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Budgetary woes force colleges to borrow funds

Locally, College of the Canyons has seen deferrals of nearly $44M in payments from state

Posted: October 2, 2010 9:37 p.m.
Updated: October 3, 2010 4:30 a.m.
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California’s budget stalemate has forced the state’s community colleges to borrow money and lose out on funding that would go toward offering much-needed classes, college officials said this week.

“In the months since the state budget deadlock began, California community colleges have been forced to survive by borrowing, freezing purchasing, delaying vendor payments and other drastic steps,” said California Community Colleges Chancellor Jack Scott in a statement.

In total, colleges have seen $840 million in deferrals, amounting to 15 percent of their annual funding.

At College of the Canyons, the Santa Clarita Valley’s only community college, administrators have dealt with nearly $44 million in state deferral payments.

“This is our basic funding,” COC spokesman John McElwain said. “This is the money we operate on.”

For instance, a payment to College of the Canyons of $2,147,589 was pushed back by three months.

The state’s fiscal year began July 1 and state lawmakers have gone nearly 100 days without passing a state budget that would outline how much funding community colleges like COC would get.

The governor and state lawmakers agreed in principle to a deal Friday that would end the budget impasse, however the details are not expected to be released until next week.

Until the budget is adopted and money comes through, the college has been borrowing money from the county education office.

“We’re still able to operate as long as (Los Angeles County Office of Education) has funding,” he said.

Typically, COC’s funding goes into an account through the Los Angeles County Office of Education, where it grows with interest.

COC officials project they have lost $154,290 in interest.

“Over the course of time, that’s the money we lose when there is no state budget,” McElwain said.

This year’s budget crisis has meant the state has missed a series of multimillion payments to community colleges across California. In July, community colleges missed a $116 million payment, followed by another $277 million in August.

The latest delay came Wednesday when the state missed a $450 million payment, according to the California Community Colleges Chancellor’s Office.

The money could have gone towards adding more courses for students.

“That’s an opportunity lost because that’s money we’re never able to recoup,” board president Scott Wilk said.

Like so many community colleges across California, COC has experienced a dramatic increase in student demand as the economic recession has forced many to go back to school and retrain for new careers. At the same time, cuts to the state’s university systems have meant students are flooding community colleges in hopes of pursuing higher education.

Earlier this month COC’s trustees passed a resolution decrying the budget stalemate and its impact on students.

Projections show that community colleges will spend at least $5 million on borrowing costs because of the state’s continued delays in payments to schools, according to the resolution. They say colleges would have been able to offer 1,200 courses with that money.

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