The 2021-22 Budget: California Community Colleges

The 2021-22 Budget: California Community Colleges Summary In this report, we provide an overview of the Governor’s budget for the California Community Colleges (CCC), examine how the pandemic has affected CCC, then analyze the Governor’s major CCC proposals. Below, we share three main takeaways from the report. Opportunities Exist to Be More Strategic With Ongoing Spending Commitments. The Governor’s budget includes eight new CCC ongoing Proposition 98 General Fund spending commitments (totaling $213 million). The largest ongoing proposal is to provide apportionments a 1.5 percent cost-of-living adjustment. We believe the Legislature has opportunities to improve the Governor’s overall community college budget package by taking fewer, but more strategic, actions. Regarding ongoing spending, we encourage the Legislature to consider increasing the augmentation for apportionments by redirecting funds from lower-priority proposals. (We identify some candidates for redirection in this report.) Potentially offering a larger increase to apportionments would help colleges in responding to staffing, salary, and benefit pressures while also giving them flexibility in responding to key local needs. Legislature Could Be More Strategic With One-Time Funds Too. The Governor’s budget includes nine one-time Proposition 98 General Fund proposals (totaling $1.6 billion). The Governor’s largest one-time proposal is to pay down just over $1.1 billion of the existing nearly $1.5 billion in deferrals. As with the ongoing proposals, we think the Legislature might want to consider redirecting funds from certain unjustified or otherwise lower-priority one-time initiatives (several of which we identify in this report) to a more select set of strategic one-time priorities. In particular, the Legislature could consider redirecting resources to paying down more deferrals and/or mitigating districts’ future pension cost increases. Governor’s Student Support Proposals Could Be Better Coordinated. Among the Governor’s proposals are three relating to student support totaling $380 million ($30 million ongoing and $350 million one time). These proposals provide additional funding for students’ basic needs (including food and housing), mental health, access to technology, and emergency grants. Although the Governor has a laudable focus on issues exacerbated by the pandemic, he continues the state’s uncoordinated and piecemeal approach to addressing those issues—combining unlike services into one categorical program, not specifying how proposed programs would interact with existing ones, and providing one-time funding for a purpose (food pantry and housing assistance programs) that requires ongoing funds to be sustainable. We recommend the Legislature consider a different approach that would pool all or a portion of the proposed new funds (and an existing CCC housing program) into a basic needs block grant. Under such an approach, districts would have flexibility to use the funds for any combination of food, housing, mental health, and technology services, based on the needs of their students. GABRIEL PETEK LEGISLATIVE ANALYST FEBRUARY 2021 analysis full gutter 2021-22 BUDGET INTRODUCTION This report analyzes the Governor’s major specific CCC proposals, with sections focused on budget proposals for the California Community (1) apportionments, (2) student support, (3) online Colleges (CCC). We begin by describing the tools, (4) apprenticeships and work-based Governor’s overall budget plan for CCC. We learning, (5) instructional materials, and (6) faculty then review what is known to date about the professional development. We provide tables impacts of the pandemic on community colleges’ with more detail about CCC’s budget on our budgets. Next, we analyze the Governor’s EdBudget website. OVERVIEW OF GOVERNOR’S BUDGET Total CCC Funding Reaches $17 Billion Governor Has Numerous Other CCC Proposals. Under Governor’s Budget. Just over $10 billion Figure 2 on page 4 lists the CCC deferral of the CCC budget comes from Proposition 98 paydown as well as the Governor’s 16 other CCC funds. Proposition 98 support for CCC in Proposition 98 proposals. Eight of these proposals 2021-22 increases by $423 million (4.4 percent) reflect new ongoing spending commitments over the revised 2020-21 level. In addition to (totaling $213 million) and eight are one-time Proposition 98 General Fund, the state provides initiatives (totaling $428 million). The largest CCC with non-Proposition 98 General Fund for ongoing proposal is to provide apportionments a certain purposes. (Most notably, non-Proposition 98 1.5 percent cost-of-living adjustment (COLA). The funds cover debt service on state general Governor’s budget links this base increase to two obligation bonds for CCC facilities, a portion of expectations regarding student equity gaps and CCC faculty retirement costs, and operations at online education. The Governor also proposes the Chancellor’s Office.) Much of CCC’s remaining funding enrollment growth of 0.5 percent (about funding comes from student enrollment fees, other 5,500 additional full-time equivalent [FTE] students). student fees (such as nonresident tuition, parking The Governor’s largest one-time proposals (after fees, and health services fees), and various local the deferral paydown) relate to emergency student sources (such as revenue from facility rentals and financial aid and student basic needs. community service programs). As Figure 1 on the Governor Includes Two of These Proposals next page details, community colleges also are in “Early Action” Package. As part of a broader receiving federal relief funds over the period shown. early action package, the Governor proposes Governor Proposes to Keep Deferrals in $100 million for emergency student financial aid Place for 2020-21, but Then Pay Down Most of grants and $20 million for student retention and Them in 2021-22. The Governor proposes just enrollment strategies. The Governor intends for the over $1.1 billion one-time Proposition 98 General Legislature to consider his early action package in Fund to pay down deferrals in the budget year. the spring. For 2021-22, $326 million in deferrals would Four of These Proposals Are Largely remain in place. Specifically, a portion of CCC’s Reenactments From Last Year. One of May and June 2022 apportionment payments the ongoing proposals (for the California would be deferred to early 2022-23. Growth in the Apprenticeship Initiative) and three of the one-time Proposition 98 minimum guarantee in 2021-22 is proposals (relating to work-based learning, sufficient to cover the ongoing program costs that zero-textbook-cost degrees, and dual enrollment were not covered in 2020-21 due to the deferrals. programs) are the same or very similar to proposals introduced by the Governor last January but withdrawn at the May Revision. 2 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET Governor Proposes No Change to Enrollment was intended to reduce future pension costs. Fee. State law currently sets the CCC enrollment The 2020-21 budget package repurposed this fee at $46 per unit (or $1,380 for a full-time student $2.3 billion to provide immediate budget benefit taking 30 semester units per year). The Governor in 2020-21 and 2021-22. Specifically, community proposes no increase in the fee, which has colleges received an additional $147 million in remained flat since summer 2012. 2020-21 and are scheduled to receive an additional Previous Pension Package Implemented, but $113 million in 2021-22 to cover a portion of their No New Pension Relief. The 2019-20 budget plan pension costs, with their employer contribution included $3.2 billion non-Proposition 98 General rates reduced by approximately 2 percentage Fund for certain pension payments the state was points. The Governor’s budget implements the scheduled to make on behalf of schools and already scheduled payment for 2021-22 but does community colleges. Of this amount, $2.3 billion not propose any new pension relief payments to districts. Figure 1 California Community Colleges Rely Heavily on Proposition 98 Funding (Dollars in Millions, Except Funding Per Student) Change From 2020-21 2019-20 2020-21 2021-22 Revised Revised Proposed Amount Percent Proposition 98 General Fund $6,062 $6,174 $6,413a $239 3.9% Local property tax 3,252 3,414 3,598 184 5.4 Subtotals ($9,313) ($9,588) ($10,011) ($423) (4.4%) Other State Other General Fund $658 $654 $663 $9 1.4% Lottery 246 233 233 —b -0.2 Special funds 18 41 96 55 133.3 Subtotals ($922) ($929) ($992) ($63) (6.8%) Other Local Enrollment fees $455 $445 $447 $1 0.3% Other local revenuec 5,011 4,168 4,098 -71 -1.7 Subtotals ($5,466) ($4,614) ($4,544) (-$69) (-1.5%) Federal Federal relief fundsd $614 $54 $1,280 $1,226 2,272.0% Other federal funds 287 287 287 — — Subtotals ($900) ($341) ($1,567) ($1,226) (359.9%) Totals $16,602 $15,471 $17,114 $1,643 10.6% Full-time equivalent (FTE) students 1,109,723 1,100,046 1,107,695 7,649 0.7%e Proposition 98 funding per FTE student $8,393 $8,716 $9,038 $321 3.7% Total funding per FTE student $14,961 $14,064 $15,450 $1,386 9.9% a Excludes $327 million in proposed apportionment deferrals to 2022-23. b Difference of less than $500,000. c Primarily consists of revenue from student fees (other than enrollment fees), sales and services, and grants and contracts, as well as local debt-service payments. d For 2019-20, consists of $580 million in CARES Act funds for formula allocations (at least half of which is for emergency student aid), $33 million for community colleges designated as minority-serving institutions, and $425,000 for districts designated as institutions with the greatest unmet need. Funds for 2020-21 are designated by the state for a COVID-19 response block grant. Funds for 2021-22 are estimates as of January 2021 per CRRSAA. Of the estimated nearly $1.3 billion total, at least $290 million must be designated for emergency student aid. e Reflects the net of the Governor’s proposed 0.5 percent systemwide enrollment growth together with all other enrollment adjustments. CARES = Coronavirus Aid, Relief, and Economic Security; COVID-19 = coronavirus disease 2019; and CRRSAA = Coronavirus Response and Relief Supplemental Appropriations Act. www.lao.ca.gov 3 analysis full gutter 2021-22 BUDGET help colleges in responding Figure 2 to staffing, salary, and benefit Governor Has Many Proposition 98 pressures while also giving them CCC Spending Proposals flexibility in responding to key local (In Millions) needs. Throughout the remainder of this report, we identify a few Proposal Amount ongoing spending proposals that New Ongoing Spending we believe are good candidates for COLA for apportionments (1.5 percent) $111 such a redirection. Student mental health and technology 30 Enrollment growth (0.5 percent) 23 Also Opportunities to California Apprenticeship Initiative 15 Be More Strategic With COLA for select categorical programs (1.5 percent)a 14 One-Time Initiatives. Spending Online education and support block grant 11 on one-time activities has the CENIC broadband 8 benefit of creating a budget Adult Education Program technical assistance 1 cushion, which