BILL ANALYSIS Ó
AB 478
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Date of Hearing: March 29, 2011
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Marty Block, Chair
AB 478 (Hernandez) - As Introduced: February 15, 2011
SUBJECT : Community colleges: funding.
SUMMARY : Eliminates the 2% cap on the level of unemployment
exceeding 5% that the California Community Colleges (CCC) uses
for purposes of calculating the request for enrollment growth
funding and instead requires the CCC Chancellor's Office to
determine any amount exceeding 5% and report that amount, along
with the rational for the determination, to the Department of
Finance (DOF).
EXISTING LAW requires CCC Board of Governors to annually request
system-level funding from the Administration and the
Legislature, using the following formula to calculate its annual
system growth:
1)Weighted average of the adult population-rate change, ages
19-24 and 25-65.
2)The unemployment increase when unemployment exceeds 5%, not to
exceed a 2% positive difference.
3)Unfunded full-time equivalent students (FTES) in the areas of
transfer, vocational education, and basic skills.
FISCAL EFFECT : Unknown. However, according to the Assembly
Appropriations Committee analysis of similar legislation
introduced in 2009, 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 state budget process.
COMMENTS : Background : SB 361 (Scott), Chapter 631, Statutes
of 2005, replaced CCC's program-based funding with the current
allocation mechanism that generally provides a single rate per
FTES for all CCC districts. In addition, SB 361 requires the
CCC Board of Governors to request funding annually for
AB 478
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enrollment growth based on the aforementioned factors. The
provisions that this bill would alter one of the factors (the
unemployment rate) used in determining annual enrollment growth
requests.
Purpose of this bill : Unemployment and CCC enrollment have a
strong positive correlation. While fiscal constraints may
preclude the Legislature and Administration from funding growth
up to the level of demand, current law prevents the
Administration and Budget Committees from even considering
appropriately correlating demand for CCC courses with the
current high rates of unemployment. The author believes CCC
should be able to include actual unemployment rates in its
annual budget request to provide a more accurate representation
of CCC enrollment growth needs.
Why the 2% limitation ? The 2% cap ensures that 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. However, that limitation comes at the expense of
accurate information. For example, unemployment was 12.4% in
January 2011, which CCC was not able to accurately reflect in
its budget request despite the likely effect on demand for CCC
services.
Impact on the state budget : The Administration and the
Legislature are not required to include CCC's budget request in
their proposals. It is one of many funding requests from state
entities that can be accepted or rejected, depending upon the
state's fiscal condition.
Prior Legislation : AB 385 (Block) of 2009 was substantially
similar to this bill. AB 385 was held in the Senate Education
Committee at the request of the author.
REGISTERED SUPPORT / OPPOSITION :
Support
Faculty Association of California Community Colleges (sponsor)
California Federation of Teachers
California Community Colleges Chancellor's Office
Opposition
AB 478
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None on File
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960