BILL ANALYSIS �
AB 2591
Page 1
Date of Hearing: April 17, 2012
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Marty Block, Chair
AB 2591 (Furutani) - As Amended: April 9, 2012
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 and fee revenues. Specifically, this
bill :
1)Establishes legislative intent to create an automatic
California Community College (CCC) local revenue backfill
funding mechanism by requiring the Controller to transfer
funds from the General Fund to the State School Fund when CCC
property tax revenues and fee revenues fall short of the
amount on which the appropriation for CCC in the annual Budget
Act are based.
2)Requires the Department of Finance to annually post on its
website the total local property tax revenue, total fee
revenue, and federal oil and mineral resource and donations
revenue for CCC districts upon which the General Fund
appropriation for CCC districts in the annual Budget Act is
based.
3)Requires the CCC Chancellor to certify to the Controller, on
or before December 31 of each fiscal year and on or before May
31 of each fiscal year, the amount of property tax revenue and
fee revenue estimated for the current fiscal year and the
prior year as reported to the CCC Board of Governors for use
in the calculation of the state general apportionment.
4)Requires, if the total amount of local revenue identified in
the annual Budget Act is greater than the amount of local
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 the State School Fund for the CCC.
5)Requires, if the total amount of local revenues identified in
the annual Budget Act is less than the amount of local
revenues identified and reported by the CCC Chancellor, the
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State Controller, at the time of the next general fund
apportionment, to transfer the excess amount from 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 local
property tax revenues. However, current law does not provide
for a similar adjustment for CCC districts.
FISCAL EFFECT : Unknown
COMMENTS : Background on CCC budgeting . In developing the
annual CCC budget, the state must estimate how much local
property tax and student fee revenue will be available to the
CCC. If the systemwide level of local property tax and fee
revenue turns out to be lower than budgeted, this shortfall is
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 non-received local
revenue, state aid to CCC is also not automatically reduced when
local revenues exceed estimates.
Background on property tax shortfalls . 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, as a result of
the recession and state budget cuts, two factors have impacted
the collection of fee revenue (1) increase in the number of
students receiving the Board of Governors Fee Waiver and (2)
reduction in the overall number of students attending CCCs. In
addition, property tax collections have come in $40 million
below budget estimates. When combined, the total local revenue
deficit equals $149 million. This shortfall comes on the heels
of a $313 million workload reduction imposed in the Budget Act,
and a $102 million midyear trigger cut, which have already
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heavily impacted CCCs ability to effectively serve students.
This shortfall affects CCCs general purpose revenues,
significantly reducing resources available to support
educational services. Without additional funding to make up for
the unexpected mid-year shortfall, CCCs have to find ways to
lower expenses such as cutting courses, reducing services and
laying off employees. This loss in funding severely cripples
the ability of CCCs to plan accordingly to meet the educational
demands of students.
Additional pressures on the state budget . According to the
Legislative Analyst's Office (LAO), the U.S. and California
economies are poised to continue slow recoveries. While ongoing
budgetary actions have to begin to restore California's state
budget to balance, the Legislature will have to pursue billions
more in budget-balancing solutions in the coming year. The
Committee may wish to consider the degree to which an automatic
annual backfill, as contained in this bill, will affect the
state's ability to achieve budgetary balance.
Prior legislation . AB 551 (Furutani) of 2010, which was held in
Assembly Rules Committee, would have required the LAO report on
whether General Fund dollars or property tax revenues provide
the most stable funding source for CCC. 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. 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. AB 1417
(Pacheco) of 2004, which was held in this form in the Senate
Appropriations Committee and subsequently amended to require a
study of CCC funding, was substantially similar to AB 1402. SB
990 (McPherson) of 2000, which was held in the Senate
Appropriations Committee, was also substantially similar to AB
1402.
REGISTERED SUPPORT / OPPOSITION :
Support
Antelope Valley Community College District
Barstow Community College
Cabrillo College
California Community Colleges Chancellor's Office
AB 2591
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California Federation of Teachers
Chaffey College
Community College League of California
Glendale Community College District
Kern Community College District
Los Angeles Community College District
Los Rios Community College District
MiraCosta Community College District
Mt. San Jacinto Community College District
North Orange County Community College District
Ohlone Community College Districts
Peralta Community College District
Porterville College
Rancho Santiago Community College District
Rio Hondo Community College District
Riverside Community College District
San Diego Community College District
San Jose-Evergreen Community College District
Santa Monica Community College District
Shasta-Tehama-Trinity Joint Community College District
South Orange County Community College District
State Center Community College District
West Hills Community College District
West Kern Community College District
Yosemite Community College District
12 Individuals
Opposition
None on File
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960