BILL ANALYSIS Ó
AB 478
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ASSEMBLY THIRD READING
AB 478 (Roger Hernández)
As Amended April 7, 2011
Majority vote
HIGHER EDUCATION 9-0 APPROPRIATIONS 17-0
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|Ayes:|Block, Donnelly, |Ayes:|Fuentes, Harkey, |
| |Achadjian, Brownley, | |Blumenfield, Bradford, |
| |Fong, Galgiani, Lara, | |Charles Calderon, Campos, |
| |Miller, Portantino | |Davis, Donnelly, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : 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. This amount above 5% must be
determined by the CCC Chancellor's Office and its rationale must
be submitted to the Department of Finance.
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 : According to the Assembly Appropriations
Committee, 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%
AB 478
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enrollment growth-equal to about $175 million at current funding
rates. Actual funding for CCC enrollment growth is determined
through the annual 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 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.
AB 478
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Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960
FN: 0001141