helps protect Subtotal ($213) ongoing programs from volatility One-Time Initiatives in the Proposition 98 minimum Deferral paydown $1,127b guarantee. Having a cushion Student emergency financial aid grants 250c seems especially important in Student basic needs 100 2021-22 given the continued and Faculty professional development 20 Student retention and enrollment strategies 20c significant economic uncertainty Work-based learning 20 due to the pandemic. As with the Zero-textbook-cost degrees 15 ongoing proposals, we think the Instructional materials for dual enrollment students 3 Legislature might want to consider AB 1460 implementationd/anti-racism initiatives 1 redirecting funds from some Subtotal ($1,555) one-time initiatives to a more select Total $1,768 set of strategic one-time priorities. a Applies to the Adult Education Program, apprenticeship programs, CalWORKs student services, campus child care support, Disabled Students Programs and Services, Extended Opportunity Specifically, the Legislature could Programs and Services, and mandates block grant. consider redirecting resources b Of this amount, $145 million is scored to 2019-20, $901 million is scored to 2020-21, and $81 million is scored to 2021-22. from lower-priority, one-time c Scored to 2020-21. proposals to (1) paying down more d Implements activities relating to Chapter 32 of 2020 (AB 1460, Weber). deferrals and/or (2) mitigating COLA = cost-of-living adjustment; CENIC = Corporation for Education Network Initiatives in California; and AB = Assembly Bill. districts’ future pension cost increases. Paying down more LAO Comments of the deferrals has several advantages, including reducing districts’ need for Opportunities Exist to Be More Strategic With borrowing, reestablishing the link between ongoing Ongoing Spending Commitments. We believe program costs and ongoing funding, and giving the the Legislature has opportunities to improve the Legislature more budget tools to respond to future Governor’s overall community college budget economic downturns. Paying down future pension package by taking fewer, but more strategic, costs, meanwhile, could help smooth out a notable actions. Regarding ongoing spending, we increase in district costs currently projected for encourage the Legislature to consider increasing 2022-23. Throughout this report, we also identify the augmentation for apportionments by redirecting several one-time initiatives that we believe are good funds from lower-priority proposals. Potentially candidates for this type of redirection. offering a larger increase to apportionments would 4 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET FISCAL IMPACT OF THE PANDEMIC Community Colleges Have Operated colleges, many students are facing extraordinary Remotely Since Start of Pandemic. Prior to challenges, including reduced household income, the pandemic, 17 percent of overall instruction higher technology costs, and disruptions in housing was provided online at the community colleges. arrangements. The percent varied by college, ranging from Federal Government Has Provided 100 percent at Calbright College (a new statewide Substantial Fiscal Relief Both to Colleges online college), to 78 percent at Coastline College, and Students. One source of assistance for the to less than 10 percent at several colleges colleges and their students has been federal relief (including City College of San Francisco and Los funding. The federal government provided higher Angeles Trade-Technical College). In response to education institutions with relief funding shortly after the public health crisis, all community colleges the onset of the pandemic (in spring 2020) and is shifted primarily to remote operations beginning providing a second round of relief funding in winter in March 2020—the middle of the spring term 2021. (See our posts, Overview of Federal Higher for most colleges. Colleges continue to offer the Education Relief and Second Round of Federal vast majority of their instruction online, with the Higher Education Relief Funding, for more detail.) exception of a small number of courses that involve As Figure 3 shows, federal relief funding across the laboratory or other required hands-on work. In two rounds totals nearly $2 billion for community addition, campuses are providing most of their colleges. Each round requires colleges to designate student services (such as academic advising, at least $290 million in federal relief funds for financial aid administration, and mental health emergency student financial aid. The remaining services) online. Colleges tend to be operating $1.4 billion in federal relief funds are available for their noncore programs (such as their bookstores and parking programs) at substantially reduced Figure 3 capacity. Community Colleges Are Receiving Pandemic Has Had Notable Fiscal Federal Relief Funds Implications for Colleges and Students. The (In Millions) colleges’ shift to primarily remote instruction resulted in some extraordinary costs. These costs Spring 2020 Relief Package include acquiring technology such as laptops for CARES Act: Higher Education Emergency Relief Fund employees and students, providing training and Base grants: student aid $290 support for faculty moving their classes online, Base grants: institutional relief 290 Supplemental grants: minority-serving institutions 33 and purchasing personal protective equipment Supplemental grants: institutions with unmet need —a for staff remaining on campus. The Chancellor’s Subtotal ($613) Office estimates that these extraordinary costs Coronavirus Relief Fund $54 total about $350 million through 2020-21. Colleges Total $667 also provided a total of an estimated $58 million Winter 2021 Relief Package in enrollment and other fee refunds to students CRRSAA: Higher Education Emergency Relief Fundb whose classes were abruptly cancelled in spring Base grants: student aid $290 2020 (such as those in performing arts and certain Base grants: institutional relief 1,023 other classes that faculty deemed as too difficult Total $1,313 to convert to an online format) or who were Grand Total $1,981 otherwise unable or unwilling to stay enrolled. a Certain colleges received supplemental grants totaling $425,000. In addition, colleges have experienced revenue b Shows CRRSAA allocations known to date. losses from parking, food services, facility rentals, Note: In most cases, campuses have one year from receiving funds to spend them. CARES = Coronavirus Aid, Relief, and Economic Security and and various other noncore programs. As with the CRRSAA = Coronavirus Response and Relief Supplemental Appropriations Act. www.lao.ca.gov 5 analysis full gutter 2021-22 BUDGET college operations. College relief funds can be our discussions with various districts, these federal used for an array of expenses, including health funds appear to be sufficient to cover the colleges’ and safety measures, technology, professional costs and revenue losses related to the pandemic development, and backfilling revenue declines from through 2020-21. parking and other noncore programs. Based on APPORTIONMENTS In this section, we provide background on provide the Chancellor’s Office with authority to community college apportionment funding, use alternative years of data in extraordinary cases. describe the Governor’s proposals to increase Known as the “emergency conditions allowance,” apportionments for inflation and enrollment growth, the Chancellor’s Office has been allowing colleges assess those proposals, and offer associated to use alternative years of data for 2019-20 and recommendations. 2020-21. (The 2020-21 budget also explicitly provided colleges with this flexibility.) The purpose Background of the emergency conditions allowance is to State Adopted New Apportionment Funding prevent districts from having their apportionment Formula in 2018-19. For many years, the state has funding reduced due to enrollment drops and other allocated general purpose funding to community disruptions resulting from the pandemic. colleges using an apportionment formula. Prior Formula Insulates Districts From Certain to 2018-19, the state based apportionment Funding Losses for Next Several Years. In funding for credit instruction almost entirely on addition to the regulatory emergency conditions enrollment. In 2018-19, the state changed the allowance just described, statute includes “hold credit-based apportionment formula to include harmless” provisions for community college three main components—a base allocation linked districts that would have received more funding to enrollment, a supplemental allocation linked to under the apportionment formula that existed low-income student counts, and a student success prior to 2018-19 than the new formula. Through allocation linked to specified student outcomes. Of 2023-24, these community college districts are total apportionment funding, the base allocation to receive the total apportionment amount they accounts for 70 percent, the supplemental received in 2017-18 adjusted for COLA each year allocation accounts for 20 percent, and the student of the period. Beginning in 2024-25, districts success allocation accounts for 10 percent. For are to receive no less than the per-student rate each of the three components, the state set they generated in 2017-18 under the former per-student funding rates. The rates increase in apportionment formula multiplied by their current years in which the state provides a COLA. The FTE student count. In 2020-21, 32 districts were new formula—formally known as the Student held harmless under these provisions, and the state Centered Funding Formula—does not apply to provided $170 million in total hold harmless funding incarcerated students or high school students in (that is, funding above what these districts would credit programs. It also does not apply to students have generated based upon the Student Centered in noncredit programs. Apportionments for these Funding Formula). students remain based entirely on enrollment. State Allocates Enrollment Growth Due to Disruptions Resulting From Pandemic, Separately. Enrollment growth funding is provided Certain Aspects of Formula Have Been on top of the funding derived from all the other Temporarily Modified. Statute specifies the years components of the apportionment formula. Statute of data that are to be used to calculate the amount does not specify how the state is to go about a district generates under the Student Centered determining how much growth funding to provide. Funding Formula. State regulations, however, Historically, the state considers several factors, 6 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET including changes in the adult population, the decline in terms of headcount). Nearly all districts unemployment rate, prior-year enrollment, and the that have submitted data to the Chancellor’s Office condition of the General Fund. as of the end of January 2021 report an enrollment drop. While enrollment declines are affecting most Enrollment Trends student demographic groups, districts generally Heading Into the Pandemic, CCC Enrollment report the largest enrollment declines among Had Plateaued. During the Great Recession, African