BILL ANALYSIS �
AB 285
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Date of Hearing: March 15, 2011
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Marty Block, Chair
AB 285 (Furutani) - As Introduced: February 8, 2011
SUBJECT : Community colleges: property tax revenues.
SUMMARY : Requires general fund apportionments to California
Community Colleges (CCC) to be automatically adjusted for
changes in property tax revenues. Specifically, this bill :
1)Requires the annual budget act to specify the total local
property tax revenue for CCC districts upon which the General
Fund appropriation for CCC districts is based.
2)Provides that the CCC Chancellor shall certify to the State
Controller, on or before December 31 of each year, the annual
property tax revenue for the prior year based on information
reported on each CCC district's Annual Financial and Budget
Report.
3)Requires, if the total amount of property tax revenue
identified in the annual Budget Act is greater than the amount
of property tax revenue identified and reported by the CCC
Chancellor, the State Controller, at the time of the next
general fund apportionment, to transfer the deficient amount
from the General Fund to Section B of the State School Fund
for the CCC.
4)Requires, if the total amount of property tax revenues
identified in the annual Budget Act is less than the amount of
property tax revenues identified and reported by the CCC
Chancellor, the State Controller, at the time of the next
general fund apportionment, to transfer the excess amount from
Section B of the State School Fund for the CCC to the General
Fund.
EXISTING LAW provides that general fund apportionments to K-12
school districts automatically adjust for changes in property
tax revenues. However, current law does not provide for a
similar adjustment for CCC districts.
FISCAL EFFECT : Unknown
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COMMENTS : Background on CCC budgeting : In developing the
annual CCC budget, the state must estimate how much local
property tax revenue will be available to the CCC. For any
individual CCC district, General Fund revenues will be adjusted
upward or downward from the budgeted level to compensate for any
surplus or shortfall in actual tax receipts. However, if the
system wide level of local property tax revenue turns out to be
lower than budgeted, this shortfall will be proportionally
spread across all CCC districts. In some years, legislation has
been passed to augment General Fund support to CCCs in order to
make up for this shortfall. In other years, CCCs were required
to absorb the shortfall. While CCC funding is not automatically
"backfilled" for un-received property taxes, state aid to CCC is
also not automatically reduced when property taxes exceed
estimates.
Background on property tax shortfall : As a result of
legislation that responded to the court ruling in Serrano v.
Priest, current law provides for K-12 school districts to be
automatically compensated with state funding when property tax
revenues fall short of expectations relied upon for the state
budget act. Unlike K-12 school districts, CCC does not have a
mechanism for the automatic backfilling of property taxes not
received. As noted above, in years where property tax revenues
are less than estimated, a direct appropriation is the means for
adjustment.
Purpose of this bill : According to the author, the lack of an
automatic adjustment mechanism for CCC funding creates budget
uncertainty that severely cripples the ability of a CCC district
to plan accordingly to meet the educational demands of the
community. This uncertainty restricts CCC districts from
confidently pursuing future programs that could suffer if an
unexpected drop in property tax revenue occurs. Students feel
the impact when CCC is faced with a short-fall mid-year and is
required to cut services. Such disruptions in a community
college student's enrollment can lead to lower retention rates.
The author believes that this bill will give CCC great security
and certainty of their expected revenue for the academic and
budget year. This will allow the colleges to appropriately plan
for the expected student services.
Prior attempts : While there is a policy argument for treating
K-12 and CCC similarly in regards to property tax backfills,
there have been numerous attempts to address this issue in the
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past 10 years. None of these efforts have ultimately made it to
the Governor due to cost. Some examples of prior efforts
include AB 551 (Furutani) of 2009 which was amended in Assembly
Appropriations to remove costs and subsequently held in the
Senate Rules Committee; AB 2277 (Eng) of 2008, which was held in
the Assembly Appropriations Committee, would have provided for
the one-time transfer of funds to compensate for un-received
property tax revenues; and AB 1402 (Blakeslee) of 2005, which
was subsequently amended to address a different subject, would
have provided for an annual transfer of funds to compensate for
un-received property tax revenues.
CCC and the state budget : California's budget shortfall is
estimated at $26.6 billion. In response, the Budget Conference
Committee recently adopted a budget proposal that includes $12.5
billion in cuts to California programs. CCCs are faced with an
anticipated $400 million in unallocated reductions to
apportionments and a student fee increase of $10 per student,
raising CCC fees from $26 to $36 per unit. Should actual
property tax revenues fall short of those anticipated in the
2011-12 Budget Act, without this bill the CCC will face an
additional and unexpected funding reduction. However, the
Committee may wish to consider how this proposal to establish an
automatic backfill of (non-received) property tax revenue, and a
corresponding ongoing state funding obligation, might impact the
overall state budget.
REGISTERED SUPPORT / OPPOSITION :
Support
California Community Colleges, Chancellor's Office (Sponsor)
American Federation of State, County and Municipal Employees,
AFL-CIO
California Federation of Teachers
California School Employees Association
Cerritos Community College District
Community College League of California
Contra Costa Community College District
Faculty Association of California Community Colleges
Long Beach City College
Merced College
Monterey Peninsula College
Shasta College
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Opposition
None on File
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960