The 2014-15 Budget: The Commission on Teacher Credentialing

The 2014-15 Budget: The Commission on Teacher Credentialing MAC TAYLOR • L E G I S L A T I V E A N A L Y S T • MARCH 28, 2014 Executive Summary The Commission on Teacher Credentialing (CTC) is responsible for issuing teacher credentials, accrediting teacher preparation programs, and conducting disciplinary reviews of credential holders. The CTC has an annual budget of about $20 million. Its two main revenue sources are teacher credential fees and test fees. Revenue from credential fees is deposited into the Teacher Credentials Fund (TCF) whereas test fee revenue is deposited into the Test Development and Administration Account (TDAA). Cash Flow. The Governor proposes to grant CTC flexibility to transfer funds from the TDAA to the TCF for a 60-day period within a fiscal year to cover cash flow shortages without Department of Finance (DOF) approval. (Currently, transfers from the TDAA to the TCF can be made only with DOF approval.) Given CTC commonly has cash flow challenges, we recommend the Legislature address the issue more fundamentally by combining the TCF and the TDAA into a single account. The combined reserve would be sufficient to cover CTC’s operations during cash-poor months. We also recommend the Legislature work with the administration and CTC to refine budget documents such that fee revenues can be more easily linked with associated expenditures. Though not currently available, this detail would improve the Legislature’s ability to undertake appropriate fiscal oversight of CTC’s budget. Accreditation. The Governor also proposes to allow CTC to raise fees for all types of accreditation activities. We recommend the Legislature approve this proposal, as it is consistent with action the state took last year giving CTC authority to raise fees for accrediting new teacher preparation programs and conducting extraordinary accreditation activities (such as follow-up site visits). Allowing CTC to charge for all accreditation activities also is consistent with other areas of CTC’s budget, including credentialing and testing, which are designed to be self-sustaining. We are concerned, however, that the Governor’s proposal makes no improvements to CTC’s current labor-intensive accreditation process. To reduce associated costs, labor, and fees, we recommend the Legislature amend statute to require CTC to streamline its standards and accreditation process. 2014-15 BUDGET Background plus a prudent reserve.” Revenue from credential fees flows into the TCF, which makes up about Overview of CTC’s Budget 75 percent of CTC’s revenues. Teacher Test Fees Also a Source of CTC CTC Is Organized According to Its Three Revenue. School employees also pay fees when Primary Functions. The CTC has three divisions, they take tests required for earning credentials. each of which is responsible for a primary function Unlike the credential fee, which is set in statute, of the commission: (1) the Certification Division, test fees are set by the CTC. Test fees currently which issues credentials, permits, and waivers range from $41 for the paper-based version of authorizing persons to work in California schools; the basic skills test (required for most teachers (2) the Professional Services Division, which adopts applying for their first credential) to $427 for the standards for the teaching profession and accredits California Preliminary Administrative Credential teacher preparation programs based on their Examination (required for administrator adherence to the standards; and (3) the Division candidates who do not complete an approved of Professional Practices, which investigates administrator preparation program). Revenue complaints against credential holders and has the from test fees flows into the TDAA, which makes authority to suspend and revoke credentials. As up roughly 25 percent of the commission’s total Figure 1 shows, the CTC has an annual budget of revenues. Under state law, TDAA funds must be about $20 million and 152 authorized positions. used for the development and administration of Among the divisions, Certification is the largest. tests or other assessments required by CTC. Teacher Credential Fee Is Largest Source of Credential Volume Dropped Notably CTC Revenue. School employees are required to From 2006-07 to 2012-13, Contributing to pay a fee to CTC when they apply for a credential Budget Shortfalls. As Figure 2 shows, credential for the first time and when they renew a credential, applications declined by one-third between 2006-07 typically every five years. Credential fees are set and 2012-13. Largely because of the associated by the Legislature. The current credential fee is decline in TCF revenues, CTC began experiencing $70. State law requires DOF to review the fee operating shortfalls, with shortfalls growing level annually and recommend a fee level that to an estimated $5 million (about 25 percent of is “sufficient to generate revenues necessary to CTC’s budget) by 2012-13. In response, the state support the operating budget of the commission took several measures in building the 2012-13 budget to reduce CTC’s Figure 1 expenditures and CTC Expenditures and Positions by Division increase its revenues, Revised 2013-14 Estimates (Dollars in Millions) including (1) raising Division Expenditures Authorized Positions the credential fee from $55 to $70, (2) reducing Certification $7.8 44.0 Professional Practices 6.5 37.3 staff by 13 positions, Professional Services 5.4 31.0 (3) making one-time Administrationa — 40.1 spending reductions in Totals $19.8 152.4 a information technology, The Commission on Teacher Credentialing (CTC) reports expenditures for administration within each of the three divisions, as applicable, but reports positions separately. and (4) suspending certain 2 Legislative Analyst’s Office www.lao.ca.gov Graphic Sign Off Secretary Analyst MPA Deputy 2014-15 BUDGET accreditation activities. In 2013-14, the state also Figure 2 allowed CTC to begin charging a fee for certain Credential Applications by Year accreditation activities (discussed in more detail in the next section of this report). 