American, Hispanic, male, and older adult community college student demand increased, but students. Based on our discussions with various enrollment ended up dropping as the state reduced districts, spring 2021 enrollment is down similarly funding for the colleges. As state funding recovered to fall 2020. during the early years of the economic expansion Several Factors Likely Contributing to (2012-13 through 2015-16), systemwide enrollment Enrollment Drops. Based on our discussions with increased. Enrollment flattened thereafter, as the colleges and national surveys, reduced enrollment period of economic expansion continued and demand in 2020-21 likely is due to a number of unemployment remained at or near record lows. factors. Some students believe they do not do well CCC Enrollment Increased in Summer learning in an online format. Others, particularly in 2020. Historically, enrollment demand at the rural areas, indicate they lack reliable, high-speed community colleges increases during a recession, internet connectivity to take online classes. Taking as individuals affected by the economic downturn online courses also could be difficult due to a lack seek retraining. Summer 2020 appeared to follow of a quiet study space at home. Beyond these this trend, as enrollment ended up higher than the challenges, community college students who are summer 2019 level by about 4,000 FTE students parents or otherwise responsible for taking care of (3.3 percent). Enrollment was uneven throughout children could have less ability to study themselves the state, though, with 40 districts reporting an given K-12 school closures. Students also might increase and 31 districts reporting a decline. (As consider working (if they still have a job) even more of this writing, one district has not yet reported important if other family members have lost jobs, or summer 2020 enrollment.) Based on discussions they could be spending time looking for a new job with the RP Group (a statewide organization of if they recently lost one. In either of these cases, CCC researchers) and district administrators, enrolling in college coursework might have become the systemwide increase could be due in part to a lower priority for them. students re-enrolling in the summer to complete Proposals courses they had withdrawn from in the spring. It also could be due in part to students seeking Proposes COLA Tied to Districts Meeting transfer—or already enrolled at a university— Two Conditions. The Governor’s budget includes deciding to take online courses to earn college $111 million to cover a 1.5 percent COLA for credits over the summer. Summer enrollment apportionments. (The 2020-21 budget did not increased considerably in transfer-level courses provide a COLA.) This proposed COLA is less such as psychology, chemistry, and calculus than half of the 3.84 percent COLA proposed for (but declined in other programs such as physical school districts’ Local Control Funding Formula education, culinary arts, and cosmetology/ (LCFF), which the Governor’s budget states barbering). would make up for the lack of an LCFF COLA in CCC Enrollment Dropped Notably in Fall the current year. As a condition of receiving the 2020. As of this writing, the Chancellor’s Office apportionment COLA, community college districts had not yet received complete fall 2020 enrollment would be required to: (1) submit a plan by June 30, data from districts. Based on surveys by the RP 2022 that identifies strategies for reducing equity Group and preliminary Chancellor’s Office data, gaps by 40 percent by 2023 and fully closing them FTE students declined by an estimated 11 percent by 2027 and (2) adopt policies by June 30, 2022 systemwide from fall 2019 to fall 2020 (an 8 percent designed to maintain the share of campuses’ www.lao.ca.gov 7 analysis full gutter 2021-22 BUDGET online courses and programs at a level that is accounting for another 10 percent to 15 percent of at least 10 percentage points higher than their total compensation costs. District health care costs share in 2018-19. (The Governor links proposed for active employees can vary, but it is common to base increases for the universities to meeting account for roughly 10 percent of compensation similar conditions, as well as to a requirement that costs. Retiree health care costs can vary too, but they create a dual admission pathway with the often account for less than 5 percent of costs. In community colleges.) addition to these costs, districts must pay various Funds Enrollment Growth. The budget includes other compensation-related costs for employees, $23 million for 0.5 percent systemwide enrollment such as workers’ compensation and unemployment growth (equating to about 5,500 additional FTE insurance, which together typically account for students). Each district, in turn, would be eligible about 5 percent of total costs. to grow up to 0.5 percent. Provisional language for Districts Are Facing Pensions and Other Cost the budget year allows the Chancellor’s Office to Pressures in 2021-22. Augmenting apportionment allocate any ultimately unused growth funding to funding can help community colleges cover backfill any shortfalls in the apportionment funding, employee salary increases, higher pension costs, such as ones resulting from lower-than-estimated and higher health care premiums, among other enrollment fee or local property tax revenue. The cost increases. Community college pension costs, Chancellor’s Office could make any such redirection for example, are increasing by a total of about after underlying data had been finalized, which $70 million for 2021-22, with the amount increasing would occur after the close of the fiscal year. (This by another about $160 million in 2022-23. Health is the same provisional language that has been care premiums are expected to increase by about used in recent years.) 5 percent at a number of districts in 2021-22, with Proposes One-Time Funding to Boost some districts reporting increases of 8 percent or Outreach to Students. The Governor’s budget 9 percent. Some districts cover the full increase also includes $20 million one time for student in health care premiums. In other cases, districts outreach as part of his early action package. The cap the amount they cover and require employees purpose of these funds is for colleges to reach to cover all or part of any increase. Like school out to former students who recently dropped out districts, community college districts also face and engage with current or prospective students cost pressures to provide a COLA to salaries given who might be hesitant to enroll at the colleges due increased living costs for their employees. to the pandemic. At the time of this writing, the Requiring Districts to Develop Equity Plans administration had not yet submitted provisional Would Be Redundant. This is because districts language including the details of the proposal. already must develop and update every three years The administration indicates its intention is to student equity plans. The state requires these be flexible, allowing the Chancellor’s Office to plans as a condition of districts receiving Student decide grant recipients, amounts, and timing. Equity and Achievement Program funds. In these The Chancellor’s Office could distribute the funds plans, districts are required to identify equity gaps among community college districts or retain them by student race/ethnicity, age, and various other centrally for a statewide outreach effort. demographics. They also must identify strategies to close those gaps. These district plans already Assessment are aligned with the goals cited in the Governor’s Districts Have Various Compensation-Related provisional language (that is, a 40 percent reduction Costs. On average, districts spend about in equity gaps by 2023, with equity-gap elimination 85 percent of their operating budget on salary by 2027), which originated in the CCC system’s and benefit (compensation) costs. While the exact 2017 Vision for Success strategic plan. Figure 4 on split varies from district to district, salaries and the next page shows the 2027 goals of the Vision wages can account for up to about 70 percent of for Success by racial/ethnic groups. total compensation costs, with pensions typically 8 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET Proposed Online Education Figure 4 Requirement Is Arbitrary and Community College System Lacks Justification. Online Has Set a Goal to Close Equity Gaps education can offer a number of potential benefits, including Three-Year Rate to Transfer or Earn an Associate Degree or Certificate, 2016-17 Cohort making coursework more accessible to students who otherwise might not be able to Asian American enroll due to restrictive personal or professional obligations and White allowing campuses to increase instruction and enrollment Pacific Islander/Native without a commensurate need for Hawaiian additional physical infrastructure. Online instruction is not suited American Indian/Alaskan Native for every student or educational program, though, and research African American suggests that online courses tend to have lower completion rates than in-person instruction, Hispanic with greater gaps for African American and Hispanic students. 10 20 30 40 50% Given student demand for online courses and campus facility Goal by 2027 issues, we are concerned that the administration has not justified whether the proposed 10 percentage point increase is model. Community colleges generally are taking warranted. In addition, all colleges, regardless of a “wait and see” approach and plan to make a their baseline, would be expected to increase their decision by spring depending on the trajectory of online offerings by the same percentage point. the pandemic and updates on the effectiveness A more refined analysis might indicate a higher of vaccines and vaccine deployment. On the one or lower level of online education is desirable at hand, if colleges—and K-12 schools—reopen any particular campus. Without a clearer rationale in the fall and the economy is slow to recover for setting online enrollment targets, colleges for displaced workers, CCC enrollment demand could make poor decisions that work counter to could be strong. If colleges remain primarily online promoting student success. For example, arbitrary in the fall and children must continue to attend increases in online courses potentially could work school virtually, CCC enrollment demand could counter to the Governor’s proposed expectation to remain weak. eliminate equity gaps. Merit of Governor’s Retention and Enrollment Enrollment Demand in 2021-22 Could Proposal Also Depends on Fall 2021 Decisions. Depend on a Number of Factors. Because they As discussed above, the drop in enrollment are open-access institutions, community college demand this year likely is due to a number of enrollment demand is often difficult to predict. This factors, including individuals being reluctant to year is even more difficult given the disruptions take online classes and their need to be home caused by the pandemic. As of this writing, it while their children are attending online school. is unclear whether fall 2021 instruction will be Were