May 2017 Advocate: District Budget
District’s Fund 1 has $50M surplus over four years; Difference between AFT & District proposals: $1M/year
By Steven Lehigh, AFT Rep. to District Budget & Finance Committee, CSM Economics
As our contract negotiations went to a Fact Finding hearing on Monday, May 8, it is interesting to look at a comparison of how the district budget has changed since our District funding became “community-supported” (also known as Basic Aid). Since our District’s revenues switched in 2011 from relying on state allocations to primarily coming from county property values, it is clear that the state of the District’s budget and reserves is very strong.
Revenue up much more than expenses
As can be seen in the table below, while the 2011/12 budget was essentially balanced (revenues were $110M, expenses were $107M), the Fund 1 budgets since then have had surpluses year to year. By 2015-16, revenues were 41% higher while expenses increased 28%, yielding a surplus in Fund 1 of $18.2M, equivalent to what was transferred out.
SMCCCD Fund 1 Budget (in $millions)
|* $9.9M has been removed from the “Revenue” category for 2015-16. These funds were a one-time back payment from the state for mandated costs. This money was all allocated as Innovation Funds. For purposes of year to year comparison they were excluded.|
There has been roughly a $67M difference between Fund 1 revenues and expenditures over the four years between 2012/13 and 2015/16, an average of $16.75M a year. With these Fund 1 surpluses, the District has been able to cover numerous expenses and obligations outside of the Fund 1 category. Every year some money is transferred to funds for self-insurance, child development and Fund 3 (Restricted Funds for EOPS, DSPS etc.) Over the last four years these transfers have totaled $13M, which is relatively consistent with previous budgets. For the analysis the term “transfer” represents the net transfer (effectively the impact on the balance of the fund,) since funds are transferred in and out each year between funds.
Of the remaining $54M, $51M of this surplus has been transferred out of Fund 1 ($3M has been added to it’s balance.)
Approximately $19M has been transferred to Fund 8, for the future financing of retiree benefits. This is in addition to the typical contribution already included in benefits expenses (roughly $4M a year.)
Most of Fund 1 surplus goes into Capital Outlay Fund
The remaining $32M has been transferred to Fund 4, the Capital Outlay Fund. Money transferred to Fund 4 from Fund 1 is intended for capital expenditures not covered by bond measures and other funding. It is not clear why such a significant amount of dollars has been transferred to Fund 4.
Difference between AFT & District proposals is less than 10% of Fund 1 annual surplus
While some of these allocations of the Fund 1 surplus have their own rationale for funding, it is significant to put these budget numbers in the context of our current contract negotiations. The divide between the Union proposal and the District’s is less than $1M a year (for 2016-17.) This represents less than 10% of the annual Fund 1 surplus and is significantly less than the amounts we’ve been transferring to Fund 4, or the extra being transferred to the OPEB trust. Ultimately, we need to make sure that there is a collaborative discussion as to the best way to allocate these funds and transparency on the decisions that are made.