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GCC mulls $25M loan

College officials say without a state budget, they can't meet operational or payroll costs.

September 24, 2010|By Max Zimbert,

NORTHEAST GLENDALE — With no state budget, and cash reserves running dangerously low, Glendale Community College officials say they are preparing to take a $25-million loan from Los Angeles County to meet basic expenses.

The state budget represents about 70% of the college's revenue. Without it, administrators are preparing to pull the loan from the Los Angeles County treasury next month.

A loan will allow the administrators to meet payroll and operational costs from November through January, if authorized by the college board of trustees and granted by county officials, said Ron Nakasone, vice president of administrative services.


"At this point, all of these entities, community colleges included, are operating off whatever reserves they've built up," he said. "There are a lot of pressures, and it really didn't pick up until fall semester started, because that's when our main semester starts and all of our employees are working."

Making matters worse is the revenue lost through interest payments, Nakasone said. Glendale Community College typically earns interest on its public dollars. But with no state dollars in the bank, there's no interest accruing.

And if the loan is approved, college coffers are likely responsible for interest payments to Los Angeles County.

"That is less money that I have to provide for students," said Tony Tartaglia, president of the board of trustees.

It's a cash-flow problem that's a direct result of a state budget that's almost three months late, Nakasone said.

"So far, we think we're assured of the revenue, it's just we're not receiving it because the budget hasn't been signed," he said.

Community colleges are funded differently than K-12 public schools, and Glendale Unified officials said they do not expect a need for loans this year.

Legislators said they're continuing budget negotiations to close a $19.1-billion deficit through the weekend. An announcement by representatives of Gov. Arnold Schwarzenegger that legislators had agreed to a budget framework Friday was met with skepticism by college officials.

"It's about as vague as I think you can get," Nakasone said. "I'm not sure if they've come up with the details of how much the cuts are going to be, or if they are going to borrow or what."

Passing a state budget doesn't erase the college's fiscal woes. Trustees approved an $82-million budget earlier this month that's $1.2 million short of solvency.

College officials are bracing for another year of negotiations for concessions from employee unions that represent the bulk of expenses.

"The board is extremely disappointed in the state of California," Tartaglia said. "Almost three months, a quarter of my year, has proceeded, and I don't know my budget and I don't know what the ramifications are going to be from a state budget."

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