New Money to be deferred to next fiscal year
California Legislature passed a budget package Friday night nearly three months after the start of the fiscal year. The $17.9 billion shortfall is made up for through spending cuts in social services, deferred payments to K-12 and community colleges, and increased federal aid.
The agreement includes an overall increase in funding for community colleges. The increase will expand workforce training programs and enrollment. However, the $189 million dollars of increased funds will not be paid until next year.
“I’m pleased our legislative leaders agreed to augment our budget to help us serve more students in 2010-11, and expand workforce training programs,” said California Community Colleges Chancellor Jack Scott. “However, the budget also defers $189 million of the money promised us until the next year. This action tends to undermine the funding increases by obligating our system to expand this year, but does not provide colleges with the resources to do so until next year.”
The deferral of payments may result in community colleges having to borrow from private institutions. This would result in interest payments and fess that would diminish the deferred payment.
Demand for job certification programs and students looking to avoid the high cost of tuition means community colleges have to provide services for more students. “The enrollment funding will help our colleges respond to the tremendous demand they are experiencing,” said Scott, “but the deferral still puts us in a tough spot. Our credit card is getting pretty heavy here.”
Cuts to social services include $256 million from a childcare program for families coming off welfare and $133 million from mental health services for special education students. Governor Arnold Schwarzenegger made these cuts using his line-item veto.
$5.4 billion in new federal aid will also play a part in making up the budget shortfall. A portion of this will fund education and welfare payments. $2.4 billion will come from higher tax revenue by delaying a corporate tax break.
A change to the pension system was also included in the new budget. All state employees hired after Nov. 1 will receive lower benefits than current employees.
This has been the longest budget delay in California history. It will undoubtedly impact Proposition 25 on this year’s ballot. Prop 25 would change budget approval from a two-thirds vote to a simple majority.