community colleges and schools able primarily virtual, primarily in-person, or a hybrid to reopen campuses in the fall for instruction, www.lao.ca.gov 9 analysis full gutter 2021-22 BUDGET community colleges could use the Governor’s of the proposed 10 percentage point increase proposed $20 million one time to boost outreach in online courses, we also recommend rejecting and advertising in the community. Colleges could this proposal. However, we understand the hire limited-term workers, for example, to contact administration’s desire to maintain the current former students and inform them of the programs momentum toward developing and improving that will be offered on campus. (The potential effect online courses. To this end, we recommend the of these types of efforts on enrollment levels is Legislature instead adopt budget bill language uncertain.) Were community colleges and schools directing the Chancellor’s Office to report on to remain primarily virtual in the fall, however, it is campuses’ experiences with online education. unclear how the proposed funds would be useful Such a report should include: (1) analysis as given the underlying reasons for weak enrollment to which courses are most suitable for online demand would be unchanged. instruction, (2) an estimate of the fiscal impact of expanding online education, (3) a plan for improving Recommendations student access and outcomes using technology, Make COLA Decision Once Better Information and (4) an assessment of the need for additional Is Available This Spring. As with school funding, faculty professional development. To ensure the COLA for CCC apportionments is based on the this information is available to assist next year’s price index for state and local governments. The budget deliberations, we recommend requiring COLA rate will be locked down in late April when the Chancellor’s Office to submit this information the state receives updated data from the federal by November 2021. Such a report would give the Bureau of Economic Analysis. By early May, the Legislature a better basis to determine how to Legislature also will have better information on state support online education at the community college revenues, which, in turn, will affect the amount in the coming years. available for new CCC Proposition 98 spending. Withhold Decisions on Enrollment Growth If additional Proposition 98 ongoing funds are and Retention-Enrollment Proposals. Though available in May, the Legislature may wish to the Legislature currently lacks key information to provide an even greater increase than the Governor help it make an informed decision on enrollment proposes to community college apportionments. growth and the Governor’s retention and enrollment A larger increase would help all community college proposal, more clarity likely will come over the next districts address rising pension and health care several months. By the time of the May Revision, costs while also addressing pressure to increase the Chancellor’s Office will have provided the employee salaries. The Legislature also could Legislature with final 2019-20 enrollment data consider repurposing lower-priority ongoing and initial 2020-21 enrollment data. By that time, proposals to support a larger COLA. (We identify more school and CCC districts also likely will some lower-priority proposals later in this analysis.) have announced their fall instructional plans. This Reject Governor’s Two Conditions Tied to information, in turn, will help the Legislature assess a COLA, but Require Report About Online whether the Governor’s proposed 0.5 percent Education. Given that the state already requires enrollment growth expectation for the CCC system districts to maintain and update a plan aimed at in 2021-22 is reasonable. Similarly, this information eliminating student equity gaps, we recommend will help the Legislature better assess whether the Legislature reject the Governor’s proposal to one-time funds for community college outreach and require another equity plan. Given the arbitrariness advertising might be advantageous. 10 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET STUDENT SUPPORT In this section, we focus on student support $1,648 annually) and Student Success Completion programs. The Governor has three proposals in this Grant (worth up to $4,000 annually for Cal Grant area, together totaling $380 million Proposition 98 recipients attending CCC full time). Federally General Fund ($30 million ongoing and $350 million subsidized and unsubsidized loan programs also one time). The proposals would fund food, housing, are available to assist students. These grants and mental health, and technology initiatives, as well loans can be used for any cost of attendance, as emergency grants. After providing background including housing, food, transportation, books, and on student support programs, we describe each supplies. of the proposals in this area, then assess those Targeted Programs Also Support Basic proposals, and make associated recommendations. Needs. In addition to traditional financial aid programs, many colleges operate programs Background targeted toward students’ basic needs. These Many Students Report Difficulty Covering programs include on-campus food pantries, Basic Needs. The term “students’ basic needs” emergency housing, and health services (including generally refers to living costs that affect students’ mental health services), among others. These well-being. Definitions vary, but they almost always targeted programs are funded through a mix of include food and housing and may also include sources, including state funds, donations, and, other components, such as access to medical care, in the case of health services, student fees. mental health services, and technology. Previous As Figure 5 shows, the state has funded several surveys suggest a notable share of CCC students basic needs initiatives in recent years. With one have difficulty covering certain basic needs. In exception (the rapid rehousing program), these particular, in surveys of CCC students conducted programs were supported with one-time funds before the pandemic, 41 percent reported they through 2019-20. The 2020-21 budget package skipped meals or cut the size of their meals for then added a requirement that districts operate financial reasons and 12 percent reported not on-campus food pantries or food distributions as eating for at least one whole day the prior month a condition of receiving ongoing Student Equity because of lack of money. Rates of food and and Achievement Program (SEAP) funds. (This housing insecurity are highest among African program funds academic counseling and various Americans; American Indians; Pacific Islanders; other strategies aimed at improving student and students who identify as gay, lesbian, bisexual, completion rates and closing equity gaps.) The transgender, or nonbinary. (Because the survey had 2020-21 budget did not provide an augmentation a 5 percent response rate, respondents may not be to SEAP to operate these food services. (The representative of the overall CCC student population.) Figure 5 Traditional Financial Aid State Has Funded Several CCC Basic Needs Initiatives Programs Provide Support for One-Time Proposition 98 General Fund, Unless Otherwise Noted (In Millions) Basic Needs. The primary way the federal government and the 2017‑18 2018‑19 2019‑20 2020‑21 state support living costs for CCC Food pantries $2.5 $10.0 $3.9 —a students is through financial aid. Rapid rehousing — — 9.0b $9.0b Many CCC students with financial Mental health services 4.5 10.0 7.0c — need qualify for a federal Pell Grant Totals $7.0 $20.0 $20.0 $9.0 (worth up to $6,345 in 2020-21). a The 2020-21 budget package requires districts to operate a food pantry or food distribution program as a condition of In addition, the state funds the Cal receiving Student Equity and Achievement Program funds. b Reflects ongoing Proposition 98 General Fund support. Grant access award (worth up to c Reflects one-time Proposition 63 funds (Mental Health Services Fund). www.lao.ca.gov 11 analysis full gutter 2021-22 BUDGET Governor’s 2020-21 budget proposed $11.4 million Proposals in ongoing funds to support campus food services, Proposes Ongoing Funds for Mental Health but the proposal was rescinded in the May Revision and Technology. The Governor proposes to due to a projected state budget shortfall.) provide community colleges with $30 million During Pandemic, Many Students Report ongoing Proposition 98 General Fund for student Having More Challenges With Basic Needs. The mental health services and access to technology state does not have comprehensive data on the (electronic devices and internet connectivity). The impact of the pandemic on student financial need, provisional language does not specify what portion largely because financial aid applications use of funds is to be used in each of the two areas, income data from two years prior to the award year. with the colleges having discretion to determine the However, surveys suggest many students have had split. Provisional language includes a requirement unanticipated financial needs due to the pandemic. for the Chancellor’s Office to report by January 1, In a California Student Aid Commission survey 2025 and every three years thereafter on how much of financial aid applicants across all segments each district received and how they used the funds. conducted in late spring 2020, over 70 percent of Proposes One-Time Funds for Basic Needs. respondents reported experiencing a loss of income The Governor proposes $100 million one-time due to the pandemic. Students also reported Proposition 98 General Fund for addressing increased concern about paying for various living student food and housing insecurity. Funds could costs, including housing and food, health care, be used for various activities, including to support and technology. (This survey had a response rate food pantries, enroll students in CalFresh (food of 12 percent.) Also in late spring 2020, a Student benefits for low-income individuals), and help Senate for CCC survey found that 67 percent of homeless students obtain housing. Funds would be respondents reported they were experiencing available for encumbrance through June 30, 2024. a higher level of anxiety, stress, or other mental Provisional language includes a requirement for the distress than usual. (This survey was completed by Chancellor’s Office to report by January 1, 2025 on a total of 1,690 students from 64 colleges.) how much funding it provided to each district, how Relief Funds Have Provided Emergency the funds were used, the impact the funds had Grants and Other Assistance to on reducing food and housing insecurity among Students. Community colleges received a first students, and certain other information. round of federal relief funds in spring 2020 and Proposes One-Time Funds for Emergency are expecting to receive a second round of funds Grants. The Governor proposes to provide a total shortly. Colleges must spend a portion of these of $250 million one-time Proposition 98 General funds for student aid. Systemwide across the two Fund for these grants. Of this amount, $100 million rounds, the minimum portion that must be used is proposed as part of the Governor’s early action for student aid totals $580 million. Under the package. Trailer bill language specifies that the new federal legislation (relating to second-round Chancellor’s Office would allocate the funds to funding), grants may support students’ regular colleges based on their headcount of Pell Grant costs of attendance or emergency expenses related recipients, as well as undocumented students to the pandemic. The new legislation includes qualifying for resident tuition who meet certain a requirement for institutions to prioritize aid for income criteria. Colleges may award grants to students with exceptional need, such as Pell students who self-certify that they meet the Grant recipients. In addition to the federal relief following criteria: funds, the state provided CCC with $11 million non-Proposition 98 General Fund in the 2020-21 • Have an emergency financial need. Budget Act for emergency grants to undocumented • Meet the financial eligibility requirements to students. The colleges also have used federal relief receive a CCC fee waiver. funds to provide laptops and other technology to • Meet certain enrollment or employment students so they can access online courses. conditions. 