San Diego County Community Colleges Brace For COVID-19’s Financial Hit
Community colleges across San Diego County, some of which already were struggling financially, have spent millions of dollars in unanticipated costs since COVID-19 abruptly closed campuses.
Now, as the coronavirus pandemic continues to devastate state revenue streams, the colleges are expected to see potentially massive budget cuts.
Some schools had previous plans to tighten their budgets. San Diego Community College District planned to eliminate 900 class sections, and Southwestern College in Chula Vista had already cut non-personnel expenses by 25%.
“It is going to be a very, very difficult and severe recession if it doesn’t even move into depression,” Southwestern President Kindred Murillo said.
The severity of the budget cuts remains unknown. Public agencies are awaiting Gov. Gavin Newsom’s revised budget this month, which is expected to be significantly different from the $222 billion spending plan he initially proposed. State lawmakers have been told to prepare for as much as a $35 billion projected deficit.
State funding makes up the majority of community college revenue. Newsom’s proposed budget for the fiscal year that begins July 1 would have given $15.7 billion to the state’s 115 community colleges.
But that was before the pandemic. And because the state income tax filing deadline was extended to mid-July, colleges may not know final revenue numbers until August — after they’ve developed tentative budgets.
Constance Carroll, chancellor of the San Diego Community College District, told board trustees last month to expect “quite a drop” in state funding. Its $755 million budget for this year served roughly 100,000 students across three campuses and its continuing education programs.
“We will be rolling the budget forward within all this ambiguity as best we can,” Carroll said at a meeting last month. “We will ask for everyone to be patient because this is an unprecedented situation for all of us.”
COVID-19 came amid shaky school finances
From hiring freezes to additional state oversight, some of the region’s community colleges were grappling with financial issues before the pandemic hit.
In November, the state Fiscal Crisis and Management Assistance Team warned Palomar College that it was at risk of becoming insolvent within two years and would be forced to borrow $6.5 million to stay afloat. The San Marcos-based district was projected to have an $11.7 million deficit this fiscal year when the state auditing team analyzed its finances.
Some 30,000 students attend Palomar and its education centers in Escondido, Fallbrook and Rancho Bernardo. The district has since imposed a hiring freeze and is one of just two community college districts in the state to be assigned a fiscal monitor to watch its spending.
A Palomar spokeswoman told inewsource the college district has so far spent at least $1.3 million in coronavirus-related expenses.
San Diego Community College District, one of the largest in the state, also was under a hiring freeze for all but critical positions when the pandemic hit. The district said in its most recent budget that it has suffered from drops in student enrollment, rising pension costs and state funding formula issues.
While the district has had savings to deal with declining revenues, it “must address its structural imbalance,” according to its spending plan.
So far, the district has spent about $4 million on unanticipated costs related to the pandemic. Much of it went toward converting more than 5,000 classes to an online format. Nearly $740,000 was spent on laptops and internet connections for students, a district spreadsheet shows.
Officials expect costs to continue to grow through fall. Like the others in the county, the San Diego district is providing classes online only during the summer.
Contract employees have been told they’re safe from layoffs, pay cuts or furloughs for the summer semester. To save $4.6 million, the district is eliminating 903 class sections during the 2020-21 academic year.
“The plan is to do this as a way of increasing class sizes and reducing our costs,” spokesman Jack Beresford said. “Students should have access to the classes they need to continue their academic progress. We will be more efficient with the classes we offer and how we schedule them.”
At Southwestern, officials likely will be able to cushion a possible $2 million deficit with this fiscal year’s ending balance, Murillo said. The college’s $136.7 million budget serves about 20,000 students.
Murillo said Southwestern was already working to reduce non-personnel expenses for the next fiscal year in anticipation of funding formula changes. It’s considering possible cuts in deferred maintenance, travel and professional development training.
“Usually in a recession, what happens is our budgets get reduced and we end up with more students because students come back to school during a recession,” Murillo told inewsource.
