Cabrillo trustees redesignate funds from pandemic-era tax credits amid budget squeeze

Grace Chinowsky is Lookout Eugene-Springfield’s city of Eugene and University of Oregon correspondent. She is working in Santa Cruz through the end of January.

Cabrillo College’s governing board on Monday voted to reallocate millions in revenue from pandemic-era federal employee retention tax credits to help shore up its tightening budget.

The community college district is looking to cut about $5.5 million in spending in fiscal year 2025-26, the second year in a row it is operating at a deficit. 

The money that was reallocated comes from one-time tax credits that Cabrillo got in exchange for keeping employees on payroll during COVID-19 shutdowns. In the 2023-24 academic year, trustees earmarked $1.79 million of the tax credit revenues to issue one-time $1,500 payments to Cabrillo employees, as well as to pay mandatory employee tax payments and accounting firm Eide Bailly for its filing services.

At the time, what remained in the fund, $7,337,030, was earmarked in a trust fund to pay for the non-pension benefits that the college promised to retired employees, such as health care.

But since then, Cabrillo’s “fiscal operational needs” have necessitated “greater flexibility in the use of the one-time revenues,” according to a resolution prepared by finance officials for Monday’s meeting. 

In light of the college’s budget pressures, trustees on Monday voted to reallocate the $7.3 million in remaining tax credit revenues to different places. 

The breakdown includes $2.5 million to cover one-time early retirement incentive costs and $1.5 million to pay for emergency facility repairs and the construction of the Cabrillo-UC Santa Cruz student housing and child care center.

Trustees voted to place $1.33 million in general reserves to cover “potential deficits and shortfalls” associated with federal grant cancellations and staffing costs through June 2026.

Cabrillo College leaders said in September they could lose about $3 million for two of the school’s federally funded programs after the Trump administration announced it was canceling grant funding for programs at minority-serving institutions across the country. Cabrillo, with a student population that is more than 50% Hispanic, became a Hispanic-Serving Institution in 2006. 

Trustees also transferred $2 million into the non-pension benefits trust fund, as was originally intended for the dollars.

Trustee Ken Wagman motioned to table the redesignation of funds until the college’s new president, Jenn Capps, begins her role and can weigh in. He said the funds are an “absolute gift” to a community college and have “very few strings attached.” 

Trustee Adam Spickler voiced concern that delaying the redesignation of the funds could signal to campus constituency groups that the funds could be spent elsewhere. 

“I feel like this is a fairly collegewide decided use of funds that I don’t want to imply could be used differently in case there really isn’t room to use this differently,” he said.

The motion ultimately failed to produce a second, and trustees voted to redesignate the funds as originally proposed, with Wagman abstaining. 

Just after, trustees voted to eliminate a vacant, full-time COVID-19 response and compliance manager position due to lack of funding.

The governing board received a report on the construction of the college’s first student housing project, which broke ground in September. The project is currently expected to be completed ahead of schedule, in July 2027 instead of the August 2027 target. 

The board approved an expenditure of $570,084 in FY ’25-26 to replace Cabrillo’s public-facing network firewalls, which are outdated and need to be replaced.

Trustees also OK’d spending $551,220 in FY ’25-26 and ’26-27 for contracts with 66 Training Services to provide “project management services” to three multi-college regional joint ventures focused on developing generative artificial intelligence studies and a bachelor’s degree program in “emerging creative technologies.”

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