12 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET Assessment student outcomes. Absent clearly stated objectives, holding colleges accountable for their use of the Proposals Address a Longstanding Problem funds would be difficult. Exacerbated by the Pandemic. Despite the lack To Be Sustainable, Basic Needs Programs of comprehensive data measuring students’ unmet Require Some Ongoing Funding. Basic needs basic needs, the available survey data suggests programs have some ongoing operational that unmet needs are substantial. Moreover, these costs. Food pantries, for example, need staff to needs have likely increased for some students obtain food supplies from community partners, during the pandemic. The Governor’s proposals manage inventory, and assist students who visit address this sizable and timely problem. the pantries. Because such operations entail To Date, State Has Taken a Piecemeal ongoing costs, colleges have difficulty maintaining Approach to Addressing Students’ Basic consistent levels of service using one-time Needs. Over the past four years, the state has allocations. Due to estimates at the time about a funded multiple basic needs initiatives at the decline in the Proposition 98 minimum guarantee, colleges. However, the state’s overarching strategy the state made the difficult decision last year not for addressing students’ root problems remains to provide dedicated, ongoing funding for campus unclear. The state lacks a definition of what basic food services. The state knew that by requiring needs include, a way of measuring demand for colleges to operate food service programs out programs supporting them, an expectation about of existing SEAP funds, the new requirement levels of service, and clearly articulated goals about likely would result in a reduction in existing desired student outcomes. In the absence of this SEAP-funded activities (such as counseling, basic framework, funding levels for basic needs tutoring, and other targeted academic support for initiatives have tended to wax and wane each year, traditionally underrepresented student groups). without a strong guiding policy rationale. Moreover, Now that revised estimates suggest additional the state’s approach to allocating funds among funding is available for CCC, the Legislature has the higher education segments is inconsistent and an opportunity to revisit its 2020-21 budget action. has not directly tied funding to need. For example, This could include providing colleges a minimum the University of California receives ongoing state level of ongoing support for sustaining their funding for its basic needs initiative, while CCC, basic needs services. In addition, the Legislature which serves a greater proportion of low-income could consider providing some one-time funding students, has primarily received one-time funds. to address variable costs (such as purchasing Governor’s Proposals Would Add to This additional food during an economic downturn, Uncoordinated Approach. The Governor when more students than usual may be in need). proposes to create a new mental health and Opportunity Exists to Coordinate Proposed technology program on top of the existing basic State Emergency Grants and Federal Relief needs programs. That new program combines Grants. The administration did not have the two distinct objectives—increasing student mental benefit of knowing about the new federal relief health resources and increasing digital equity— package when developing its budget proposals, without a clear nexus between the two. Moreover, as the federal legislation was not enacted until it is unclear how the new funds are intended to late December 2020. Now that substantial new interact with the campus mental health programs federal funds have been authorized for student aid, currently supported by student fees or the the Legislature can consider what one-time state proposed funding for online tools that will support funding, if any, it would like to add in this area. telehealth services for students. Similarly, it is Unfortunately, as with many other groups impacted unclear how the proposed funds for basic needs by the pandemic, there is no comprehensive data are intended to interact with CCC’s existing rapid measuring the increase in students’ financial need rehousing program. As with existing basic needs under the pandemic, or the amount of unmet programs, the Governor’s proposals also do not set need remaining after accounting for traditional and any expectations for levels of service and desired www.lao.ca.gov 13 analysis full gutter 2021-22 BUDGET emergency financial aid programs. As a result, number of days students report being homeless, the Legislature has no easy way to determine if and average wait times to see a mental health additional state funds are warranted. professional, among other information. Opportunities Remain to Leverage Public Evaluate Emergency Grants Proposal in Assistance Programs. Over the past several Light of New Federal Relief. We recommend the years, the state has worked to increase student Legislature direct the Chancellor’s Office to report enrollment in CalFresh. Nonetheless, a recent this spring on colleges’ plans for the upcoming report from the California Department of Social federal relief funds. These spring plans should Services estimates that between 290,000 and (1) identify the amount of federal relief funds that 560,000 students eligible for CalFresh across colleges intend to use for student aid, (2) estimate California’s public segments were not enrolled as the number of students likely to receive federal of 2018-19. (No estimate is available specifically emergency grants, (3) describe the methods for community college students.) The state has an colleges are using to distribute funds among opportunity to further increase CalFresh enrollment students, (4) estimate the amount of aid a student in 2020-21 and 2021-22 as a result of the new is likely to receive, and (5) identify students’ federal relief legislation. That legislation expands remaining financial needs. After obtaining this student CalFresh eligibility during the public information, the Legislature would be in a better health emergency by removing the standard work position to make a decision on the proposed requirement for certain students who are very low state emergency aid funds. For example, the income or eligible for work-study. Moreover, the Legislature could design state aid to supplement state has opportunities to translate the lessons federal aid, such as by providing summer-term learned from its CalFresh student enrollment efforts assistance to students who would receive federal to various other public assistance programs (such aid in the spring. Alternatively, the Legislature could as Medi-Cal, the Earned Income Tax Credit, and decide that federally funded emergency grants unemployment insurance) that students may be are sufficient in size and instead repurpose the underutilizing. proposed state funds for other one-time priorities (such as paying down additional deferrals or Recommendations providing more pension relief to districts). If the Consider Creating a Basic Needs Block Legislature provides additional funds for emergency Grant. The Governor’s focus on students’ basic student aid in 2021-22, we recommend requiring needs is laudable, but his proposals in this area colleges to report on how they distribute and use lack coordination and accountability. A more the additional funding, as this could help guide coherent approach the Legislature might consider future state budget decisions. The state required would be to pool all or a portion of the proposed similar reports for the emergency aid it provided to new funds and the existing rapid rehousing undocumented students in 2020-21. program into a basic needs block grant. Under Expand Efforts to Increase Student Utilization such an approach, districts would have flexibility to of Public Assistance Programs. In addition to use the funds for any combination of food, housing, increasing the number of students enrolled in mental health, and technology services, based on CalFresh, there are likely opportunities to expand the needs of their students. A major component student enrollment in other public assistance of such a block grant would be an accountability programs, which could help students cover other system that (1) identifies the state’s expected levels costs, including housing, mental health, and of service and student outcomes and (2) includes technology costs. The Legislature could direct regular reporting that tracks and measures districts’ community colleges to partner with the relevant performance in meeting these objectives. For state and local agencies to explore strategies example, annual reports provided by districts to increase utilization of other public assistance could identify student enrollment in CalFresh, the among college students. 