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State Budget Crisis

John MortonVice President for Community Colleges Fall 2008

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The State Budget Deficit(in millions of dollars)

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Revenue 5,142.0 5,244.8 5,155.1 5,300.5 5,506.2

Expenses 5,381.0 5,406.9 5,716.3 5,822.8 5,924.7

Revenue over Expend

-238.9 -162.2 -561.2 -522.3 -418.5

Carry-over Begin Bal

732.3 493.4 331.2 -230.0 -752.3

Ending Balance

493.4 331.2 -230.0 -752.3 -1,170.8

Based on 10/29/08 Council of Revenues revised forecast

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State Tax Revenue Projections(in millions of dollars)

4,000.0

4,500.0

5,000.0

5,500.0

6,000.0

6,500.0

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

August2007

July 2008

Jan 2009(possible)

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Bottom Line

Current State budget cannot be maintained

Likely to get even worse No choice but to cut - the budget cannot

be in deficit

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Steps to Solution

Step 1 - Legislature reduced FY 2009 general funds by 4% of “discretionary” budgetDiscretionary means all funds used for

administration, operations, and public serviceCC budget reduced by $1,373,087

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Steps to Solution

Step 1 (continued)CC System reduced equipment fund by

$820,000Balance of $553,087 distributed to campuses

based on new money (GF+TFSF increases)

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Steps to SolutionFY 2009 Legislative Reduction

Equipment

FY 2009 Budget

Reduction Total

Honolulu 78,460 78,460

Kapi‘olani 128,364 128,364

Leeward 90,456 90,456

Windward 40,690 40,690

Hawai‘i 75,416 75,416

Maui 91,082 91,082

Kaua‘i 48,619 48,619

CCSWS 820,000 820,000

Total 820,000 553,087 1,373,087

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Steps to SolutionFY 2009 Legislative Reduction

FY 2009 FY 2009 FY 2009 FY 2009 % ofReduction GF TFSF GF + TFSF % of GF GF + TFSF

Windward 40,690 10,702,857 2,219,900 12,922,757 0.38% 0.31%

CCSWS 820,000 7,909,774 0 7,909,774 10.37% 10.37%

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Steps to Solution Step 2 - Governor restricted additional 4%

of discretionary budget CC share was $1,019,547 CC System restricted $500,000 of enrollment growth

money Balance of $519,547 was distributed to campuses

based on A 25% - GF Apprn + TFSF Revenue B 25% - Adjusted Cash Balance C 25% - Vacancy Savings (Delay filling to 01/01/09) D 25% - Vacancy Savings (2 year old vacancies)

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Steps to SolutionFY 2009 Executive Restriction

Enrollment

Growth

CC System

FY 2009 Budget Restriction Total

Honolulu 86,071 86,071

Kapi‘olani 48,745 48,745

Leeward 79,772 79,772

Windward 25,413 25,413

Hawai‘i 83,179 83,179

Maui 59,070 59,070

Kaua‘i 71,319 71,319

CCSWS 500,000 65,978 565,978

Total 500,000 519,547 1,019,547

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Steps to SolutionFY 2009 Reduction & Restriction

FY 2009

Reduction FY 2009 FY 2009 FY 2009 % of

+ Restriction GF TFSF GF + TFSF % of GF GF + TFSF

Windward 66,103 10,702,857 2,219,900 12,922,757 0.62% 0.51%

CCSWS 1,385,978 7,909,774 0 7,909,774 17.52% 17.52%

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Steps to Solution Step 3 - Governor orders FY 2009 Budget

Execution Policy ConstraintsNo filling of positions without permission,

except for teaching facultyNo out-of-state travel without permissionNo personal services contracts in excess of

