BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 955 (Williams) - Community Colleges: Intersession Extension Pilot Program Amended: June 25, 2013 Policy Vote: Education 9-0 Urgency: No Mandate: No Hearing Date: July 1, 2013 Consultant: Jacqueline Wong-Hernandez This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 955 requires the California Community Colleges Chancellor's Office (CCCCO) to establish a voluntary pilot program that would authorize a community college district (CCD) to establish and maintain an extension program meeting specified characteristics during summer and winter intersessions. The bill would require the CCCCO to select no more than 15 campuses for participation, and would require a participating CCD to collect, keep, and submit specified records related to the program. The bill would require the Legislative Analyst's Office (LAO), by January 1, 2017, to submit a report on the pilot program to the Legislature, as specified. This bill would state the intent of the Legislature that at least one campus should begin implementation of the pilot program by January 2014 and that an additional 5 campuses should implement the pilot program by July 1, 2014. Fiscal Impact: CCCCO administration: Approximately $400,000 in 2014-15 to establish the pilot program and select up to 15 campuses for participation; the extent to which the CCCCO's start-up costs can be recovered from participating campuses through course fees or nonstate funds is unclear. Annual oversight costs of $200,000-$300,000 beginning in 2015-16; these costs will be fully recovered by course fees. CCD participation: Likely minor costs to CCDs that elect to participate, to comply with reporting requirements. Significant (elective) costs to offer extension courses, expected to be fully recovered by increased fees. LAO report: Approximately $150,000-$200,000 in contracting costs to conduct campus visits, interviews with faculty, students, and administrators, and to complete the analysis AB 955 (Williams) Page 1 required for the report. Background: Existing law requires the governing board of a CCD to admit any California resident, (and authorizes them to admit any nonresident) possessing a high school diploma or the equivalent and authorizes the board to admit anyone who is capable of profiting from the instruction offered, as specified. (EC § 76000) Existing law requires that community college students be charged a per unit fee and statutorily prescribes the fee level through the annual Budget process. Current law exempts students enrolled in noncredit courses and in credit contract education courses, as specified, from these fee requirements. Current law also exempts from these requirements California State University and University of California students enrolled in remedial classes, as specified, and provides for the waiver of these fees for students who have financial need or meet other specified criteria. (EC § 76300) Existing law authorizes a CCD to admit nonresident students and requires that these students be charged a tuition fee, with certain specified exemptions. Tuition is set by the governing board of each CCD by February 1 of each year for the succeeding fiscal year. Specified notice of fee changes must be provided, and any increase in fees must be gradual, moderate, and predictable. Existing law prescribes a formula for the calculation of the nonresident fee which, generally, is based upon the amount expended by the district for the "expense of education", adjusted by the Consumer Price Index, and divided by the total full-time equivalent students (FTES) that attended the CCD in the preceding fiscal year. Current law also authorizes a tuition fee amount not to exceed that established by any contiguous district, and prohibits the fee from being less than the statewide average fee for students. Special provision is made for the calculation of the fee by CCDs that have greater than 10% FTES from non-credit courses. (EC § 76140) Proposed Law: AB 955 requires the CCCCO to establish and maintain a voluntary pilot program for purposes of authorizing a community college district to establish and maintain an extension program meeting specified characteristics during AB 955 (Williams) Page 2 summer and winter intersessions. This bill requires the CCCCO to select up to 15 community college campuses for participation, as specified, and establishes parameters for the program. Participating CCDs are required to collect and keep specified records related to the program, and to annually report specified information to the CCCCO. This bill requires the LAO to provide to the Legislature with a written report that evaluates the pilot program established by this article, drawing upon campus reports, campus visits, interviews with faculty, students, and administrators, and other sources the LAO deems relevant, by January 1, 2017, This bill states the intent of the Legislature that at least one campus should begin implementation of the pilot program by January 2014 and that an additional 5 campuses should implement the pilot program by July 1, 2014. These provisions will sunset on January 1, 2020. Related Legislation: SB 1550 (Wright) 2012 would have required the CCCCO to establish a voluntary pilot program and select up to 8 campuses to establish and maintain an extension program offering career and workforce training courses for credit at fee levels covering the actual cost of these courses. SB 1550 failed passage in the Assembly Higher Education Committee. AB 515 (Brownley) 2011 would have established a California Community Colleges Extension Pilot Program. That bill authorized extensive participation by community colleges throughout the state since any community college that certified that it met the requirements of the program would be eligible to participate. The bill was heard in the Senate Education Committee on June 29, 2011, but no vote was taken. A subsequent hearing on the bill was cancelled at the request of the author. Staff Comments: This bill requires the CCCCO to establish a pilot program. Program participation would be voluntary for the CCDs, but establishing the program (including a selection and oversight process) would be mandatory for the CCCCO. The stability of the funding mechanism is unclear because the Chancellor's Office will incur expenses to establish the program, whether or not there are participating CCDs; yet, the bill also provides that participating CCDs will bear the cost of the program, and specifically prohibits General Fund use to run the program. The CCCCO would need additional staff to establish the pilot, AB 955 (Williams) Page 3 before campuses can begin to implement the program. The CCCCO projects that it would require a Specialist position ($130,000 for salary and benefits) for MIS data work and $5,000 per site to make data element changes to be able to add the pilot program to the data system. Staff would be also be needed to create a separate financial aid system for this program; the bill specifies that a certain amount of fees be diverted to "financial aid" for students that are eligible for the BOG fee waiver, but it does not specify how that aid will be distributed (particularly, if it is insufficient to cover all of the fees for low-income students). A separate application and administration process could be necessary and, as the administrator of the program, the CCCCO will either be responsible for establishing how financial aid will work or for verifying and enforcing that campus aid programs exist and meet the requirements of the bill. Finally, staff would also be needed to develop and administer a selection process for the campuses, and to execute participation agreements. The CCCCO estimates that the total cost to establish the program will be approximately $400,000. The personnel needs would likely have to be filled before the CCDs are selected to participate, though the bill specifies that fees charged to students by the CCDs must pay the administrative oversight costs of the CCCCO. It is unclear if the bill would allow the CCCCO to recover start-up costs; this bill requires the program to be self-supporting from a campus perspective, but only specifically allows for the CCCCO's "oversight" costs to be recovered by fees. It is unclear whether the initial CCCCO costs would be considered oversight costs. It is also unclear whether and when the start-up costs could be recovered by the CCCCO, as a practical matter. If the program begins with one campus in January 2014, as the legislative intent indicates, it is unlikely that the single campus will reimburse the CCCCO for its initial costs; either the first few participating campuses will have to share the start-up costs, or the CCCCO will have to make a projection of likely final participation and be reimbursed over a longer period of time. Annual oversight costs will depend on the number of participating campuses, and will likely be fully recovered by fees. Staff notes that fee levels will need to be set at a rate that allows for: a) full program cost recovery for the campus to offer the courses; b) full program oversight cost recovery for AB 955 (Williams) Page 4 the CCCCO; and, c) one-third of the fees to be earmarked for financial aid. Functionally, two-thirds of amount of the course fees will need to be able to cover the full cost of the program for campuses and the CCCCO.