14 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET ONLINE TOOLS In this section, we provide background on CCC’s professionals for medical or mental health issues). Online Education Initiative, discuss the Governor’s Colleges can choose which of these online tools proposal to augment funding for colleges’ online they would like to integrate into their local Canvas tools, assess the proposal, and provide an configurations. associated recommendation. OEI Has Three Types of Price Assistance for Colleges. Using its state appropriation, OEI fully Background subsidizes Canvas subscription costs on behalf of Initiative Aims to Provide Systemwide Access colleges. OEI also fully subsidizes technical (help to Online Courses. The Online Education Initiative desk) support for Canvas users and subscription (OEI) consists of several projects, including a costs for certain online tools. For other online common course management system for colleges, tools, OEI provides a partial subsidy for colleges resources to help faculty design high-quality (also using its state appropriation). The third online courses, and the California Virtual Campus type of price assistance involves negotiating a Exchange. The exchange creates a more “bulk” discounted rate for certain online tools that streamlined process for students at participating colleges use their own funds to purchase. To help it colleges to take online classes from other negotiate discounted rates, the Chancellor’s Office participating colleges. The state currently provides typically partners with other agencies, including the $20 million ongoing Proposition 98 General Fund Foundation for California Community Colleges. for OEI. The Chancellor’s Office has a grant with Mass Migration to Online Instruction Led to the Foothill-De Anza Community College District to Cost Pressures on OEI. Beginning in March 2020, administer OEI. OEI costs escalated primarily for two reasons. Common Course Management System Is a First, the Chancellor’s Office decided to support Key Component of Initiative. Faculty use a course colleges’ transition to online courses by fully management system to post course information subsidizing certain online tools (such as the (such as the syllabus), instructional content (such accessibility tool) that previously were the financial as readings and videos), assignments, and other responsibility of colleges. In addition, colleges’ material. Students use the system to submit largescale migration to online instruction resulted assignments, collaborate with classmates, and in higher usage rates of Canvas, the Canvas help communicate with instructors. Historically, each desk (which OEI upgraded from limited technical college or district had selected its own course support to 24/7 assistance for users), and various management system from among several vendors. online tools integrated with Canvas. Higher usage In 2015, a large committee overseen by the rates, in turn, resulted in higher subscription and Chancellor’s Office selected the Canvas course maintenance costs. management system to be the common system Chancellor’s Office Has Announced Some across colleges. Currently, all but one community Costs Will Have to Shift to Colleges Absent college use Canvas. (Calbright College, a fully Additional State Funding. The Chancellor’s online college, uses a separate system.) Office has responded to these higher OEI costs A Suite of Online Tools Can Be Integrated by redirecting unspent funds from certain other Into Canvas. This suite includes a platform that areas of CCC’s budget, including funds previously permits students and their academic counselors set aside for in-person trainings. In addition, OEI to meet virtually, a platform that enables students has been scaling back some of its subsidies. For to participate in virtual science labs, a tool that example, OEI began limiting the number of tutoring gauges the accessibility of instructors’ online hours it will subsidize for an online tutoring service. course content, and telehealth services (which As of January 2021, colleges that wish to exceed allow students to access third-party health care their initial allotment of hours must cover the costs www.lao.ca.gov 15 analysis full gutter 2021-22 BUDGET using district funds. Recently, the Chancellor’s Colleges Have Federal Relief Funds to Help Office notified colleges of plans to reduce the state With Extraordinary Pandemic-Related Costs. subsidy for other online tools beginning in July As discussed earlier in our report, colleges are 2021 absent additional state funding for 2021-22. receiving approximately $1.4 billion in federal campus relief funds—considerably more than the Proposal reported adverse fiscal impacts of the pandemic on colleges to date. Based on our discussions with Proposes $10.6 Million Ongoing Augmentation for Online Tools. The augmentation districts, this federal relief funding remains available would bring total funding for OEI to $30.6 million to cover extraordinary costs associated with the Proposition 98 General Fund. (Although the pandemic, such as higher subscription and usage proposal relates to OEI, the Governor’s budget costs from online tools. Colleges have until next places the $10.6 million in a separate categorical year (2022) to use these funds. program that supports various other systemwide Recommendation technology projects, including electronic transcripts.) The Governor’s budget does not Reject Proposal, Reevaluate Need for specify the specific online tools that are to be Additional Funding Next Year. Given that the supported with the additional funds, but provisional out-year costs to support OEI are unknown and language states that the funds “may include, but federal relief funding remains available, providing an are not limited to, access to online tutoring and ongoing augmentation for the program at this time counseling, ensuring available technical support, is premature. (Colleges may have even more federal and providing mental health services and other relief funds should Congress approve the Biden student support services.” The language is silent on Administration’s recovery proposal now under who would administer the additional funding. consideration.) We thus recommend the Legislature reject the Governor’s proposal. Instead of providing Assessment an augmentation in 2021-22, we recommend directing the Chancellor’s Office to report in spring Unclear How Long Online Usage Rates Will Remain at Elevated Levels. Given increasing 2022 on the status of campus reopenings and vaccine deployments, colleges might be able to what the implication is for the usage rates and offer more in-person instruction during the 2021-22 costs of Canvas and the suite of associated online academic year. Were this to happen, pressure tools. With that information, the Legislature could on OEI would be reduced at least somewhat, if make a better determination of whether to provide not significantly. additional funding for OEI for 2022-23. APPRENTICESHIPS AND WORK-BASED LEARNING In this section, we provide background on Background (1) traditional apprenticeships, (2) a state-funded Some Individuals Are Trained Through apprenticeship program focusing on nontraditional Traditional Apprenticeships. The state sectors, and (3) CCC initiatives that incorporate has about 93,000 apprentices, mostly in the work-based leaning. We then describe the construction trades and public safety (including Governor’s proposals in each of these areas, firefighting) sectors. Apprenticeships in these assess those proposals, and offer associated sectors are commonly referred to as “traditional recommendations. apprenticeships.” Apprenticeship programs consist of two key components: (1) on-the-job training completed under the supervision of skilled workers and (2) classroom learning, known as related 16 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET and supplemental instruction (RSI). Traditional Work-Based Learning Covers a Broad apprenticeships typically are sponsored by Range of Career Readiness Activities. Defined employers and labor unions. These sponsors are broadly, work-based learning refers to activities largely responsible for providing on-the-job training. that promote career exploration and preparation. It is also common for sponsors to directly provide Schools and colleges choose what specific RSI, taught by their employees at stand-alone work-based learning opportunities to provide their training centers. students. Common opportunities include guest State Reimburses Apprenticeship Sponsors job shadowing, internships, and apprenticeships. for Instruction. Sponsors typically cover the Promoting work-based learning is a key purpose majority of the costs of instructing and training of the Strong Workforce Program. The state apprentices, often maintaining a training trust provides CCC with $248 million annually for this fund to support those costs. However, the state program. Work-based learning also is an important has a longstanding CCC categorical program component of CCC’s Guided Pathways Program, that reimburses sponsors for a portion of their which aims to develop structured, efficient instructional costs. Sponsors are reimbursed at the academic course sequences for entering students. hourly rate set for certain CCC noncredit instruction State law defines guided pathways to include (currently $6.44). Sponsors must partner with a “group projects, internships, and other applied school or community college district to qualify for learning experiences to enhance instruction and these funds. To receive reimbursement, the sponsor student success.” In 2017-18, the state provided submits a record of RSI hours to the partnering CCC with $150 million one time for this initiative. district, which, in turn, submits those hours to The majority of Guided Pathways Program funds the Chancellor’s Office. The Chancellor’s Office are being allocated to colleges in stages across five provides RSI funds to the district, which takes years, through 2021-22. a small portion of the funds off the top and then Proposals passes the remaining funds to the sponsor. State Seeks to Spur Apprenticeship Programs Proposes COLA for Traditional in Nontraditional Sectors. In 2015-16, the state Apprenticeship Programs. The Governor’s created the California Apprenticeship Initiative budget provides $1 million for a 1.5 percent COLA (CAI) to support new apprenticeship programs on the RSI rate. This would increase the hourly in high-growth industry sectors—such as health reimbursement rate from $6.44 to $6.54. The care, information technology, and clean energy— Governor’s budget would not change the number that have not traditionally used the apprenticeship of RSI hours that are funded (a total of about model. The state has provided $15 million 10 million hours in 2020-21). annually—a total of $90 million to date—for CAI. Proposes to Double Ongoing Funding for CAI. Community college districts and K-12 agencies Under the Governor’s proposal, CAI would receive (including school districts and county offices of a $15 million ongoing augmentation in 2020-21, education) may apply for these grants. To be bringing total ongoing funding to $30 million. The eligible for funding, applicants must demonstrate Governor proposes no other changes to CAI. a commitment from one or more employers to hire Proposes $20 Million One Time for New participating apprentices. Applicants also must Work-Based Learning Initiative. Under the submit a description of their program and a budget, Governor’s proposal, this funding would support among other criteria. Grant funding is intended to competitive grants to colleges to “expand cover program start-up costs such as curriculum work-based learning models and programs at development. As CAI funds are only available for community colleges, with the goal of ensuring that a limited term, grantees are expected to find other students complete programs with applied work fund sources to cover ongoing program costs once experience.” Provisional language charges the the grant expires. Chancellor’s Office with developing a competitive grant process for allocating the funds. At this time, www.lao.ca.gov 17 analysis full gutter 2021-22 BUDGET the Chancellor’s Office is considering providing