BILL ANALYSIS Ó SB 860 Page 1 ( Without Reference to File ) SENATE THIRD READING SB 860 (Budget and Fiscal Review Committee) As Amended June 12, 2014 Majority vote. Budget Bill Appropriation Takes Effect Immediately SENATE VOTE : Vote not relevant SUMMARY : Contains necessary statutory and technical changes to implement the Budget Act of 2014 relating to higher education. This bill makes the following statutory changes to implement the budget: 1)Delays by one year a reduction in the amount of the Cal Grant A and B awards for students attending private, non-profit colleges or accredited for-profit colleges. Students will receive $9,084 for tuition expenses in 2014-15 fiscal year. 2)Modifies performance requirements for institutions participating in the Cal Grant program to require a graduation rate above 20% and a cohort default rate of less than 15.5% through the 2016-17 fiscal year. 3)Allows students who become ineligible for Cal Grant awards because they exceed the income cap in one year to become eligible again in a subsequent year if their income falls below the cap and they meet all other program eligibility requirements. The change would apply only to students who reapply no more than three academic years after receiving an initial award. 4)Makes several clarifying and technical changes to statute pertaining to the Middle Class Scholarship, including setting the minimum award for an eligible student and requiring applications to be submitted by March 2. 5)Codifies current regulatory requirements that each community college district maintain a student equity plan that includes the following for each community college in the district: a) Campus based research as to the extent of student equity by gender and for students that are current or former SB 860 Page 2 foster youth, disabled, low-income, veterans, or specific ethnic and racial categories. b) Goals for access to, and completion of, basic skills, career technical education and workforce training, and transfer courses for the overall student population and for each population group and a determination of what activities are most likely to effectively meet those goals. c) Measures for addressing disparities, as specified, including: a means of coordinating with, at a minimum, specific student equity-related categorical programs or campus based programs. d) Sources of funds for activities in the plan. e) A schedule and process for evaluation. f) An executive summary that includes, at a minimum, the student groups for whom goals have been set, the goals, the initiatives that the community college or district will undertake to achieve these goals, the resources that have been budgeted for that purpose, and specific contact information. Beginning in 2016-17, the summary shall also include a detailed accounting of how funding was expended and an assessment of the progress made in achieving the identified goals. Requires the California Community College (CCC) Chancellor to allocate funds provided for the purposes of successfully implementing the activities and goals specified in the student equity plans consistent with: ensuring a community college district has submitted a student equity plan, ensuring that community college districts that serve greater populations of students who are high-need students or disadvantaged students receive greater resources for services, establishing criteria to determine the number of high-need and disadvantaged students in a district, and establishing a list of eligible and ineligible expenditures and activities. 6)Moves requirements for the CCC California Work Opportunity and Responsibility to Kids program, which have been included in annual budget acts, into statute. SB 860 Page 3 7)Makes permissive a requirement that community colleges submit specified facilities information to the CCC Chancellor's office, thereby eliminating a reimbursable state mandate (this information will continue to be collected through the state's capital outlay process). 8)Pays down inter-year deferrals of funding for community colleges by appropriating a total of $592.5 million of funds from fiscal years 2012-13, 2013-14, and 2014-15. In addition, for the month of June, defers $94.5 million to July. 9)Specifies that, beginning in the 2015-16 fiscal year, career development and college preparation full-time equivalent students shall be funded at the same rate as the credit rate, as specified. The Legislative Analyst's Office is required to report by March 1, 2016, regarding the impact of this change. 10)Requires that the CCC Chancellor develop, and the board of governors adopt, a revised apportionment growth formula for use commencing with the 2015-16 fiscal year. Specifies that the formula shall support the primary missions of the segment, and be based on each community's need for access to the community colleges, as determined by local demographics. In developing the formula, the chancellor must consider multiple factors, including: a) The number of persons under the age of 25 without a college degree, within a community college district's boundaries, and the number of persons 25 to 64 years of age, without a college degree (the chancellor may alter these age ranges dependent on availability of data); and, b) the number of persons who are unemployed, have limited English skills, are in poverty, or exhibit other signs of being disadvantaged. In addition, specifies that the maximum amount of growth established by the chancellor shall be no less than 5% nor greater than 10% of a community college district's apportionment base for the preceding fiscal year. 11)Provides the San Francisco Community College District with additional funding, for the next three fiscal years, as the college works to restore student enrollment and maintain accreditation. For the 2014-15 fiscal year the district would receive funding equal to the amount it received in the 2013-14 fiscal year, with the amount of funding for the district being reduced by 5% and 10% in 2015-16 and 2016-17, respectively. SB 860 Page 4 In order to receive the third year of funding, the district would be required to meet or exceed benchmarks related to fiscal management and controls, as specified. 