BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 1460 (Leno) - Community colleges: funding: San Francisco Community College District ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 5, 2016 |Policy Vote: ED. 8 - 1 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: April 18, 2016 |Consultant: Jillian Kissee | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill 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. Fiscal Impact: 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 SB 1460 (Leno) Page 1 of ? 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. SB 1460 (Leno) Page 2 of ? 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. Staff 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 SB 1460 (Leno) Page 3 of ? 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. -- END --