Budget deal just in time for MSJC

By: LORELL FLEMING - Staff Writer | Tuesday, August 21, 2007 9:32 PM PDT ∞

The state budget agreement reached Tuesday comes just in time for Mt. San Jacinto College.

The community college was forced to take out a $2 million short-term loan to pay employees and vendors late last month, and was looking at having to borrow another $1.7 million this Friday if the stalemate had continued, the school's dean of business services, Catalina Cruz, said Tuesday.

Community colleges get money for their expenses from the state government, but the two-month impasse left the college scrambling. Normally, Mt. San Jacinto receives about $2.5 million from the state each July, and slightly more than that each August, Cruz said.

Among the expenses covered by the $2 million loan was $1 million for payroll and $600,000 in construction costs for the new Technical Center building on the Menifee campus. The remainder was used to pay for routine monthly expenses such as utilities.

If legislators had not passed this year's state budget by the end of the week, Cruz said, the college would have probably had to borrow another $1.7 million to cover the remainder of operating expenses for the rest of this month, Cruz said.

Most other area school districts, which also rely on the state for the bulk of their money, said last week that they were able to get by on reserve funds, but that if the impasse continued much longer, they would have to start pulling funds from other nonessential programs.

As of Monday, Mt. San Jacinto had a reserve budget of $3.25 million, but preferred to borrow the money rather than dip into reserves.

"Using reserve funds is a last resort," Cruz said, noting that school officials have not tapped into the emergency money in at least five years.

Now that the state budget has passed, Mt. San Jacinto expects to receive its money within the next two or three days, Cruz said. At that point, the school would immediately repay the loans, which would have cost the district no more than $1,400 in interest, she added

It's not uncommon for community colleges to take out this sort of loan based on the anticipation of getting its share of state property tax proceeds, Cruz said.

"We do it every year, but we normally take the loan in October or November," she said, noting that the first of two distributions of state property tax money is given to the college in December. The other distribution comes in April.

The last time Mt. San Jacinto took out the loan earlier than October was about three years ago, when state legislators were a little more than a month late in passing the budget, Cruz said.

The state budget situation is likely to have very little impact on Mt. San Jacinto's proposed $101 million school budget, according to Cruz.

"We've been kept abreast of what is going on with the state budget, and at this time, we don't see the need to make any drastic changes to our budget," she added.

In June, the college's board gave tentative approval of the proposed budget. The board will consider giving final approval to the budget when it meets Sept. 13.

-- Contact staff writer Lorell Fleming at (951) 676-4315, Ext. 2621, or lfleming@californian.com.