$10,000 without permissionNo equipment purchases in excess of $10,000

without permissionNo motor vehicle purchases without permission

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Steps to Solution

Step 3 (continued)UH limits Governor’s policy constraints to

general fundsChancellors may grant mission critical

exceptionsWeekly reports on exceptions required to be

submitted to the President

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Steps to Solution

Step 4 - Governor asks UH to plan for FB 2009-11 reductions of:$13.5M based on 10% of discretionary budget

and 1% of non-discretionary budget$22.0M based on 15% of discretionary budget

and 2% of non-discretionary budget$30.6M based on 20% of discretionary budget

and 3% of non-discretionary budget

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Steps to Solution

UH plans at the 10% Reduction Level$9.0M from the general fund budgetShift $4.5M from general funds to tuition and

fee fundsCC share is

$2,338,830 of general funds $1,166,287 of tuition and fee funds

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Steps to Solution

For the General Fund Reductions CC System Office reduces: $500,000 in enrollment growth funding $285,946 through eliminating 5.75 vacant positions

Mandated electricity savings of $854,446 Balance of $698,438 is allocated to the

campuses based on General Fund/TFSF budget

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Steps to SolutionFB 2009-11 Budget Reduction – 10% Level

Enrollment

Growth/

5.75 Positions Electricity Campus Total

Honolulu 127,428 127,428

Kapi‘olani 161,829 161,829

Leeward 120,867 120,867

Windward 56,917 56,917

Hawai‘i 85,807 85,807

Maui 91,329 91,329

Kaua‘i 54,261 54,261

CCSWS 785,946 854,446 1,640,392

Total 785,946 854,446 698,438 2,338,830

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Steps to Solution

Windward CC elects to reduce budget byCounselor Vacancy for Vocational & Continuing

Education/Employment Training Center - $56,917

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Steps to Solution

Tuition increases UH will generate approximately $20.0M

in new money each year at constant enrollment

Windward CC projects to generate an additional $229,987 in tuition revenue in FY 2010

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Steps to SolutionWindward CC Additional TFSF Revenue vs Funding Requirements

FY 2010 FY 2011

Additional TFSF Revenue (09/30/08 TFSF projection) 229,987 489,749

Less: Need Based Financial Aid 27,000 84,000

Net Additional TFSF Revenue 202,987 405,749

% of UHCC Total 0.052259 0.050871

Campus Share of TFSF Cost Transfer 60,949 59,330

Surplus/Deficit After TFSF Cost Transfer 142,038 346,419

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Steps to SolutionWindward CC Additional TFSF Revenue vs Funding Requirements

FY 2010 FY 2011

Surplus/Deficit After TFSF Cost Transfer 142,038 346,419

RRR-Furniture & Equipment 705,470 705,4705.50 5.50

RRR-Routine Maintenance 343,456 418,4566.00 9.00

Tier 1 PCR 597,628 706,576

New Facilities Support 1,085,900

FYF of New FY 2009 Positions 18,549 18,549

Surplus/Deficit After TFSF Cost Trf & RRR & New Facil Suppt -1,523,065 -2,588,532

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Steps to SolutionWindward CC Additional TFSF Revenue vs Budget Reductions at 15% and 20% Levels

FY 2010 FY 2011

Surplus/Deficit After TFSF Cost Transfer 142,038 346,419

Campus Share of TFSF Cost Transfer - Additional at 15% 116,057 112,975

Surplus/Deficit After 15% Budget Reduction 25,981 233,444

Campus Share of TFSF Cost Transfer - Additional at 20% 116,058 112,975

Surplus/Deficit After 20% Budget Reduction -90,077 120,469

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Steps to Solution Special and Revolving Fund Cash Carry

forward balances CC system has $18,098,301 as of June 30, 2008 Reserve requirement is $9,680,361

(4% of unrestricted fund E&E + working capital) Windward CC has $819,559 ending cash balance Reserve requirement range is $604,709-$739,612

(3-4%) Available to spend $79,947

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Steps to SolutionGeneral Fund Unbudgeted Temporary Positions – 9/19/08FY 2008 GF + TFSF Casual Payroll and Student Assistant E&E

Unbudgeted FY 2008 E&E FY 2008 E&ETemporary Casual Student

Campus FTE Salaries Payroll Assistants

Honolulu CC 11.70 514,426 365,846 356,750

Kapi‘olani CC 35.25 1,794,742 630,445 445,705

Leeward CC 7.50 346,227 143,018 328,829

Windward CC 3.00 176,898 58,850 196,551

Hawai‘i CC 8.30 456,830 452,312 171,636

Maui CC 21.50 945,147 187,681 156,437

Kaua‘i CC 3.60 261,214 105,300 21,770

CCSWS 3.00 195,204 61,181 15,227

Total 93.85 4,690,688 2,004,633 1,692,905

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Steps to Solution

Transfer temporary appointments to permanent positions

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Steps to SolutionGeneral Fund Permanent Position Vacancies – 9/30/08