12)Adjusts the method for scoring local property tax revenues in the 2013-14, 2014-15, and 2015-16 fiscal years, that formerly flowed to redevelopment agencies and now flow to the colleges as an offset to CCC apportionments, by scoring revenues received late in the fiscal year, after April 15, as having been received in the next fiscal year. This will provide the colleges with more certainty as they develop and administer their budgets. 13)Requires the CCC Chancellor, in coordination with community college stakeholder groups, the appropriate fiscal and policy committees of the Legislature, and the Department of Finance (DOF), to develop a framework of indicators designed to measure the ongoing condition of a community college's operational environment in the following areas: a) accreditation statues; b) fiscal viability; c) student performance and outcomes; and d) programmatic compliance with state and federal guidelines. Requires that each community college develop, adopt, and publicly post a goals framework that addresses at least of the areas specified above. Before the commencement of the 2015-16 fiscal year, and annually thereafter, requires the chancellor to publicly post the statewide goals and locally developed and adopted community college or district goals and targets. The chancellor shall assess the degree to which each community college district is improving its outcomes and offer technical assistance to community college districts that are not improving. 14)Extents the sunset, from June 30, 2014, to December 31, 2015, on the additional time a person serving as temporary full-time clinical nursing faculty or as a part-time clinical nursing faculty may be employed by a community college district. Under this extension, a person serving as a full-time clinical nursing faculty or as a part-time clinical nursing faculty may be employed by a community college district for up to four semesters or six quarters within any period of three consecutive academic years, which is twice the statutory limit for all other temporary faculty. 15)Makes technical and clarifying chances to statutory SB 860 Page 5 requirements for annual reporting on system-wide performance measures by the University of California (UC) and California State University (CSU). 16)Prohibits a CSU campus, or the chancellor, from approving a student success fee before January 1, 2016, and requires the chancellor to conduct a review of the CSU student fee policy, as specified. Requires the chancellor to report to the DOF and the appropriate fiscal and policy committees of the Legislature, on February 1, 2015, regarding proposed revisions to the CSU student fee policy related to student success fees. 17)Provides the CSU with the authority to pledge up to 12% of the state funds provided in its General Fund support budget, less general obligation debt payments and lease payments, towards capital outlay, lease-revenue bond debt financed and pay as you go, inclusive. Further, provides the CSU with the authority to pursue capital outlay projects, after approval by DOF and review by the committees in each house of the Legislature that consider the state budget, and the budget subcommittees in each house of the Legislature that consider appropriations for the CSU. 18)Makes technical and clarifying changes to the UC capital outlay process, moves language regarding energy conservation projects that had been included in provisional budget language into statute, and creates one process to authorize UC energy conservation projects instead of two. 19)Requests the UC Regents to establish the California Blueprint for Research to Advance Innovations in Neuroscience program to leverage California's vast research assets and federal funding opportunities to accelerate the development of brain mapping techniques, including the development of new technologies, in order to achieve the following goals: a) maintain California's leadership role in neuroscience innovation; b) develop a dynamic map of the human brain, as specified; c) grow California's economy through the expansion of high technology and biotechnology sectors; and, d) train the next generation of scientists. 20)Provides the UC with authority to begin the Tolman Hall Seismic Replacement Building project on the UC Berkeley campus. SB 860 Page 6 21)Authorizes the use of $6 million in excess Student Loan Authority funds (remaining after the recently-approved sale of the Cal Loan program portfolio by the California Educational Facilities Authority) as an offset to the General Fund cost of Student Aid Commission loan assumption program costs. 22)Extends the sunset date, to January 1, 2020, for authority to use a portion ($65) of certain appellate court civil filing fee revenue to support the California State Law Library. 23)Authorizes the State Fire Marshal to delegate enforcement of building standards on CSU campuses to the CSU. Authorizes the CSU to use one contract for multiple projects at multiple campuses, and to provide public notice of contract bids on its Internet Web site. 24)Authorizes adjustments to Proposition 98 of 1998 General Fund spending in whatever amounts are necessary to maintain budgeted funding levels for community colleges, if Proposition 30 of 2012 revenue estimates for 2012-13, 2013-14, or 2014-15 fiscal years are higher or lower than actual receipts. 25)Reappropriates the balance of Item 6870-139-8080 of Section 2.00 of the Budget Act of 2013, payable from the Clean Energy Job Creation Fund and extends the ability to encumber this balance until June 30, 2018. 26)Declares that statutory changes contained in this bill, including appropriations, are consistent with the 2014 budget package. Analysis Prepared by : Mark Martin / BUDGET / (916) 319-2099 FN: 0003956