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Santa Monica College students walk across the quad at the main campus on Thursday afternoon. (photo by Brandon Wise)

SMC — To help balance their check book and avoid cuts, Santa Monica College trustees need voters to support every single proposition on the special election being held May 19.

That’s a direct order from SMC President Chui Tsang, who earlier this week presented a tentative budget to trustees for the 2009-10 fiscal year. The proposed budget did little to renew confidence in the stability of the college’s financial status given a projected structural deficit of $3 million, and that’s if all propositions pass.

The proposed budget of $149 million will leave a $3 million structural deficit (down nearly $1 million from the third quarter of the 2008-09 fiscal year budget) with $9.8 million in reserve. SMC is paying for the deficit with reserve funds. If the propositions don’t pass, that could mean a minimum impact of at least $7 million, said Jeanine Hawk, SMC’s vice president of business and administration.

“It’s difficult [preparing a budget] because we are offering classes in July, so we have to start delivering education to students without fully understanding what level of funding from the state we can expect,” Hawk said. “If they make reductions, that gives us less time to pull back.”

The college is predicting a welcomed boost in revenue thanks to an increase in enrollment and a 15.9 percent increase in non-resident tuition costs, which represents the college’s second largest source of revenue. The state is increasing the amount of money SMC receives because of more students attending, but is holding a portion of that payment — 1.3 percent or $1.2 million — because of budget constraints. SMC receives nearly $94 million from the state.

“It’s going in the right direction, but if the propositions don’t pass, the deficit factor becomes much larger to a point where we will be going backwards significantly for this year and next year,” Hawk said.

Trustees seemed relatively calm when presented with the financial scenarios at the meeting Monday night. The only squabble was over a proposed $2 million in reserve funds that the budget subcommittee recommended being placed into a Joint Powers Authority revocable trust. Their reasoning was to earn interest, which could be used to pay their active and retiree health benefits.

However, given a possible budget crises some of the trustees grew concerned about the funds transfer.

“The concern is if the college gets in more serious trouble in the fall, because of what Sacramento is unable to do, or failed to do, or what the people failed to do on the 19th of May … ,” Trustee David B. Finkel said. “There are some who say, ‘If we were to do that we would be threatening the money set aside for a specific purpose.’ In that sense there are competing values being expressed by different stakeholders.”

Hawk explained that the revocable trust provides the flexibility to draw it back into the reserve in case of a financial emergency.

A financial emergency is just what SMC wants to avoid and Tsang made sure to remind everyone in attendance that the budget presented is the “best of all scenarios … and that’s ignoring the $8 million possible hole, or even larger.”

Only after the special election will the trustees be able to completely know where they stand. During the next trustee meeting, scheduled for June 2, the board plans on having a revised budget based on the election.

Trustees must pass a tentative budget by July 1.

news@smdp.com. Editor in Chief Kevin Herrera contributed to this report.

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