BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Senator Carol Liu, Chair
2015 - 2016 Regular
Bill No: SB 1460
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|Author: |Leno |
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|Version: |February 19, 2016 Hearing |
| |Date: March 30, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Kathleen Chavira |
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Subject: Community Colleges: funding: San Francisco Community
College District
SUMMARY
This bill requires the Board of Governors (BOG) of the
California Community Colleges (CCC) to provide the San Francisco
Community College District (SFCCD) with a revenue adjustment for
restoration of apportionment revenue for the three fiscal years
subsequent to the last fiscal year that the district received
stabilization funding due to its jeopardized accreditation
status.
BACKGROUND
Existing law requires the BOG to develop criteria and standards,
in accordance with specified statewide minimum 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. These include, 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.
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This is because a district usually does not know that its 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.)
Existing law requires the BOG of the CCC to provide the SFCCD
with specified revenues if the district is in jeopardy of losing
its accreditation and if the Chancellor's Office has exercised
its fiscal oversight authority to take specified actions,
including the appointment of a special trustee. Existing law
required that for the 2014-15 fiscal year, the district 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 five percent and 10 percent, in 2015-16 and 2016-17,
respectively. In order to receive the third year of funding,
the district must meet specified requirements relative to fiscal
management and controls. In addition, the Chancellor of the
district is required to submit specified information on
accreditation status, total and projected enrollment, course
section offerings, and specified budget, revenue and expenditure
information to the Legislature, Governor, Legislative Analyst's
office and the Department of Finance beginning in April 2015,
with updates in October 2015, April 2016, October 2016, and
April 2017, as specified.
(EC § 84750.6)
ANALYSIS
This bill :
1) Requires that the Board of Governors (BOG) provide the
San Francisco Community College District (SFCCD) with a
revenue adjustment for restoration of apportionment revenue
for the 2017-18, 2018-19, and 2019-20 fiscal years.
2) Requires that the adjustment provided be pursuant to
specified Education Code provisions which entitle a
district to restoration of any reductions in apportionment
SB 1460 (Leno) Page 3
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revenue due to decreases in full-time equivalent students
(FTES) during the three years following the initial year of
decrease in FTES if there is a subsequent increase in FTES.
3) "Notwithstands" any other law in the application of this
provision.
STAFF COMMENTS
1) Need for the bill. In 2013, in response to challenges
around accreditation and fiscal management, the Legislature
and Governor provided "stabilization" funding to the SFCCD.
According to the author, while the normal restoration
process allows for stabilization for one year, the three
year stabilization funding provided was necessary to
address the unprecedented drops in enrollment faced by the
college as it attempted to respond to the challenges it
faced. Despite the three years of additional stabilization
funding the district has not been able to generate the
student enrollment necessary to maintain financial
stability. According to author, while community colleges
throughout the state have experienced an average enrollment
decline of about 8 percent, SFCCD has experienced an
enrollment drop of almost 30 percent, directly attributable
to its accreditation challenges. This bill is intended to
provide an opportunity for the City College of San
Francisco to receive funding in excess of its growth cap
for any actual FTES growth it may realize in the three
years after stabilization funding was provided in
anticipation that its full accreditation status will be
restored and its actual enrollment will grow.
2) San Francisco City College of (SFCCD) History. In July
2012, the Accrediting Commission for Community and Junior
Colleges (ACCJC) identified numerous deficiencies at SFCCD
and moved the district to the most severe level of
sanction-"Show Cause." The ACCJC identified numerous
deficiencies covering a range of district operations. The
most substantive findings focused 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.
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In addition, a review of the district's fiscal condition by
Fiscal Crisis and Management Assistance Team (FCMAT) in 2012
found severe problems in multiple areas including, fiscal
health, multiyear financial projection, staffing and operational
costs, enrollment management, administrative structure and
barriers to fiscal solvency. In a subsequent evaluation focused
on internal systems in 2013, FCMAT found that the district
lacked effective controls to ensure confidentiality of financial
and personnel data, there were inadequate mechanisms for
tracking vacation and sick leave benefits, deferred maintenance
needs were inadequately managed leaving much of the campus in
disrepair, and policies around enrollment and fee collection
were insufficient.
In June 2013, the Accrediting Commission for Community and
Junior Colleges (ACCJC) notified the College that its
accreditation would be terminated as of July 31, 2014, as
the ACCJC had concluded that the San Francisco Community
College District (SFCCD) had failed to correct the
deficiencies noted in the 2012 show cause action letter.
In July 2013, the Board of Governors took action to appoint
a special trustee with full management powers over the
district.
3) Current status of SFCCD. In June 2014 the ACCJC adopted a
new policy that created a "restoration" status under which
an institution could submit a request to restore its
accredited status within a two year period.
In July 2014, the SFCCD submitted the required documentation and
was granted restoration status by the ACCJC in January 2015.
Under this new ACCJC policy, the SFCCD must submit a
comprehensive evaluation by September 2016 and comply with other
requirements as determined by the ACCJC. It is anticipated that
all relevant information will be considered by the ACCJC at
their January 2017 meeting. While the accredited status of the
SFCCD continues during the period of "restoration" status,
failure to meet the specified requirements within the two year
period would result in the termination of accreditation with no
right to request further review or appeal. The SFCCD has noted
that while the ACCJC found the district noncompliant with 32
accreditation standards, it also found that the college had
demonstrated the ability to fully meet them within the two year
restoration period.