350,000 CTC Also Has Faced Cash Flow Issues. 300,000 Despite these actions, CTC’s budget shortfalls 250,000 gradually have eroded the reserve in the TCF, 200,000 exacerbating CTC’s cash flow challenges. 150,000 Credential volume typically fluctuates throughout 100,000 the year, with credential applications at their 50,000 lowest in the three-month period from October 06-07 07-08 08-09 09-10 10-11 11-12 12-13 through December. With an adequate reserve in the TCF, CTC is able to cover expenses even in months when credential fee revenue is lower Accreditation of than expenditures. When the TCF reserve is not Teacher Preparation Programs sufficient to cover expenses, CTC, with DOF CTC Is Required to Accredit All Teacher approval, can borrow from the TDAA to cover a ARTWORK # Preparation Programs. State law requires teacher shortfall in the TCF. (State law does not permit preparation programs to be accredited by CTC Template_LAOReport_sm.ait the commission to borrow TCF money to cover before they can recommend a candidate for a a TDAA shortfall.) In 2011-12, the reserve in the credential. The CTC accredits both new and TCF dipped below 5 percent, prompting the state to existing teacher programs. In 2013-14, more than authorize a $1.5 million transfer from the TDAA to 250 institutions offering almost 1,400 accredited the TCF to cover day-to-day expenses. Despite this teacher preparation programs are operating in the transfer, CTC’s cash flow concerns persist. In the state. fall of 2013, CTC requested a $700,000 loan from CTC Uses Seven-Year Accreditation Cycle the TDAA to meet TCF expenses during cash-poor for Existing Programs. Though CTC has changed months. (In subsequent months, however, DOF its accreditation process over time, it currently determined the loan was not needed and ultimately requires each existing teacher preparation program did not approve it.) to undergo a seven-year process to demonstrate the A Few Indicators Suggest CTC’s Budget program is adhering to CTC’s teacher preparation May Stabilize. Although it still faces budgetary standards. During the first five years of the process, challenges, CTC experienced a 7 percent increase in programs are required to submit biennial reports credential applications during the first six months that provide data on program effectiveness and of 2013-14 compared to the same period in 2012-13. explain how the program is being modified to Moreover, growing enrollment in the California address any weaknesses identified by the data. State University (a primary source of teacher In the fourth year of the review cycle, programs candidates) and increased state funding for school undergo program assessment, in which they submit districts could result in more people entering the documentation to show their coursework and teaching profession, leading to higher revenue from field experiences meet CTC’s standards. In year credential application fees in future years. six, CTC conducts a site visit to verify programs www.lao.ca.gov Legislative Analyst’s Office 3 2014-15 BUDGET are being implemented as described in program impacting program quality and requiring a assessment documents. The site visit also allows revisit from CTC (such as failing to assign a CTC to investigate any issues identified in program supervisor to each candidate during a required assessment documents or biennial reports. In internship). Probationary stipulations are issued year seven, programs are required to address when numerous standards are not met, impacting any concerns identified by CTC through the site program quality and requiring a revisit, additional visit. This process may entail further site visits documentation, and 60-day progress reports (such or document reviews to ensure programs have as a lack of adequate staff, technology, or office addressed problems. space). From 2008-09 through 2012-13, CTC issued CTC Uses Similar but Shorter Process for New stipulations for 33 institutions (or about one-fifth Programs. Institutions that have never offered a of all institutions reviewed during that time). Of teacher preparation program first must submit an these stipulations, about 80 percent were technical, Initial Institutional Approval document for CTC’s 15 percent major, and the remainder probationary. review. Then, each new program must submit an If any identified concerns are not addressed Initial Program Review document. Similar to the within one year, CTC can deny accreditation. program assessment process for existing programs, Programs typically rectify any issues identified new institutions and programs must demonstrate by CTC within one year, unless CTC grants an through these documents that they are designed extension. In the last ten years, CTC has not denied to meet CTC’s standards. They also must meet accreditation to any teacher preparation institution certain preconditions, such as demonstrating the or program. need for the program and complying with the CTC Suspended Accreditation Site Visits in statutory limit on program length (currently two 2012-13 Because of Budget Challenges. Because years). Initial Institutional Approval and Initial of limited funding, CTC suspended site visits Program Approval each take CTC 6 to 12 months in 2012-13 as well as certain other