The Rancho Santiago Community College District is one of the fastest growing among California’s 73 community college districts; last year it served approximately 106,000 students. To meet the needs of the growing number of students, the district’s leaders manage the increases and decreases in the state budget by being fiscally conservative and agile.
This hasn’t gone unnoticed. The district recently earned high ratings and praise for its fiscal stability from two prominent bond-rating companies, according to Iris Ingram, vice chancellor of business services for RSCCD.
The fiscal year begins in July, but California’s governor releases his budget proposal in early January and then legislative committees and groups affected by the budget weigh in to advocate for adjustments.
The University of California and the Cal State University systems as well as the Community College League of California make the case for their needs. “They each lobby for what they like, what they don’t like and what they want,” Ingram said.
Negotiating goes on through May when the governor provides a “May revise,” Ingram explained. But from January to May, she and Adam O’Connor, assistant vice chancellor of business services, continually gather information about what the revised budget will probably look like.
“We build a budget based on those assumptions, and we update those assumptions monthly for our own internal district budget process,” Ingram said. Faculty, students, staff, unions and administrators from both Santiago Canyon College and Santa Anna College are involved in that district process to create their own placeholder budget.
How much money schools receive from the state depends in part upon the number of students they have enrolled. Still, each year the governor’s budget can call for decreases in some areas. Ingram and O’Connor are always prepared for this.
“Our district is conservative in its budgeting,” Ingram said. “We typically budget for a 2% deficit factor, meaning we don’t rely on 100% of our earned funding being allocated. Due to the state budget concerns, we increased this deficit to 3.55% for 2024–25.”
The district also keeps emergency funds in reserve, just as individuals or households do. “Our board of trustees recently increased the minimum board policy contingency reserve equal to two months of budgeted expenses in the combined general fund,” Ingram said. “In 2023–24, this reserve increased from $26.8 million to $54.4 million. As of the 2024–25 tentative budget, it increased again to $63.2 million.”
One decrease in this year’s budget proposed by the governor is the cost of living adjustment, or COLA. Last year’s budget allowed for an 8.22% COLA increase while this year the COLA increase is just 1.07%. But Ingram and her team anticipated this decrease and planned accordingly. “The COLA going down was not a complete surprise,” Ingram said. “We are constantly adjusting our budget assumptions.”
The district continually updates five-year projections based on several assumptions to plan for the future, according to Ingram. “We maintain healthy reserves and alternative forms of liquidity to minimize the impact of cuts or deferrals of expected revenue. And we continually monitor costs,” she said.
Liquidity means easily accessed funds such as retiree benefit funds and capital outlay funds, O’Connor said. While the district does not intend to borrow from these funds, it could for an emergency (and by law, the district would have to pay these funds back).
Scheduled maintenance of buildings, “to fix all those things when you own a building just like owning a house,” said Ingram, is also a key part of the budget. “We have to keep money on hand to try to keep up,” she said. “Sometimes the state gives us an allocation for scheduled maintenance and other times they don’t. However, you still have to maintain your buildings —they’re not necessarily always funded at the same level you count on. So what you do is, you have a plan.”
O’Connor noted, “This year we got nothing in the current state budget for capital outlay maintenance purposes. But there’ve been other years where the state has been flush with budget, and they decide they can dump more money into that category, and we might get a very large allocation.”
The district is not allowed to use its operating funds for the construction of new buildings; these must be funded separately — and that means going outside of the governor’s budget to raise money. Last month the board of trustees voted to ask Orange County taxpayers to approve a bond of $720 million for new buildings and infrastructure to help meet the needs of its fast-growing student population.
“We’re projecting 10, 15 years into the future,” Ingram said, “and how we’re going to meet those needs of future students. That’s why we’re asking for approval of a bond.”
The recent high ratings from the bond-rating companies may assure voters that this bond financing will be handled with the same responsibility the district has shown with all its finances, she said.
