District Budget News
May 21, 2018
Employees and students are receiving appeals from faculty members to support them in their demands for increases to compensation. The following is a summary of the District’s perspective on this issue.
During 2017-2018 negotiations, the Faculty Association initially demanded a 1.56 percent ongoing increase to salary. Most recently, the demand was revised to a 1.56 percent equivalent one-time payment in the interest of supporting faculty salaries competitive with the cost of living.
The District shares the concerns of employees and agrees it is important to offer competitive salaries for all of our employee groups to maintain the level of quality education the district has always offered. The District has offered to discuss the distribution of available dollars once the state budget for 2018-2019 has been passed and remains open to conversation in the interest of reaching agreement. At this time, it is our understanding that the budget may include some one-time and/or ongoing dollars that could be available to share with employees. Our reasons for not doing so for 2017-2018, or for 2018-2019 until more is known, are explained below.
It is the District’s position that it would be fiscally irresponsible to commit to increases in expenditures until we know the amount of state revenue the district can expect in 2018-2019. That information is not yet available and remains volatile and elusive. For example, last Wednesday, the Senate budget subcommittee on education finance rejected the governor’s proposal for a new funding formula, signaling another possible change in our budget forecasts.
What we do know is that the 1.56 percent cost of living adjustment (COLA) included in the 2017-18 state budget did not translate to “extra” money for the district. The $2.3 million COLA received was more than offset by other mandated expense increases in the following areas: state mandated employer contribution rates for California State Teachers’ Retirement System (CalSTRS) and California Public Employees’ Retirement System (CalPERS) and automatic employee salary step increases included in previously negotiated agreements between the district and its unions, which are also accompanied by automatic regulatory benefit contribution increases (i.e. Social Security, Medicare, STRS/PERS, etc.). The District also received a small one-time budget augmentation in addition to the COLA, but these dollars were one-time only and not sufficient to cover the remaining unmet mandatory compensation related increases or increased expenses in other areas (e.g. service contracts, utilities, etc.) let alone an additional increase of 1.56 percent for salaries.
Contrary to the opinions expressed by some, the COLA allocation is not designated specifically for employee salaries. The COLA is provided by the state to cover anticipated increases in expenses. Any adjustment to employee salaries is subject to negotiations, and a pass through of the COLA to employee salary schedules is not automatic or guaranteed.
Like many other California community college districts, Foothill-De Anza has been experiencing declining enrollment, which affects revenue. The district started the 2017-2018 fiscal year with a $10.3 million structural deficit in the adopted budget, which was balanced with reserves to allow time for planning for reductions through the participatory governance process. In addition, due to the continuing enrollment decline, the district is now projecting an additional loss of $7.6 million in state apportionment funding in 2018-2019.
Faculty may respond that the District still has significant one-time dollars in its reserve to cover a one-time increase in compensation. We agree there is a healthy reserve and are grateful for the prudent management of fiscal resources, which allowed the District to accumulate those dollars. However, as the District has already demonstrated, the reserves will be needed to cover the budget shortfall during the implementation of a multiyear plan to bring expenses into line with revenues while preserving as many programs and services as possible.
We look forward to our enrollment stabilizing, but the timing of that is uncertain. In the meantime, the District must proceed with planning to implement reductions to staffing and services to accommodate the reductions in its budget. The District takes very seriously its responsibility to steward public resources in service to students and the community. Until the district has a clear understanding of the revenue picture for 2018-2019, offers of increased compensation are fiscally imprudent.