BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1460|
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THIRD READING
Bill No: SB 1460
Author: Leno (D)
Amended: 4/5/16
Vote: 21
SENATE EDUCATION COMMITTEE: 8-1, 3/30/16
AYES: Liu, Block, Hancock, Huff, Leyva, Mendoza, Monning, Pan
NOES: Vidak
SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/27/16
AYES: Lara, Beall, Hill, McGuire, Mendoza, Nielsen
NO VOTE RECORDED: Bates
SUBJECT: Community colleges: funding: San Francisco
Community College District
SOURCE: Author
DIGEST: 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.
ANALYSIS:
Existing law:
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1)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.
2)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 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.)
3)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,
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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)
This bill:
1)Requires that the BOG provide the 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 revenue due to
decreases in 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.
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 the author,
while community colleges throughout the state have experienced
an average enrollment decline of about eight percent, SFCCD
has experienced an enrollment drop of almost 30 percent,
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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.
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 ACCJC notified the SFCCD that its
accreditation would be terminated as of July 31, 2014, as the
ACCJC had concluded that the SFCCD had failed to correct the
deficiencies noted in the 2012 show cause action letter. In
July 2013, the BOG took action to appoint a special trustee
with full management powers over the district.
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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.
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 SFCCD's
budget.
Finally, the SFCCD reports that it has implemented various
measures designed and targeted at restoring enrollment and
FTES. 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.
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A follow-up report by FCMAT on the progress made by the SFCCD
in addressing the issues raised in its prior reports was
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 SFCCD 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 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.
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 one and four 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 has 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 FTES funding in the 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 FTESfor 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 this bill's provisions the SFCCD could 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 funds would otherwise be allocated to
other state priorities such as additional access to courses
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and improved support services for all colleges.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, the 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 the
low millions based on the district's estimated growth.
(Proposition 98)
SUPPORT: (Verified 5/27/16)
None received
OPPOSITION: (Verified 5/27/16)
None received
Prepared by: Kathleen Chavira / ED. / (916) 651-4105
5/28/16 17:08:42
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