Unexpected $2.4 Million to Pay Off College Debts

The Ventura County Community College District will use an estimated $2.4 million in unexpected revenue to pay off old debts, bolster operating funds and replenish reserves, the district board has decided.

District officials had planned for state budget cuts as high as 2% when they tentatively approved the district’s $60-million, 1993-94 budget in June, but the actual cuts came in at only half a percent, said Harry Culotta, the district’s budget director.

The additional funding was welcome news after years of hearing only “doom and gloom” about the community college budget, board member Timothy Hirschberg said at Tuesday’s board meeting.

“This puts the district on firm financial footing for the first time in a long time,” Hirschberg said. “It’s a new beginning.”

Officials said the extra money allows the district to pay off all the expense it incurred from offering an early retirement program. Between 1990 and 1993, 91 district employees opted for the “golden handshake” plan, at an estimated cost to the district of $2.4 million, officials said.

The money will allow the district to pay off the remaining $716,000 owed for the golden handshake program, officials said.

Previously, the district planned to pay off the obligations to the Public Employees Retirement System and the state teachers’ retirement system over a four-year period, at a 9% interest rate, Culotta said. By paying all the money at once, the district will save about $110,000, he said.

In addition, nearly $1.2 million will go to the district’s underfunded operational budget, officials said. The allocation of $3.77 million, approved when the district passed its tentative budget in June, “was not enough to cover all of the (colleges’) mandatory costs and allow them to operate their facilities,” Culotta said.

The operational budget includes money for supplies, utilities, travel and mileage, repairs, rent, advertising and contracted services, he said. Any extra money that becomes available for the classes or staffing budgets will also be channeled to the cash-strapped operating budget, Culotta said.

The board decided to place the remaining $500,000 into a contingency fund as a safeguard against a shortfall in state funding. Sacramento has historically overestimated revenue growth, district Vice Chancellor Jeff Marsee told the board members, and he said it has probably done it again this year.

According to state estimates, the district’s property-tax revenue should increase by 4% in the coming year, just as it did this last year, Marsee said.

However, property-tax revenue increases have gotten progressively smaller in the last two years, and each year the district has been saddled with the resulting deficit, Marsee said.

Last year, property taxes brought in $1.1 million less than the state projected, and the district had to scramble and cut to come up with the funds, Marsee said. This year, district officials expect to receive $500,000 less than state estimates--or just enough to wipe out the contingency fund.

Should the state surprise the district and leave it with all or part of the $500,000 next spring, any excess funds should go straight to the struggling infrastructure budget, and not to creating more classes, Chancellor Thomas Lakin said.

“Our program is still very solid and our students have adequate choices,” Lakin said, adding that the number of classes cut for the fall has turned out to be proportionally less than the decline in fall enrollment.