BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 1143 (Liu) Hearing Date: 05/27/2010 Amended: 04/05/2010 Consultant: Dan Troy Policy Vote: ED 7-0 _________________________________________________________________ ____ BILL SUMMARY: SB 1143 would change the calculation of full-time equivalent student (FTEs) enrollment for purposes of apportionment within the California Community Colleges to the average enrollment in a course at the one-fifth point and at course completion, as specified, and prohibits any reduction in revenues as a result of the changed calculation until the 2012-13 fiscal year. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Administrative costs Unknown, potentially millions General* *Counts toward meeting the Proposition 98 minimum funding guarantee _________________________________________________________________ ____ STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED. Current law and regulation provides that funding for the California Community Colleges (CCC) is based, in part, on a calculation using the enrollment as of the Monday of the week nearest to one-fifth of the length of the term. According to the author's office only 29 percent of those entering the community colleges seeking a degree ultimately complete a certificate or degree or transfer to a university within seven years of enrolling. The purpose of the bill, in part, is to alter the CCC system of finance to incentivize course completion. A 2007 report by the Institute for Higher Education Leadership & Policy identified changes to state policy that could reduce barriers to course completion at the CCCs, including; 1) the reform of finance policy to incorporate incentives for completion, 2) granting the colleges more flexibility to use funds to enhance completion 3) granting the colleges more flexibility to hire the faculty/staff best able to help students meet their academic goals, 4) modification of fee and financial aid policies to meet students costs beyond fees, encourage full-time attendance, and give colleges more access to fee revenues, and 5) revision of college policies to achieve clearer standards/assessments of college readiness matched with better counseling and support of students. By changing the calculation to the average of the one-fifth point and at course completion, this bill would result in an annual reduction in apportionments of approximately $420 million, commencing the 2012-13 fiscal year. This assumes that the average course completion rate of 83 percent remains constant. Staff notes that Page 2 SB 1143 (Liu) this figure could change depending on the response by CCCs. To the extent CCCs are able to increase course completion rates, savings would decrease. The bill also authorizes CCC board of governors to adopt alternative calculations for specified courses, including those that are noncredit, short-term credit courses, apprenticeship, tutoring, and certain other courses. Further, the bill requires the adoption of weighting factors for the FTE calculation to ensure that districts do not have a disincentive to enroll students from demographic groups with historically lower rates of course completion. As noted above, in its current version, the bill would result in long-term savings to the state commencing in the 2012-13 fiscal year. This rests on the assumption that the intent of the bill is to divert the funding from the CCC system. Potentially, these programmatic savings could be shifted to other purposes within the CCCs. The Chancellor's Office notes there would be up front costs to the CCC districts to change their enrollment accounting systems, and given the lack of consistency in how the 72 CCC districts operate, these costs could reach the millions. It is not entirely clear that these costs would be reimbursable through the mandate system, but as enrollment accounting is required and this bill would require changes to the local systems, it is possible the Commission on State Mandates would deem the local costs reimbursable. Author's proposed amendments would: Hold overall system funding level harmless for the change in the FTE calculation. Delay implementation until the 2013-14 fiscal year. Add additional groups to weighting criteria, including low-income students, English language learners, students with disabilities, and students entering with English or math competencies below college level.