BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 385
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          Date of Hearing:   April 22, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                 AB 385 (Block) - As Introduced:  February 23, 2009 

          Policy Committee:                              Higher  
          EducationVote:9-0 (Consent)

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill eliminates the 2% cap on the level of unemployment  
          exceeding 5% that the California Community Colleges (CCC) must  
          use for purposes of calculating the annual request for  
          enrollment growth funding.

           FISCAL EFFECT  

          Potential significant Proposition 98 cost pressure to allocate  
          additional funding for enrollment growth during periods of high  
          unemployment.  For example, a 10% unemployment rate would yield  
          a request from the CCC for an additional 3% enrollment  
          growth-equal to about $185 million at current funding rates.   
          Actual funding for CCC enrollment growth is determined through  
          the annual state budget process.

           COMMENTS  

           1)Background  .  SB 361 (Scott)/Chapter 631 of 2005 replaced the  
            CCC's program-based funding with a new allocation mechanism  
            that generally provides a single rate per fulltime equivalent  
            student (FTES) for all CCC districts.  In addition, SB 361  
            requires the CCC Board of Governors to request funding  
            annually for enrollment growth based on the following:

             a)   Weighted average of the adult population-rate change for  
               ages 19-24 and 25-65.
             b)   The amount that the state unemployment rate exceeded 5%  
               in the most recent fiscal year, not to exceed a 2%  
               difference.
             c)   Unfunded FTES in the areas of transfer, vocational  








                                                                  AB 385
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               education, and basic skills.

            The 2% cap ensures that the CCC can never report an  
            unemployment rate greater than 7% (the 5% threshold plus the  
            2% cap), limiting future cost pressures on the state budget.

           2)Purpose  .  This bill eliminates the 2% cap discussed above.   
            The author argues that the community colleges should be able  
            to include actual unemployment rates in its annual budget  
            request to provide a more accurate representation of their  
            enrollment growth needs.  Unemployment and CCC enrollments  
            historically have a strong positive correlation, and while  
            fiscal constraints may preclude the state from funding growth  
            to the full level of demand, current law prevents the  
            consideration of the correlating increased demand for CCC  
            courses with high unemployment rates.

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081