BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: AB 1199
AUTHOR: Fong
AMENDED: May 24, 2013
FISCAL COMM: Yes HEARING DATE: July 3, 2013
URGENCY: Yes CONSULTANT: Daniel Alvarez
SUBJECT : Community colleges: funding.
SUMMARY
This bill, an urgency measure, essentially establishes a
loan program for community colleges under specified
accreditation sanctions. This bill requires the Board of
Governors (BOG) of the California Community Colleges (CCC)
to adopt a revenue funding formula that provides CCC
districts under specified accreditation status (probation
or "show cause"), a second year of declining enrollment
revenue relief, provided certain conditions are met, and
the district must pay back the second year of declining
enrollment revenue in equal installments over the following
two years.
BACKGROUND
Existing law confers upon the Board of Governors of the
California Community Colleges the ability to prescribe
minimum standards for the formation and operation of
community colleges and exercise general supervision over
the community colleges (Education Code � 66700 and �
70901). As such, regulations have been adopted to require
each community college within a district to be an
accredited institution - with the Accrediting Commission
for Community and Junior Colleges (ACCJC) determining
accreditation. After an initial accreditation, colleges
must have their accreditation reaffirmed every six years.
This process includes a self-study, a site visit by a team
of peers, a recommendation by the visiting team, and an
action by the ACCJC.
Existing law requires the BOG to develop criteria and
standards, in accordance with specified statewide minimum
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requirements, for the purposes of making the annual budget
request for the CCC to the Governor and the Legislature and
allocating state general apportionment revenues, among
other things, a requirement that the calculations of each
district's revenue level for each fiscal year be based on
specified criteria with revenue adjustments being made for
increases or decreases in full-time equivalent students
(FTES) for specified purposes.
Existing law provides a year of stabilization funding,
during which the district receives at least the same
funding for enrollment as the previous year (even if
enrollment declines) or higher funding (up to an allowable
cap) if enrollment increases. This is because a district
usually does not know that its full-time equivalent student
(FTES) count has declined until it begins its enrollment
counts, which occur at the same time the state is
disbursing funds and after the district has hired faculty
and determined its class schedules. If enrollment declines
beyond just one year, the district's revenues are reduced
by the decrease in its FTES. However, those reductions are
restored if enrollments increase during the subsequent
three years, providing a district with a buffer against
fluctuating enrollments. (Education Code � 84750.5 et.seq.)
ANALYSIS
This bill , an urgency measure, essentially establishes a
loan program for community colleges under specified
accreditation sanctions. This bill requires the Board of
Governors (BOG) of the California Community Colleges (CCC)
to adopt a revenue funding formula that provides CCC
districts under specified accreditation status (probation
or "show cause"), a second year of revenue relief from
declining enrollment, provided certain conditions are met
by the district, and that must be paid back in equal
installments over the following two years. More
specifically, this bill:
1) Requires the BOG to adopt the formula for determining
revenue adjustments to district's fiscal-year revenue
levels if all of the following conditions are met:
a) The district or campus of the district is
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subject to probation or a "show cause"
accreditation sanction.
b) The district has identified a new funding
source sufficient for the full payment of any
fund liability in equal installments over the
next two years.
c) The district submits an improvement plan to
the CCC Chancellor that:
i) Includes a six-month accreditation
compliance report that details the
district's to-date progress, signed by the
district chancellor and passed by the
district's board of trustees.
ii) Includes a timetable to complete a
full and satisfactory accreditation
response.
1) Requires the stabilization formula per (1) to provide
the following adjustments in district revenues for a
qualifying district experiencing decreases in
full-time equivalent students (FTES):
a) Decreases in FTES shall result in revenue
reductions beginning in the year following the
initial year in which the district qualifies for
this stabilization funding. This provides a
second year of revenue relief from declining
enrollment for qualifying colleges/districts.
b) Revenue reductions in the second and third
years after the district qualifies for the
stabilization funding shall include payments by
the district of equal installments in each of
these years to cover the difference between the
stabilization funding the district would have
received pursuant to existing law and what the
district did receive pursuant to (2)(a).
STAFF COMMENTS
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1) According to the author, "this bill is necessary to
assist community colleges under severe sanction from
an accreditation agency that are also forecasting
current year enrollment reduction. This bill will
provide a stabilizing formula over a three-year period
in order to keep courses open for students and ensure
a high quality level of education by retaining
faculty.
