BILL ANALYSIS                                                                                                                                                                                                    

                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 1460 (Leno) - Community colleges:  funding:  San Francisco  
          Community College District
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          |Version: April 5, 2016          |Policy Vote: ED. 8 - 1          |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: April 18, 2016    |Consultant: Jillian Kissee      |
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          This bill meets the criteria for referral to the Suspense File.

          Summary:  This bill provides that the San Francisco Community  
          College District (SFCCD) is entitled, for three years beginning  
          in the 2017-18 fiscal year, to restoration of any reduction in  
          apportionment revenue due to decreases in full-time equivalent  
          students (FTES) up to the level of FTES funded in the 2012-13  
          fiscal year.

           The California Community Colleges (CCC) Chancellor's Office  
            estimates that SFCCD will restore FTES between two and three  
            percent per year over the next few years.  This would  
            translate to a cost between $2.5 and $3 million per year.  The  
            incremental cost pressures attributed to this bill going  
            beyond the district's growth cap calculated by the  
            Chancellor's Office in a particular year, would likely be in  


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            the low millions based on the district's estimated growth.   
            (Proposition 98)

          Background:  Existing law requires the California Community Colleges (CCC)  
          Board of Governors (BOG) to develop criteria and standards, in  
          accordance with specified statewide minimum requirements, for  
          the purposes of making the annual budget request 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 FTES for  
          specified purposes. 
          The Chancellor's Office newly developed growth formula, which is  
          used to determine allocation of apportionment funding, uses  
          local demographic factors, such as unemployed adults, households  
          below the poverty line, and educational attainment, to determine  
          which colleges have more need for community college education.   
          The formula also considers the college's ability to grow.  The  
          outcome of this calculation is a growth rate of between one and  
          four percent for most colleges which is considered a "cap" on  
          the FTES funding that can be received by the district.

          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 if enrollment increases (up to an allowable cap).  
           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 the one year, the  
          district's revenues are reduced by the decrease in its FTES.   
          However, those reductions are restored if enrollment increases  
          during the subsequent three years, providing a district with a  
          buffer against fluctuating enrollments.  (Education Code   
          84750.5 et.seq.)

          In June 2013, the Accrediting Commission for Community and  
          Junior Colleges (ACCJC) notified the San Francisco City College  
          that its accreditation would be terminated as of July 31, 2014.   


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          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.  The SFCCD submitted the required documentation and was  
          granted restoration status by the ACCJC in January 2015.  Under  
          this process, if the SFCCD does not meet specified requirements  
          during the two year time period ending in January 2017, it would  
          lose its accreditation with no right to request further review  
          or appeal.

          Since the 2012-13 fiscal year, the college has lost over 30  
          percent of FTES.  SB 860 (Committee on Budget and Fiscal Review,  
          Chapter 34, Statutes of 2013) requires the BOG 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.  The  
          bill provided the SSFD with additional funding, for three fiscal  
          years, as the San Francisco City College worked to restore  
          student enrollment and maintain accreditation.  Pursuant to the  
          bill's provisions, for the 2014-15 fiscal year, the district  
          received 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 funding will  
          cease after the 2016-17 fiscal year.

          Proposed Law:  
            This bill provides that the SFCCD is entitled for three years  
          beginning in the 2017-18 fiscal year, to restoration of any  
          reduction in apportionment revenue due to decreases in FTES up  
          to the level of FTES funded in the 2012-13 fiscal year.

          Comments:  This bill allows the SFCCD to grow enrollment beyond  
          the enrollment cap calculated by the CCC Chancellor's Office,  
          beginning in the 2017-18 fiscal year - the year after the SFCCD  


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          receives its last installment authorized under SB 860.  The  
          enrollment cap for the 2015-16 fiscal year is currently  
          estimated to be 1.3 percent ($1.3 million).  The Chancellor's  
          Office estimates the SFCCD will restore FTES between two and  
          three percent per year over the next few years.  Therefore, cost  
          pressures attributed to this bill would be the incremental  
          amount above the growth cap established by the Chancellor's  
          Office, if the SFCCD experiences an increase in FTES.  
          This bill also authorizes the SFCCD to grow up to its funded  
          FTES level in the 2012-13 fiscal year, which would cost in the  
          mid tens of millions.  However, based on the level that the  
          district is estimated to grow in the next few years, this is  
          unlikely.  If the SFCCD does not experience an increase in FTES  
          in three years beginning with the 2017-18 fiscal year, then  
          neither the restoration funding up to the growth cap nor the  
          additional funding beyond the cap permitted by this bill would  
          be triggered.

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