How Do Student Fees Contribute to Community College Funding?

July 2010 E B D ASICS How Do Student Fees Contribute to Community College Funding?  Each community college districts keeps the fees it collects from its students.  These fees contribute toward each district’s “general apportion- ment,” which is the funding source for general educational costs. The other main sources of district apportionments are local prop- erty taxes and state General Fund monies. (These two sources together make up a district’s Proposition 98 funding.)  Fee revenue is therefore on top of whatever Proposition 98 support the state provides community colleges each year. California Community Colleges Apportionments 2009-10 Budget Act (Dollars in Millions) 7,000 6,000 Fee Revenue ($357) Non-Proposition 98 5,000 Local Property Taxes Funding ($1,962) Proposition 98 Funding 4,000 3,000 General Fund 2,000 ($3,757) 1,000 EDBASICS How Do Student Fees Contribute to Community College Funding? (Continued)  The Legislature sets community college fees in statue. When fees are increased, this generates additional revenue that is collected and retained by the districts.  Because it is collected locally, student fee revenue is not appropriated in the annual budget act. However, because fee revenue contributes to overall community college support, the Legislature’s decisions about setting fee levels and appropriating Proposition 98 support through the budget act are interrelated.  As a practical matter, a fee increase can either supplement the colleges’ Proposition 98 appropriations (thus increasing total resources available to the colleges), or can supplant Proposi- tion 98 appropriations (thus creating savings in Proposition 98 spending). Choosing between these approaches is decided by the Legislature and Governor in enacting the annual budget act.  Functionally, fees play essentially the same funding role for com- munity colleges as they do for the University of California and the California State University.  For all three public higher education segments, student fees contribute to overall funding.  For all three segments, the Governor and Legislature can use a fee increase to offset General Fund support. Alternatively, they can permit a fee increase to supplement state support. This is one of a series of issue briefs examining important questions about higher education funding in California. For more information on this topic, or to request other briefs from this series, contact the Legislative Analyst’s Offi ce Higher Education section at (916) 319-8349, or visit our website at www.lao.ca.gov.