state also supports apprenticeships—one form of $1 million each to 20 colleges, with a focus on work-based learning—through both a categorical funding additional apprenticeships, internships, program that reimburses sponsors for instructional clinical practicums, and applied learning hours and a competitive grant program that experiences within the classroom. The funds would provides seed funding for new apprenticeships. be available through June 30, 2026. One-Time Funds Are Not a Good Fit for Supporting the Proposed Work-Based Learning Assessment Activities. Based on conversations with the No Concerns With COLA for Traditional Chancellor’s Office, the proposed grants likely Apprenticeships. We do not have concerns with would support a range of expenses, including the proposed COLA for traditional apprenticeships. work-based learning coordinators, stipends for The augmentation would allow apprenticeship industry practitioners to provide work-based sponsors and partnering districts to address learning opportunities, curriculum development, program cost pressures, including staff salaries and student screening and preparation. Most of and benefits. these activities are ongoing in nature, requiring Lack of Justification for Expanding CAI continued funding to sustain them. Without a plan Funding at This Time. There appears to be to cover the costs moving forward, these activities insufficient demand among colleges, K-12 are at risk of ramping up, only to end when the agencies, and employers to fully utilize even the grant period ends. Such an approach also has the current level of funding for CAI. Based on data drawback of creating cost pressure for the state the Chancellor’s Office shared with our office, to sustain the activities in future years, despite a it appears grant awards fell short of available projected operating deficit. funds in both 2018-19 and 2019-20. Though Recommendations the data provided by the Chancellor’s Office for this program is very limited, it suggests that only Approve COLA for Traditional $12.5 million of the $14 million set aside for grants Apprenticeships. We recommend the Legislature in 2018-19 was awarded due to a lack of eligible approve the 1.5 percent COLA to the RSI rate for applications. It appears no grants were awarded in traditional apprenticeships, as the augmentation 2019-20. In addition to lack of unmet demand, key could help sponsors in operating their programs. questions remain about the financial sustainability Reject CAI Augmentation. We believe it would of CAI-funded apprenticeships. While CAI is be premature to expand CAI for two reasons. intended to create lasting programs that will serve First, demand among eligible applicants appears apprentices for many years to come, the state does insufficient for CCC to fully utilize even the existing not yet have data on how many past CAI grantees funding level. Second, the Legislature currently have continued their programs beyond the grant lacks data on whether the new apprenticeship period. The Foundation for California Community programs created to date are being sustained after Colleges has partnered with Social Policy Research grant funding ends. Later this year, the follow-up Associates on a follow-up study on this topic. (The study described above or other evaluation activities study was originally expected to be completed by supported by the Chancellor’s Office could provide summer 2020, but the Foundation indicates its critical information about the programs funded release was delayed due to disruptions caused to date. Having better information on initial CAI by the pandemic.) The study’s release date is outcomes could inform future budget decisions anticipated for March or April 2021. for the program. If the findings were to show that With Several Programs Already Focused most apprenticeship programs ended due to on Work-Based Learning, Another Is Not insufficient funding once their CAI grant expired, Warranted. Work-based learning is explicitly part the Legislature might consider policy changes of the Strong Workforce Program and Guided next year, including potentially refining the grant Pathways Program. As discussed earlier, the requirements. Alternatively, if the findings were to 18 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET show that many grant recipients have identified programs focused on work-based learning and ongoing fund sources, then the Legislature might most of the proposed activities associated with consider expanding the program. Were this to be this new initiative are not of a one-time nature, we the case, we encourage the Legislature to ensure recommend the Legislature reject the proposal that any augmentation be based on evidence of and redirect the associated one-time funds to unmet demand for CAI grants. other Proposition 98 priorities. For example, the Reject Governor’s Proposal for Work-Based Legislature could consider providing more one-time Learning. Given the state already funds several funding to pay down additional deferrals and smooth out future district pension cost increases. INSTRUCTIONAL MATERIALS In this section, we first analyze the Governor’s A Few Years Ago, the State Funded a proposal to create more degrees that would Zero-Textbook-Cost Degree Initiative. Beginning rely solely on instructional materials that are in 2012, the state funded several intersegmental free of charge to students (commonly known as initiatives intended to build up a shared repository “zero-textbook-cost degrees”). We then analyze the of OER course materials. In an effort to take Governor’s proposal to fund instructional materials the next step and go beyond OER for individual for certain high school students taking community courses, the state provided $5 million one time colleges classes (dual enrollment students). in 2016-17 to create entire degrees relying solely on OER. Specifically, the $5 million was for a ZERO-TEXTBOOK-COST DEGREES competitive grant program aimed at helping community colleges develop zero-textbook-cost Below, we provide background on associate degrees and career technical education zero-textbook-cost degrees, then describe the certificates. Budget trailer legislation required Governor’s proposal, offer our assessment, and grantees to prioritize the development of such make an associated recommendation. degrees and certificates using existing OER materials before creating new content. The Background Chancellor’s Office was permitted to provide Open Educational Resources (OER) Are colleges with grants of up to $200,000 for each Intended to Reduce the Cost of Instructional degree or certificate developed. Grantees were to Materials. OER are digital instructional materials “strive to implement degrees” by fall 2018. that educators can develop, share, repurpose, First Zero-Textbook-Cost Degree Initiative and make available to their students. OER can be Had a Reporting Requirement. The trailer used for in-person classes as well as hybrid and bill language authorizing this initiative required fully online courses. OER come in many forms— the Chancellor’s Office to submit a report to ranging from course readings, videos, and tests, the Legislature and Department of Finance by to textbooks. The use of OER content in place June 30, 2019 that included (1) the number of instructional materials sold by publishers has of degrees developed by each grantee, several benefits, including reducing students’ costs (2) the number of students who completed a and increasing access to materials. Numerous zero-textbook-cost degree or certificate program, groups, including state higher education systems, (3) the estimated annual savings to students, consortia of higher education institutions, and and (4) recommendations to improve or expand national nonprofit organizations provide online zero-textbook-cost degrees. As of this writing, OER repositories and search tools. Special the Chancellor’s Office had not yet submitted state grant initiatives have supported faculty in this report. developing OER. www.lao.ca.gov 19 analysis full gutter 2021-22 BUDGET Academic Senate Is Rolling Out More OER to the overall cost of attendance for students. The Support More Zero-Textbook-Cost Degrees. The Governor’s proposal also focuses additional OER 2018-19 budget provided $6 million one time for efforts at the community colleges, where a large the CCC Academic Senate to lead an additional number of students (including many low-income OER effort. Thus far, the Academic Senate has students) enroll. Additionally, all segments funded two new rounds of OER development, teach lower-division courses, so transferable OER with additional rounds planned over the next courses developed for CCC degrees potentially three years. The Academic Senate’s focus for could be useful to students at the California State every round of funding is to prioritize OER that is University (CSU) and University of California (UC) needed to complete a new zero-textbook-cost too. degree for students, with an emphasis on associate Providing Another Round of Funding Is degrees for transfer. During the first grant round, Premature Without Key Information. Though colleges created new OER content for courses in the Governor’s proposal has positive aspects, we 18 disciplines. For the second round, new OER is believe funding the proposal is premature. To date, in the process of being finalized for 18 additional the Chancellor’s Office is more than a year and a disciplines. After faculty review of the newly created half late in giving the Legislature key information OER, the Academic Senate provides corresponding about the results of the 2016-17 initiative. The professional development to faculty throughout the Legislature therefore lacks basic information, such state on integrating the OER into their teaching. as how many zero-textbook-cost degrees and certificates were developed, how much it cost to Proposal develop them, what challenges were encountered Proposes $15 Million One Time for CCC to in developing them, how many students completed Create More Zero-Textbook-Cost Degrees. The or are on track to complete a zero-textbook-cost administration’s trailer bill language for this proposal degree, and how much savings to students was is similar to language the state adopted for the generated. Before contemplating funding for 2016-17 initiative. The Chancellor’s Office may another initiative that, as proposed, is nearly award grants of up to $200,000 for each associate identical in structure to the first one, we encourage degree or certificate developed. The intent is the Legislature to wait for the report it required on for grantees to begin offering the new round the first initiative and glean any lessons learned of zero-textbook-cost degrees by the 2023-24 from it. academic year. The Chancellor’s Office must report Governor’s Proposal Does Not Ensure to the Legislature and Department of Finance by Existing OER Efforts Will Be Coordinated. The June 30, 2024 on the results of the initiative and Governor’s proposal is silent on how the proposed make recommendations for further expansion or initiative would build on current OER efforts improvement. by the CCC Academic Senate. We encourage the Legislature to