficiency efforts ¨ $16. 9 m to enhance online education ¨ $179 m to buy down existing apportionment deferral 11

2013 -14 State Budget - continued n Policy changes ¨ Five year phase in for changing apportionment funding from a census date model to one based on course completion ¨ 90 unit cap on students for apportionment funding ¨ FAFSA completion required for BOG fee waiver 12

May Revise n n Governor released May Revise on May 14 th $227 m augmentation of funding for community colleges an increase of $30 m from January ¨ $87. 5 m for COLA (1. 57%) ¨ $89. 4 m to restore enrollment (1. 63%) ¨ $50 m for matriculation services to implement Student Success Task Force recommendations n Policy changes withdrawn ¨ Census date funding formula ¨ 90 unit cap ¨ Shift of adult education to community colleges n Additional $64. 5 m to buy down deferral 13

State Budget Effect on Community Colleges 1. 57% COLA - $1. 097 million n 1. 63% enrollment restoration - $1. 16 million n $50 million for Student Success - $650 K n $49. 5 million for energy efficiency efforts (Prop 39) - $692 K n 14

Status of State Budget Legislative Analyst Office (LAO) has projected a $4. 5 billion surplus in tax revenues for 2012 -13. n LAO estimates that May Revise revenue assumptions are understated by $3. 2 billion n Assembly and Senate Budget Subcommittees have developed proposals to augment budget with additional funds n Conference Committee has reconciled the two legislative proposals and is presenting their proposal to legislature for a vote n 15

State Budget Proposals Item May Revise Senate Assembly Conference COLA 1. 57% Enrollment Restoration 1. 63% 1. 61% 1. 63% 2012 -13 Deferral Buy Down $180 m $248 m $220 m $180 m 2013 -14 Deferral Buy Down $64 m $116 m $20 m $30 m Instructional Equipment - $12 m - Scheduled Maintenance - $12 m - Professional Development - $6 m - $30 m 16

State Budget Proposals - continued Item May Revise Senate Assembly Conference Basic Skills $20. 0 m $33. 6 m $20. 0 m Student Financial Aid $67. 5 m $68. 1 m $72. 1 m $67. 5 m EOP&S $64. 3 m $89. 3 m $117. 2 m $79. 3 m CARE $9. 3 m $10. 6 m $17. 0 m $9. 3 m DSP&S $69. 2 m $94. 2 m $126. 8 m $84. 2 m CAl. WORKS $26. 7 m $34. 5 m $44. 3 m $34. 7 m Matriculation $99. 2 m $127. 7 m $99. 2 m PT Health $480 k $823 k $1, 016 k $480 k PT Parity $24. 9 m $51. 6 m $24. 9 m PT Office $3. 5 m $5. 9 m $7. 3 m $3. 5 m Nursing $13. 4 m $22. 4 m $13. 4 m Categorical Programs: 17

2013 -14 TENTATIVE BUDGET DEVELOPMENT 18

GCC Budget Development Process Unrestricted General Fund Tentative Budget is based on May Revise n Assumes ending balance at same level as 2011 -12 n Assumes a 1. 57% COLA n Assumes $50 m augmentation in Matriculation n Does not include 1% deferred pay raise n 19

2013 -14 Rollover Budget n $1. 90 million deficit in Rollover Budget ¨ Only vacant positions approved for filling put in budget. ¨ Hourly backfill amounts budgeted for positions not approved for filling ¨ 1. 25% employee pay cut in 2012 -13 restored ¨ 2012 -13 Budget Reallocation committee cuts restored ¨ 2013 -14 Exempt Cost augmentations included ($359 K augmentation) ¨ 5% General Reserve established ($4. 0 million) ¨ $400 K Contingency Reserve restored 20

2013 -14 Projected Revenue Changes State apportionment n Other State Income n Interest n Non-Resident Tuition n Other Revenue n Blue Shield Rebate n Total Revenue Augmentation n $1. 668 M $0. 167 M ($0. 125 M) $0. 200 M $0. 018 M ($0. 353 M) $1. 575 M 21

2013 -14 Exempt Cost Augmentations n n n n n Utilities Postage Insurance Audit Health (10% inc)* State Unemployment Insurance Step and Column Reallocation Reserve Retiree Benefits Five Full-time Faculty Total Exempt Cost Augmentations n *Estimate $ ($ $ $ 20 K) 55 K 103 K) 483 K) 665 K 50 K 35 K) 200 K 359 K 22

Budget Actions Taken n Rollover Budget Deficit 2008 Retirement Incentive n Matriculation backfill n Restore one month reduction n Budget Reallocation Committee Total Actions Taken n ($1. 900 M) $0. 534 M $0. 401 M ($0. 266 M) $1. 215 M $1. 884 M 23

Reserves Reserve Amount Percent General Reserve $4. 000 M 5. 11% Contingency Reserve $0. 400 M 0. 51% Reallocation Reserve $0. 100 M Total $4. 500 M N/A__ 5. 62% 24

Pending College Issues Adoption of State Budget n 1% deferred pay raise n 2013 -14 New Budget Requests n ¨ Instructional Equipment ¨ Deferred Maintenance ¨ Technology Additional classes to meet growth target n Collective Bargaining n ¨ Health ¨ Use of plan changes 2012 Blue Shield rebate ($716 K) 25

Budget Risks n 2012 -13 Statewide deficit ¨ Education Protection Act Revenue ¨ Redevelopment Agency Funds n One percent deferred pay raise 26

Conclusion State economy is improving and with the passage of Prop 30, community colleges are beginning to see additional funding n Community colleges in a better fiscal position with the withdrawal of the Governor’s proposed policy changes (Adult Ed. , 90 unit cap, and funding formula) n Economy will need to continue to improve once Prop 30 tax increases expire n 27