2) This bill establishes a loan program for community
colleges under specified accreditation sanctions . By
accepting a 2nd year of declining enrollment revenue
relief (loan) from the state, and since the additional
stabilizing funding must be paid back, doesn't this
change the underlying oversight, fiscal, and
management relationship between the state and the
college/district? The college / district in this
instance is mandated to accept the 2nd year of
declining enrollment revenue (if the conditions on a
new source of revenue are met) which in term
acknowledges deficient financial, budgetary and/or
management oversight, shouldn't the state now have
more authority in the operations of a college /
district?
For example, existing law establishes, for K-12 school
districts, a process for state oversight and financial
assistance for schools in financial trouble, and
authorizes the governing board of a school district
that determines that its revenues are insufficient to
meet its current year obligations to request an
emergency apportionment (loan) from the state through
the Superintendent of Public Instruction. An
emergency apportionment (loan) from the state results
in the state taking control of the school district.
The degree of state control is determined by the size
of the loan relative to the district's budget.
3) Accreditation is required to receive state
appropriations and to be eligible for federal and
state financial aid programs. Accreditation is a
method used in this country to generally: (1) assure
quality, (2) provide access to government funding, (3)
generate stakeholder support, and (4) facilitate
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credit transfer for and to educational institutions.
After an initial accreditation, colleges must have
their accreditation reaffirmed every six years. This
process includes a self-study, a site visit by a team
of peers, a recommendation by the visiting team and an
action by the Accrediting Commission for Community and
Junior Colleges (ACCJC). In addition to these core
components, colleges must submit a midterm report
every three years and annual progress reports. The
college/district may also have to submit follow-up
reports and host visits as required by the commission.
There are three levels of sanction prior to
termination of accreditation: Warning, Probation, and
Show Cause. Follow up reports and accreditation
visits are required to retain full accreditation.
a) Warning occurs when the accrediting
commission finds that an institution has pursued
a course deviating from the commission's
eligibility requirements, accreditation
standards, or commission policies to an extent
that gives concern to the commission, it may
issue a warning to the institution to correct its
deficiencies, refrain from certain activities, or
initiate certain activities. The accredited
status of the institution continues during the
warning period.
b) Probation occurs when an institution
deviates significantly from the commission's
eligibility requirements, accreditation
standards, or commission policies, but not to
such an extent as to warrant a Show Cause order
or termination of accreditation, or fails to
respond to conditions imposed by the commission,
including a warning. During the probation
period, the institution will be subject to
reports and visits at a frequency determined by
the commission. The accredited status of the
institution continues during the probation
period.
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c) Show Cause occurs when the commission finds
an institution to be in substantial
non-compliance with its eligibility requirements,
accreditation standards, or commission policies,
or when the institution has not responded to
conditions imposed by the commission, the
commission will require the institution to Show
Cause why its accreditation should not be
withdrawn at the end of a stated period by
demonstrating that it has corrected the
deficiencies noted by the commission. In such
cases, the burden of proof will rest on the
institution to demonstrate why its accreditation
should be continued. The commission will specify
the time which the institution must resolve
deficiencies. While under Show Cause order, the
institution will be subject to reports and visits
at a frequency to be determined by the
commission. The accredited status of the
institution continues during the period of the
Show Cause order.
Many California community colleges have faced various
levels of accreditation sanctions, including Show
Cause. With the exception of Compton College in 2004,
all have retained accreditation. As of March 2013, six
community colleges are on Probation status and two
community colleges are on Show Cause status-City
College of San Francisco and College of the Sequoias.
In addition, College of the Redwoods and Cuesta
College sufficiently addressed their identified
deficiencies and were removed from Show Cause in
January 2013.
4) Is providing state loans to a college that is going
through a difficult accreditation process a good
policy? This measure is intended to provide an
additional year (total of 2 years) of revenue relief
funding resulting from a colleges' declining
enrollment, basically through the use of a short-term
loan from the State of California, for community
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colleges that are subject to a probation or show cause
accreditation sanction - presumably in order to
"stabilize" the underpinnings of the
college/district's budget and to keep courses open for
students and retain faculty. Current law provides one
year of hold harmless on revenues when enrollment
declines.
This bill would provide colleges and districts in
perilous accreditation status a revenue bonus if their
enrollments are in decline. Further, as staff
understands, community colleges are generally provided
time to resolve deficiencies identified through the
accreditation review process. It is unfortunate, that
a college may suffer a loss of funding because
students decide to exercise their options of either
attending or changing colleges, irrespective of
whether the accredited status of their current
institution is unchanged. Students are free to pursue
their course of study at any college they deem can
meet their educational goals in a timely and
reasonable way.