CampusVacancy

FTEBudgeted

Salaries /1

BudgetedSalaries

Annualized /2

Honolulu CC 25.00 598,405 1,120,068

Kapi‘olani CC 43.00 947,168 1,956,492

Leeward CC 26.00 609,236 1,163,904

Windward CC 10.50 199,180 374,592

Hawai‘i CC 30.00 774,823 1,458,768

Maui CC 18.00 397,603 732,336

Kaua‘i CC 20.00 443,520 887,040

CC Systemwide 4.75 0 0

Total 177.25 3,969,935 7,693,200/1 Budgeted Salaries based on expected date of filling./2 Monthly salary reflected on Vacancy Report x 12

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Steps to SolutionFB 2009-11 Capital Improvements Program (CIP) BOR Budget(General Obligation Bond – Thousands of dollars)

Project FY 2010 FY 2011

Windward CC Library and Learning Resource Center (Equipment) 1,578

Maui CC Science Facility (Equipment) 3,157

Leeward CC Education and Innovation Instructional Facility (Constr & Equip) 14,309

Honolulu CC Advanced Technology Training Center (Constr & Equip) 36,392

Hawai‘i CC Native Hawaiian Success Centers (Plans/Design) 50

Kaua‘i CC Native Hawaiian Success Centers (Plans/Design) 70

Honolulu CC Health and Safety requirements 5,420

Leeward CC Health and Safety requirements 1,500

Maui CC Health and Safety requirements 630

Maui CC Major CIP Planning, Moloka‘i LRDP 100

Total 26,764 36,442

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Steps to SolutionFB 2009-11 Capital Renewal and Deferred R&M Request(Thousands of dollars)

CategoryFY 2009

AllocationFY 2010Request

FY 2011Request

Community Colleges Total 12,213 51,012 43,698Capital Renewal 0 13,840 12,508Modernization 0 9,494 12,248Major Renovation 0 0 4,869Reduction of Backlog 12,213 27,678 14,073

Honolulu Community College Total 1,040 12,158 6,743Capital Renewal 938 3,113Modernization 2,784 0Major Renovation 0 0Reduction of Backlog 1,040 8,436 3,630

Kapi‘olani Community College Total 3,700 15,659 4,048Capital Renewal 6,096 1,654Modernization 1,497 0Major Renovation 0 0Reduction of Backlog 3,700 8,066 2,394

Leeward Community College Total 1,924 5,780 11,755Capital Renewal 855 4,601Modernization 1,000 2,836Major Renovation 0 0Reduction of Backlog 1,924 3,925 4,318

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Steps to SolutionFB 2009-11 Capital Renewal and Deferred R&M Request(Thousands of dollars)

CategoryFY 2009

AllocationFY 2010Request

FY 2011Request

Windward Community College Total 2,100 3,278 5,959Capital Renewal 2,472 401Modernization 208 5,208Major Renovation 0 0Reduction of Backlog 2,100 598 350

Hawai‘i Community College Total 525 5,062 8,968Capital Renewal 1,441 1,993Modernization 2,614 1,864Major Renovation 0 4,869Reduction of Backlog 525 1,007 242

Maui Community College Total 1,090 4,807 1,512Capital Renewal 916 303Modernization 0 0Major Renovation 0 0Reduction of Backlog 1,090 3,891 1,209

Kaua‘i Community College Total 1,834 4,268 4,713Capital Renewal 1,122 443Modernization 1,391 2,340Major Renovation 0 0Reduction of Backlog 1,834 1,755 1,930

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Steps to Solution

Follow the strategic plan No change in commitment to goals of

strategic plan; cut elsewhere Repair and maintenance and equipment

replacement remains a priority Balance of new tuition dollars should go to

repair, replacement, and renovation, PCRs

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State Budget Crisis

Fall 2008