accreditation to complete. After earning initial accreditation, new activities (such as training the volunteers who programs are required to undergo the seven-year review accreditation documents). The commission process to remain accredited. resumed site visits in 2013-14. During 2013-14, it CTC Can Grant Accreditation, Deny plans to visit the 35 existing teacher preparation Accreditation, or Issue Stipulations. If CTC programs that were expected to have a site visit last determines a program has met its standards, it year. accredits the program. The CTC also can grant CTC Authorized to Charge for Some accreditation with stipulations, which require a Accreditation Activities. Chapter 48, Statutes of program to submit additional documentation or 2013 (AB 86, Committee on Budget), allows CTC make modifications to address CTC’s concerns. to recover costs for (1) accreditation of new teacher The commission issues three types of stipulations, preparation programs and (2) extraordinary in order of increasing severity: technical, major, activities (such as additional site visits and and probationary. Technical stipulations tend to document reviews) it conducts when a program be relatively minor (such as providing only one does not meet all accreditation standards. The fees field placement instead of two, as is required for for new programs range from $1,000 to $2,000, some credential programs). Major stipulations while fees for programs that do not meet CTC’s are issued when several standards are not met, standards range from $500 to $3,000. The CTC 4 Legislative Analyst’s Office www.lao.ca.gov 2014-15 BUDGET projects it will collect about $50,000 in revenue are integrating the CCSS through its normal from the new accreditation fees during 2013-14. accreditation process. This estimate is revised down from the initial Governor’s Proposals budgeted amount of $200,000 because CTC was not able to implement the new fees until later than Allows Short-Term Loans From Test Fee expected. Account to Credential Fund. To address CTC’s CTC Exploring Modifications to Existing cash flow concerns, the administration proposes Accreditation Process. The commission to allow the commission to transfer funds from acknowledges its current accreditation process, the TDAA to the TCF for up to 60 days within a which involves reviewing hundreds of pages fiscal year without DOF approval. If the TCF has of documents and conducting interviews with insufficient funds to repay the TDAA funds within numerous stakeholders, is labor-intensive. In 60 days, the commission would be required to December 2013, CTC staff presented options for make monthly repayments until the full amount streamlining the accreditation process to focus is restored to the TDAA. Future fund transfers more on program outcomes and less on inputs would be prohibited if CTC does not repay the full (such as syllabi and other course documents). amount by the end of the fiscal year. These options include (1) developing more Extends Accreditation Fees. The concise teacher preparation standards, (2) using administration proposes to grant CTC authority teacher performance data to evaluate programs, to begin collecting fees for the regular activities (3) simplifying and reducing the length of required it undertakes in accrediting existing teacher documents (for example, by setting page limits preparation programs. The specific accreditation fee and developing templates), and (4) conducting schedule would be set by CTC. The administration less-intensive reviews for programs that have estimates the new fees would generate an additional achieved certain outcomes and for programs $650,000 in revenue (for total accreditation revenue seeking renewal. of $850,000) in 2014-15. CTC Updating Teacher Preparation Program Assessment and Standards to Reflect Common Core State Recommendations Standards (CCSS). The CTC also is planning to update its teacher preparation program standards Consolidating TDAA and TCF Would to reflect the CCSS. The CTC is currently scheduled Be More Effective Than Allowing Short-Term to convene a standards-writing panel in May or Transfers Among Accounts. Though allowing CTC June of 2014. The panel would present a draft of to make short-term transfers from the TDAA to new standards to CTC for adoption by August the TCF would somewhat improve its ability to 2015. (The CTC recently extended its timeline for manage cash flow, its cash flow situation could be adopting new standards by six months—from better addressed by merging the TCF and TDAA February to August—citing budget limitations.) into one account. This approach would help CTC Although program standards will not reflect the cover its cash flow needs during months when CCSS until CTC adopts new standards, CTC has credential applications are low without the need for notified teacher preparation programs that they periodic transfers back and forth between accounts. must prepare teachers to teach the CCSS beginning As Figure 3 shows (see next page), in recent years in 2014-15. The CTC will verify programs the reserve in the TCF has been below 5 percent. www.lao.ca.gov Legislative Analyst’s Office 5 2014-15 BUDGET That is, the reserve has been inadequate to cover an associated revenue source and helps ensure even one month of expenditures (8 percent to that accreditation activities are continued even in 9 percent of yearly expenditures). The combined tight budget years. Allowing CTC to draw upon reserve across both CTC funds, however, has another source of revenue, particularly one likely to been more than 10 percent. The larger reserve in a be more stable than its other revenue sources, also combined account would reduce CTC challenges would place