It is an equally unfortunate after-effect that the
current and future students of these colleges are the
real victims of the mismanagement of the college's
fiscal resources; however, other colleges that may be
on the brink of encountering similar accreditation
circumstances have addressed the timely and painful
local decision-making necessary to lift them from
their unfortunate fiscal and management situation
while maintaining their educational programs and
resolving accreditation issues. As previously
mentioned the College of the Redwoods and Cuesta
College sufficiently addressed their identified
deficiencies and were removed from Show Cause by the
Accrediting Commission for Community and Junior
Colleges (ACCJC).
What message does the State send to other colleges in
good accreditation standing, that the state will
provide revenue relief only when they are in perilous
accreditation position?
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5) Even with additional funding, improved accreditation
status isn't assured . Though the bill may provide a
modicum of arguable short-term stability, the outcome
of a positive accreditation status is highly
uncertain.
What should the state expect for providing additional
revenue or should the state have no expectation of a
successful progression in accreditation? What happens
if a college moves from "show cause" to probation
status, do they continue to benefit from additional
revenue relief as prescribed in this measure?
This bill requires the college / district to provide a
copy of a signed report and a time table for a full
and satisfactory accreditation response to the
California Community Colleges (CCC) Chancellor's
Office, however informative, such a report may be this
action has no meaningful effect, since the
Chancellor's office does not have jurisdiction over
accreditation compliance.
6) This bill would seem to require a locally elected
governing board to receive a loan (2nd year of revenue
relief) and spend locally generated revenues to repay
it. Of the two districts currently under show cause
sanction, only the City College of San Francisco
(CCSF) has a new funding source that could be
applicable to this bill. Last November, San Francisco
approved a parcel tax to raise approximately $15
million per year for CCSF.
Because CCSF was operating in deficit, the district's
governing board is planning to use most of this
revenue to increase its operating reserve and address
other deficiencies noted by the accrediting body. In
this case, would the 2012 parcel tax be considered "a
new funding source" as envisioned in this measure,
since the district has budgeted for the use of these
parcel taxes (revenues) in 2013-14?
Should locally elected boards be required to spend
local revenues to repay stabilization funding when
they may choose to use the funds to address other
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issues, such as accreditation deficiencies? Perhaps
this bill should allow a district to request the
stabilization formula authorized under these
provisions rather than mandating it? Is the state
imposing a form of management best left for local
governing bodies to determine?
7) According to the Assembly Appropriations Committee .
The California Community Colleges Chancellor's Office
states that, based on current enrollment estimates,
the stabilization formula would result in an
additional allocation within Proposition 98 funds of
$5.4 million to CCSF for 2012-13, which would be
repaid by the district over the following two fiscal
years.
Further the Assembly Appropriations Committee states,
"It is not clear from the bill what constitutes a new
funding source, nor is it clear whether a district
under "show cause" with a new local funding available
would be eligible for or required to seek the
additional stabilization funding."
8) City College of San Francisco . Last July 2012,
Accrediting Commission for Community and Junior
Colleges (ACCJC) identified numerous deficiencies at
CCSF and moved the district directly to the most
severe level of sanction-"Show Cause." ACCJC
identified numerous deficiencies covering a range of
district operations. The most substantive findings
focus on failures in the areas of fiscal planning,
fiscal integrity, governance and administration, as
well as failure to completely address eight
recommendations from a 2006 ACCJC evaluation team.
The CCSF Board of Trustees has taken numerous actions
and approved plans to address the identified
deficiencies; however, it has been a contentious
process with much opposition from local stakeholders.
Even with an urgency clause, this measure is unlikely
to go into effect before July 15, 2013. According to
the Chancellor's Office of the CCC, a public decision
on CCSF accreditation status will be formally
announced in early July 2013.
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9) Other Issues unaddressed since the initial policy
hearing.
a) Recourse for failure to repay? It is
conceivable that a district under Show Cause
could lose accreditation and cease to operate.
How would the state recoup the funding?
b) Qualifying districts must identify a new
funding source sufficient to address any "fund
liability." Fund liability is not defined, nor
does the bill specify whom the district is
repaying.
SUPPORT
California Federation of Teachers
California Labor Federation
California School Employees Association
California Teachers Association
OPPOSITION
None on file.