FROM: Mary Spilde

RE:  Budget

DATE:  February 12, 2003
 

This email will summarize the information I have shared in the all-staff meetings.  First, let me reprise the information regarding the budget projections. 

Projections
Based on the failure of ballot measure 28 and the governorís budget, our projections show that our deficit for 2003-04 is $5.9 million.  Additions to the budget from the current year are:

• $3.3 million for increases in the PERS employer rates to cover the unfunded liability.  The estimate of the collegeís total liability is $68 million to be paid over 25 years.  This means that we would have to add approximately $3 million to the general fund budget each year.  We are considering selling bonds to cover the unfunded liability to mitigate this impact.

• $1.6 million that was built into the projections for employee compensation.  This is a placeholder only as the board has not set parameters for bargaining at this time.  An additional complication is that the governor has built the budget around a wage and benefits freeze for state and school employees.  Since we bargain locally, he does not have express authority to do this, but he has set out this expectation.  The language from the Governorís budget is as follows:
ìThis budget also withholds any salary and benefit increases for state employees over the next biennium.  While difficult for those who work hard to provide important services, this is a necessity when we are reducing or eliminating vital services and programs.î  The proposed budget recommends eliminating step increases for 2003-05 for state and school employees.  This action saves $173.4 million General Fund.  Of the total amount, $133.8 million has been removed from the State School Fund in the Department of Education and $2.6 million has been removed from the Oregon University System.  The remaining $37.0 million General Fund has been removed from the budget overall, and will be identified specifically for each agency during the legislative Ways and Means hearings.  At that time, the Department of Administrative Services will also identify Other Funds and Federal Funds expenditure limitations that should be removed for this action.

• $500,000 for major maintenance and equipment.  Last year the board directed me to include an amount in the budget for these purposes. 

At the staff meetings, I also discussed our ending fund balance.  I will talk more about this in a separate email.

I need to say that nothing stays constant for long.  Every time I go to Salem, it seems like I hear more bad news.  This was certainly true last week when we were told that the co-chairs of Ways and Means (the budget-making committee) thought the Governorís budget was too optimistic and that we could look for further cuts. In addition, the state is looking at up to another $300 million loss in revenue before the end of the June.  Fortunately, we held back some ending fund balance in anticipation of this so we are still planning on getting through this year without further reductions.  However, we all still need to be vigilant about containing costs wherever we can.  It is important for you to know that these projections are likely to change; thatís just the nature of the beast! We will be sure to communicate with you as we develop new projections.

Process
The Criteria Application Work Group (CAWG) has completed its work and forwarded recommendations to the Executive Team. You may or may not know that LCCEA decided not to participate in the CAWG this year because of concerns that CAWGís deliberations were confidential.  CAWG members felt strongly that it would be impossible to do their work publicly without ìpoliticizingî the process.  Their work will be available at the time we present a balanced budget but before final decisions are made. Faculty Council, Classified Council and LCCEF were represented on the CAWG. 

The board has agreed to the administration bringing forward recommendations for a balanced budget; therefore, it will contain revenue options as well as reductions.  The budget calendar is being revised to give us time to develop revenue options.  It will be posted on the web by the end of the week. 

None of us relishes the idea of making further cuts to the college.  Cutting $5 million last year and $3.1 million this year has taken its toll.  The thought of having an additional deficit of $5.9 million is troubling to say the least.  However, there is little we can do at the state level.

Certainly we will make it known to legislators that the current funding level is unacceptable.  We will do everything we can to secure additional funds.  However, what we are hearing from legislators is that it is unlikely that we will receive more funding because their priorities are people who are more at risk.  As one legislator said to me last week, ìIf itís a choice between education and someone who is dying because they donít have medication, you know which one Iíll choose.î

Over the next seven weeks, as we develop balanced budget recommendations for the board, I realize that the anxiety at the college will increase.  I ask that you stay focused on students and their learning and try to provide a positive environment for students and for each other.  If we can cut each other some slack as we go through this, we will emerge more whole at the other end.

Although we must make some difficult choices in the next few weeks, it is important to remember that this is not about weak programs or weak services, it is about a very bad revenue situation most of which we cannot control.  We must control what we can and realize that we will come out of this.  Yes, we will be smaller, but we will continue to focus on quality.

Over the next few weeks we will be increasing the amount of communication so that we can respond to frequently asked questions (FAQís) and make sure that you know what we are hearing and where we are in our process. 

Thanks for taking the time to read this lengthy e-mail. 

Mary.