Education Lab

Budget delay strains Valley community colleges

State legislators on Friday wrapped up a long-overdue budget, but the financial consequences of delay will linger for community colleges forced to borrow cash and for students waiting for Cal Grants.

For the fiscal year that began in July, California community colleges are owed more than $840 million, officials said. The state is sitting on about $8.4 billion in unpaid bills.

State community college officials say they've pleaded for priority and hope to receive some money within a week. But that may be optimistic based on the complex number-crunching and short-term borrowing scenario relayed Friday by the state Controller's Office.

California's 112 community colleges, which serve nearly 2.8 million students, have been battered by the cash crunch. Some have exhausted financial reserves trying to manage soaring student demand and three years of state budget cuts.

Now, borrowing costs related to the 100-day budget delay are estimated at more than $5 million, system officials said.

Many campuses -- including Fresno City College and College of the Sequoias in Visalia -- haven't advanced Cal Grants hung up in the stalemate. The awards of up to $1,551 help needy students with fees and other expenses such as textbooks and transportation.

Delay is bad news for Fresno City College students like Vanessa Cabrera, 21, of Sanger. She's counting on a $700 grant to pay for supplies and other expenses.

Cabrera, who is studying to become an American Sign Language interpreter, has money through federal work study. But she will have to scrimp while waiting for the grant.

"There's nothing I can do -- it's out of my hands," Cabrera said.

Frank Ramon, director of financial aid for Fresno City College, said he needed cash this week to make Cal Grant payments scheduled next week. Officials planned to distribute about $1 million to approximately 2,000 students.

Ramon now hopes to send out awards in early November. He and others noted that many Cal Grant recipients also receive other forms of aid -- such as federal Pell Grants -- that weren't delayed by the budget stalemate.

Tamara Ravalin, dean of student services at COS, said more than 1,000 students have qualified for Cal Grants. But without state cash, the campus will be late with payments scheduled next week.

COS sometimes has covered for the state. But "we're not in a position to do that any more," she said.

The district is among those borrowing heavily from outside sources. Leangela Miller, dean of fiscal services, said the roughly $23.7 million is helping COS keep up with cash flow and construction projects dependent on state money.

The district could pay up to $200,000 in costs associated with borrowing.

Bill Scroggins, superintendent/president at COS, said officials first tapped reserves and borrowed internally. But there wasn't much available.

"We've been using reserves to cushion the [budget] decline," he said. "That's almost $3 million we had in cash two years ago that we don't have in hand now."

Some districts have managed their cash flow through internal borrowing. Trustees of the State Center Community College District, which includes Fresno City College and Reedley College, this week authorized a temporary loan of $4.6 million from a retiree benefits fund to help with cash flow.

Douglas Brinkley, vice chancellor for finance and administration, said there are no current demands on that account.

Frank Gornick, chancellor of the West Hills Community College District based in Coalinga, said officials haven't had to take any unusual steps so far. The district mainly has drawn on savings created by early retirements and other cost-cutting measures, he said.

West Hills is advancing Cal Grants. Jana Cox, director of financial aid, this week said the district has paid out about $263,000 to more than 360 students.

University of California and California State University campuses also have fronted Cal Grants. Fresno State, for example, is using funds collected in student fees to cover costs until the state comes through.

Like community colleges, UC and CSU have absorbed major state budget cuts over the past few years. But community college officials say their campuses are struggling more partly because UC and CSU have cushioned some cuts by raising student fees.

At $26 per unit, state community college fees are the lowest in the nation. State lawmakers set the rate.

On paper, the new state budget looks better for community colleges. The community college will get $126 million for enrollment growth this fiscal year. However, the state won't pay $189 million of the overall community college budget until the next fiscal year.

System officials say that adds to the financial strain.

"Our credit card is getting pretty heavy here," said Jack Scott, chancellor of California Community Colleges.