CTC on a sounder fiscal footing. This, in covering its costs during cash-poor months. In in turn, could make large backlogs in credential addition to consolidating the TCF and TDAA into applications and disciplinary reviews less likely one account, we recommend the Legislature work to arise during tight budget years. Furthermore, with the administration and CTC to refine budget allowing CTC to charge for all accreditation documents such that revenues from fees can be activities is consistent with other areas of CTC’s more easily linked with associated expenditures. budget, particularly testing, which already is Even with two separate accounts, this budget designed to be self-sustaining. (Although CTC does detail currently is not available, yet having the not currently plan to use its expanded fee authority information would improve the Legislature’s ability to cover all accreditation activities, we believe Graphic Sign Off to undertake appropriate fiscal oversight. that full cost recovery is consistent with legislative Recommend Legislature Adopt Governor’s intent that CTC’s activities, whenever practicable, Secretary Proposal to Expand Accreditation Fees. The be fully self-supporting.) Analyst Governor’s proposal to allow CTC to collect fees Governor’s Proposal Does Not Address Serious MPA for accrediting existing programs is consistent with Flaws With Current Accreditation Process. Deputy action the state took last year to authorize fees for While we believe assessing accreditation fees is accrediting new programs as well as undertaking consistent with CTC’s other fee-raising abilities, we extraordinary accreditation activities. Authorizing are concerned that the administration’s proposal fees for all types of accreditation activities creates makes no improvements to CTC’s current labor- intensive accreditation Figure 3 process. Under its current Reserves as Share of Expenditures approach, CTC claims that it must ensure teacher 100% TCF preparation programs comply 90 TDAA with every word of every 80 Combined program standard it adopts. 70 The number and length of 60 the current standards and 50 CTC’s approach to enforcing 40 the standards result in an 30 accreditation process that is 20 costly, labor-intensive, and 10 burdensome for CTC and 2010-11 2011-12 2012-13 2013-14 the institutions it accredits. Estimated A program assessment for TCF = Teacher Credentials Fund and TDAA = Test Development and Administration Account. an individual credential 6 Legislative Analyst’s Office www.lao.ca.gov ARTWORK #140151 Template_LAOReport_mid.ait 2014-15 BUDGET program, for example, contains roughly 100 to • Accreditation should be cost-effective 200 pages of narrative and up to 1,000 pages of and self-supporting. Accreditation fees supporting evidence. (Large institutions may need should be as low as possible while still to submit separate assessments for more than 20 sufficient to cover expenses associated programs.) While CTC asserts that this process with a streamlined accreditation process. helps ensure program quality, the process generates The Legislature should review the fees little information to help teacher candidates, periodically to ensure they are reasonable. the public, and the Legislature identify whether To ensure CTC is making progress on the programs are producing effective classroom revisions outlined above, we also recommend the teachers. Although CTC at a recent commission Legislature require CTC to submit a status report hearing discussed options to revise its standards, to the Legislature by January 1, 2015. As part of streamline accreditation, and incorporate more the status report, we recommend the Legislature program outcomes, it has not developed a plan or require CTC to identify the changes it plans to timeline for implementing these options. make to its accreditation fee schedule as a result Recommend Legislature Direct CTC to of streamlining teacher standards and associated Overhaul Standards and Accreditation. To accreditation activities. reduce the cost, labor, and fees associated with Conclusion the current accreditation process, we recommend the Legislature adopt statute that requires CTC The Governor’s proposals address two to make substantial revisions to its standards issues CTC has struggled with in recent years: and accreditation process by January 1, 2016. (1) maintaining adequate cash flow to fund its We recommend these revisions be guided by the day-to-day operations and (2) generating sufficient following broad principles. revenue to support accreditation. The Governor’s • Program standards should be clear, proposed solutions, however, fail to address more concise, and aligned to the state’s academic fundamental issues, namely the segregation of content standards. The standards should CTC’s funds into two accounts and the costly, focus only on the most critical aspects of labor-intensive system of accreditation currently teacher preparation. in place. Our recommendations—consolidating CTC’s two main accounts and overhauling the • Accreditation should incorporate reliable accreditation process—would address these more program outcomes data, including but not fundamental issues while placing CTC on a more limited to: job placement rates, retention solid financial footing over the long term. rates, and surveys of program completers and employers. These data should be made available to the public. www.lao.ca.gov Legislative Analyst’s Office 7 2014-15 BUDGET LAO Publications This brief was prepared by Jameel Naqvi and reviewed by Edgar Cabral. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This brief and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 8 Legislative Analyst’s Office www.lao.ca.gov