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The Special Trustee appointed by the Chancellor is expected to
remain until at least June 2016. However, the Chancellor has
gradually restored duties and responsibilities to the local
governing board. On July 1, 2015, the Trustee's authority was
reduced to stay and rescind powers over any actions that were
not in the best interest of the district, as determined by the
Trustee. In December 2015, the Chancellor further reduced the
Trustee's authority to that of an advisory role to the board
and, consistent with the requirements of SB 860, the
Trustee retains responsibility for reviewing and approving the
District's budget.
Finally, the SFCCD reports that it has implemented various
measures designed and targeted at restoring enrollment and
full-time equivalent students. These include a revised
Educational Master Plan, targeted marketing, community outreach,
and collaborative initiatives with local stakeholders with the
goal of retaining and attracting students, and strategic
initiatives to improve marketing to targeted groups, among other
things.
A follow-up report by Fiscal Crisis and Management Assistance
Team (FCMAT) on the progress made by the San Francisco Community
College District (SFCCD) in addressing the issues raised in its
prior reports is expected by the Chancellor's Office in early
April.
4) Related budget action. SB 860 (Committee on Budget and
Fiscal Review, Chapter 34, Statutes of 2013) provided the
San Francisco Community College District with additional
funding, for three fiscal years, as the college worked to
restore student enrollment and maintain accreditation.
Pursuant to the bill's provisions, for the 2014-15 fiscal
year, the district received full-time equivalent students
(FTES) funding equal to the amount it received in the
2013-14 fiscal year, with the amount of funding for the
district being reduced by five, and 10 percent, in 2015-16
and 2016-17, respectively. In order to receive the third
year of funding, the district is required to meet or exceed
benchmarks related to fiscal management and controls, as
specified. This "stabilization funding" will cease after
the 2016-17 fiscal year.
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The chart below illustrates the actual FTES experience of
the college as well as the annual funded FTES under the
stabilization funding authorized by the provisions of SB
860.
-----------------------------------------------------------
| Fiscal Year | Funded FTES | Actual FTES |
|---------------+---------------------+---------------------|
| 2010-11 | 37,057 | 37,056 |
|---------------+---------------------+---------------------|
| 2011-12 | 32,632 | 32,632 |
|---------------+---------------------+---------------------|
| 2012-13 | 32,632 | 32,621 |
|---------------+---------------------+---------------------|
| 2013-14 | 32,632 | 26,264 |
|---------------+---------------------+---------------------|
| 2014-15 | 32,632 | 23,628 |
|---------------+---------------------+---------------------|
| 2015-16 | 30,990 |21,291 |
| | | |
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5) Current caps on growth. Pursuant to trailer bill language
adopted as part of the 2014-15 budget, the Chancellor's
Office has developed a new growth formula for allocation of
apportionment funding. The formula uses local demographic
factors, such as unemployed adults, households below the
poverty line, and educational attainment, to determine what
colleges have more need for community college education.
The formula also considers the college's' ability to grow
by including their recent growth trends. The outcome of
this calculation is a growth rate of between 1 and 4
percent for most colleges which is considered a "cap" on
the FTES funding that can be received by the district.
Colleges may exceed their cap if they are reallocated
growth from other districts' unused growth cap.
6) Effect of the bill. This bill would have two distinct
impacts. Like other districts, SFCCD would be allowed to
realize a restoral of lost FTES if there is an increase in
FTES in the three years following a decline. But unlike
other districts, SFCCD would be allowed to exceed its
calculated growth cap and the real "cap" would be the level
of full-time equivalent students (FTES) funding in the
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2012-13 fiscal year; the last year before the accreditation
issues arose.
Under current law, all districts have the ability to
realize a restoral of lost full-time equivalent students
(FTES) for a period of three years and, in anticipation of
the need for potential restoral, the Chancellor's Office,
in collaboration with the Department of Finance and the
Legislative Analyst's Office, annually estimates the "base"
apportionment for each district based on the prior year's
base and adjustments for growth and decline, and uses a
three year rolling average of what has been restored in the
prior three years to estimate what might be restored in the
upcoming year and "sets aside" these funds. Under the
bill's provisions the San Francisco Community College
District (SFCCD) would be eligible for up to $50 million in
possible restoration funds. According to the Chancellor's
Office a "reasonable" amount of funds above the three year
rolling average, likely in the millions, would be set aside
in anticipation of potential growth in FTES at the SFCCD.
This bill would result in a "set aside" of funds that would
otherwise be allocated to other state priorities such as
additional access to courses and improved support services
for all colleges.
7) Need for clarification. According to the author, it is the
intent that the SFCCD be provided an opportunity to rebuild
and be funded for real FTES growth up to the level realized
in the 2012-13 fiscal year and, consistent with current
law, be granted this opportunity for three fiscal years.
As currently drafted the bill is not clear as to the
allowable cap on this growth and could be interpreted to
"restart" the three year clock at the beginning of each of
the three fiscal years identified in the bill.
Consistent with the author's intent, staff recommends the
bill be amended to replace subdivision (h) with the
following:
(h) Beginning in fiscal year 2017-18, the SFCCD shall be
entitled to restoration of any reduction in apportionment
revenue due to decreases in FTES for the next three fiscal
years, up to the level of attendance of FTES funded in the
2012-13 fiscal year, if there is a subsequent increase in
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FTES.
SUPPORT
California Federation of Teachers
OPPOSITION
None received.
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