“One of the things that I think many of us (at local community colleges) will work very hard on is educational access, trying to make sure that we can keep as many classes moving forward so that students have the ability to stay in school.”
Unlike others in the county, MiraCosta College in Oceanside is a community-supported district, meaning its primary source of funding comes from property taxes within the district’s boundaries, not the state.
College spokeswoman Kristen Huyck said officials still are anticipating a revenue decrease as the economy suffers. So far, it’s spent nearly $895,000 because of the pandemic.
She said the college does receive some federal and state funding for certain grants and student programs. “We anticipate, as state funding becomes limited, there will be an impact on these dollars,” Huyck said in an email.
Colleges prepare for ‘bare bones’ state budget
The California Community Colleges System, which describes itself as “the largest system of higher education in the nation,” serves more than 2.1 million students annually at its 115 schools.
It was set to receive $15.7 billion under Newsom’s proposed budget. Nearly $10 billion of that comes from Proposition 98 funding, which requires about 40% of the state’s general fund go to K-12 school districts and community colleges.
Under Newsom’s budget, per-student Proposition 98 funding would have hit an all-time high for community colleges for the sixth consecutive year. The governor’s Department of Finance now has signaled it will reevaluate under a workload budget — “which means bare-bones,” Carroll said.
A workload budget only covers currently authorized services. Finance officials warned “resource constraints likely will force a further prioritization and reduction of expenditures.”
“For the first time in probably our memory,” Carroll told trustees, “the May revise budget is going to be significantly less than the governor’s proposed budget in January.”
Savings may help, but the money could run out quickly. The state has $18 billion in reserve funds to address a budget gap, according to the California Budget and Policy Center. The state’s Public School System Stabilization Fund, a reserve for K-12 districts and community colleges, has $377 million — which amounts to less than 1% of their state funding.
The $2.2 trillion federal coronavirus relief bill has given San Diego County’s eight community colleges more than $46 million, half of which must be used for emergency financial aid grants to students. It also gave $355 million to the state for an emergency education relief fund.
Community college leaders say their schools — known for workforce programs that train nurses, public safety professionals and other jobs — likely will play a vital role in the economic recovery.
Martha Parham, senior vice president of public relations at the American Association of Community Colleges in Washington, D.C., said the schools are well poised to quickly respond to local needs.
Parham, who previously worked at the Coast Community College District in Orange County, said California’s system also has its own advantages: low tuition and a strong existing relationship with the state’s four-year university systems.
“I think that there’s a strength that we can look to in terms of transfer students and really developing a good pipeline for students as we hopefully get over this pandemic,” she said. “The students have a clear pathway. I think it’s a good opportunity out in California.”
Predicting enrollment numbers difficult to do
Community college enrollment has plateaued statewide. While some schools in other regions are seeing upticks, the number of students has declined in San Diego and Imperial counties by nearly 4 percent in recent years, according to the state Legislative Analysts Office.
That may soon change, as people typically return to school during recessions to learn new job skills. Nationwide, community colleges saw peak enrollment in 2010 amid that economic downturn.
During a board meeting last month, Palomar trustee Mark Evilsizer said the college saw more students during the Great Recession — even as state funding to support the increase fell short.
He hopes the college will lean on lessons from the past.
“I hope that’s in our DNA,” Evilsizer said, “and that we’re going to be able to accommodate this wave of students that will be coming to us to relearn skills and rededicate their career pathways as a result.”
Murillo said Southwestern has seen some students drop courses since switching to online instruction in mid-March, though most are not dropping entire class schedules. She expects there may be a drop in student population through the fall, but the numbers may increase in the spring when in-person classes are more likely to have resumed.
Because of cuts seen during the Great Recession, when enrollment was high, the school plans to run its normal schedule for the summer and fall, she said.
Community colleges have learned that in a recession “do not cut your programs until you absolutely have to,” Murillo said.
“In other words, make sure that you’re offering the student access,” she said. “It’s an equity issue. If we’re cutting back programs for people that are trying to come (up) to a liveable wage, then we’re really causing more disparate impacts than the COVID-19 is causing.”