ensure that any future Assessment zero-textbook-cost initiatives are coordinated Governor’s Focus on Textbook Affordability with and not duplicative of the Academic Senate’s at CCC Is Laudable. We think the Governor’s existing OER initiative. Any future initiatives in this proposal has several positive aspects. It area also could be coordinated with CSU and focuses on an important issue facing students— UC to help maximize the benefit of lower-division college affordability. Based on a recent state survey OER for students across all three higher education of public college and university students conducted segments. by the California Student Aid Commission, Recommendation students attending full time spend an average of about $800 annually on textbooks and other Withhold Recommendation Pending Receipt course materials. The Governor’s proposal to of Additional Information. Until the Chancellor’s promote greater use of OER would help reduce Office submits the required report on the first 20 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET zero-textbook-cost degree initiative, we withhold proposal, offer our assessment, and make an recommendation on the Governor’s proposal. We associated recommendation. recommend the Legislature give the Chancellor’s Background Office until early April to submit the required report and provide all the information detailed above. Dual Enrollment Defined. Dual enrollment Based on that information, the Legislature can allows high school students to take college-level decide whether additional funding is warranted courses, typically at a community college. and, if so, how best to structure another round (Dual enrollment is also commonly referred to of grant funding. If the report and key information as concurrent enrollment.) Credit from these are not forthcoming by April, we recommend the college-level classes may count toward both a Legislature request that the administration work high school diploma and an associate degree. with the Chancellor’s Office and Academic Senate By graduating high school having already earned over the coming year to compile the key information college credits, students can save money and and revise the budget proposal accordingly for accelerate progress toward a postsecondary future submission. Any new proposal submitted in degree or certificate. Dual enrollment has various 2022-23 or thereafter should be based on lessons models. California’s two most widely used models learned from earlier grants and incorporate insights are traditional dual enrollment and College and and recommendations made by the Chancellor’s Career Access Pathways (CCAP). Figure 6 and the Office and Academic Senate. Were such work to next two paragraphs detail the major features of be undertaken later this year, the Legislature would these two models. be in a much better position next year to evaluate Traditional Dual Enrollment Is Widespread the need for additional funding and identify the in California. Traditional (regular) dual enrollment opportunities for improvement. typically consists of individual high school students taking college-level courses on a community DUAL ENROLLMENT colleges campus. All 72 locally governed districts have at least some dually enrolled students. In Below, we provide background on dual 2019-20, community colleges served about 48,000 enrollment, then describe the Governor’s Figure 6 Two Major Types of Dual Enrollment in California Traditional Dual Enrollment College and Career Access Pathways Target Population Typically advanced high school students who High school students “who may not already be are college bound. college bound or who are underrepresented in higher education.” Location of Classes Typically a CCC campus. Typically a high school campus. Instructor Regular CCC faculty. High school teachers meeting CCC faculty qualifications or regular CCC faculty. CCC Apportionment Funding College can claim only if class is open to the College can claim even if class is restricted to general public. high school students. Enrollment Fee Colleges may charge students (though fee Colleges are prohibited from charging students. typically is waived). Textbooks and Supplies Students generally are required to purchase. Schools/colleges must provide to students free of charge. Number of CCC Districts Participating All 72 local CCC districts. 51 CCC districts with local agreements (2020). Minimum Instructional Hours Per Day for Four hours. Three hours. High Schools to Claim ADA Funding ADA = average daily attendance. www.lao.ca.gov 21 analysis full gutter 2021-22 BUDGET FTE students through traditional dual enrollment. provisional language specifying that these proposed Statute permits community colleges to charge an funds are to cover the cost of instructional materials enrollment fee for regular dual enrollment students, for students in CCAP programs. The provisional which colleges typically waive. Students, however, language charges the CCC Chancellor’s Office with typically are required to cover textbook and other determining how funds are allocated to community instructional material costs. Community colleges college districts. can claim apportionment funding for high school Assessment students taking CCC classes (funded at $5,622 per FTE student in 2020-21). Courses allowing for No Sign That Instructional Material Costs dual enrollment (like other CCC courses) generally Serve as Program Barrier. Since legislative must be open to the public for colleges to claim approval of CCAP in 2015, enrollment in CCAP apportionment funding. Meanwhile, statute allows programs has increased markedly. As Figure 8 on school districts to claim average daily attendance page 24 shows, CCAP enrollment totaled 28 (ADA) funding for dually enrolled high school FTE students in 2016-17. By 2019-20, CCAP students who take at least 240 minutes (four enrollment had grown to more than 14,000 FTE hours) of high school coursework per day. (Statute students. This trend does not appear to support generally requires high school students to take the administration’s argument that having to cover at least 360 minutes—six hours—of high school textbook costs has been a barrier for schools and coursework to generate ADA funding.) community colleges in offering CCAP programs. Legislature Authorized CCAP Several Years CCAP Funding Policies Can Be Advantageous Ago. Chapter 618 of 2015 (AB 288, Holden) to Schools and Colleges. Rather than posing created CCAP. Unlike traditional dual enrollment, fiscal barriers, CCAP funding policies can work CCAP allows cohorts of high school students to to the benefit of schools and colleges. This is take college-level classes on a high school campus. particularly the case when students take CCAP Community colleges may still claim apportionment courses in place of their regular high school funding (at the same rate of $5,622 per FTE coursework. In such cases, schools can receive student) for such instruction. Unlike traditional dual ADA funding even though they may only be enrollment, CCAP students only need to attend providing three hours (rather than the standard their high school classes for 180 minutes (three six hours) of instruction per day. In addition, when hours) for school districts to claim ADA funding. courses are held at a high school site, community Chapter 618 prohibits students in a CCAP program colleges can claim full apportionments from the from being charged either enrollment fees or fees state typically without incurring facility and other for textbooks and other instructional materials. related costs. To form a CCAP program, school and community Districts Have Tools to Mitigate Cost of college districts must agree to a memorandum Instructional Materials. In recent years, the of understanding (MOU). These MOUs contain state has invested in initiatives to develop OER. information such as the courses to be offered, Based on our review of CCAP MOUs, school and the number of students to be enrolled, and which community college districts have been leveraging partner (the school or community college district, such resources to reduce or eliminate their or both) is to cover program costs, including instructional material costs. In other cases, CCAP the cost of providing instructional materials. partners have agreed to use the same textbooks Figure 7 on the next page shows that local CCAP for multiple years, rather than purchasing every MOU arrangements vary widely. new edition. When they do need to purchase instructional materials, schools and community Proposal colleges are using various funding sources, Proposes $2.5 Million One Time for including lottery funds, federal and state categorical Instructional Materials for Dual Enrollment program funds (particularly for career technical Students. The Governor’s budget includes education courses), and general operating funds. 22 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET One-Time Funds Are Not a Good Fit for Recommendation Supporting the Proposed Activity. Purchasing Recommend Rejecting Proposal. For all these instructional materials for students is an ongoing reasons, we recommend the Legislature reject expense, as the activity involves refreshing the Governor’s proposal. Instead, the Legislature textbooks and other materials on a regular basis. might consider repurposing the proposed one-time Providing one-time funds for such a purpose funds toward higher priorities, such as addressing thus would create a cost pressure for the state to deferrals or district pension costs. continue providing funds in future years. Figure 7 Various Arrangements for College and Career Access Pathways in California Local Arrangements Where Classes Are Offered • Vast majority at high schools. • Some at community colleges. • Vast majority online during pandemic. When Classes Are Offered • During regular high school day. • Outside the regular high school day. Who Teaches Classes • High school faculty (meeting minimum CCC qualifications) serving as CCC district employees. • High school faculty (meeting minimum CCC qualifications) serving as school district employees. • Regular CCC faculty. Who Pays Faculty Salaries • Often depends on whether the faculty are teaching during or outside the regular high school day. If during regular day, high school typically pays. • Also depends on whether faculty are employees of community college or high school district. Typically, district covers cost of its employees. • Sometimes schools and community colleges split costs. Who Pays for Textbooks • Commonly high schools. • Sometimes community colleges. • Sometimes high schools and community colleges split cost. What Fund Sources Cover • High schools—Lottery, other funds (such as K-12 Strong Workforce Program funds). Textbooks • CCC—Apportionments, lottery, other funds (such as CCC Strong Workforce Program and federal Perkins). How Education Partners Contain • Use open educational resources. Textbook Costs • Reuse same book for multiple classes/years. Who Pays Other Costs • Facilities—typically covered by school district. • Counselors—covered by school district or community college. What Academic Credit Students • A through G college preparatory credit, plus community college credit. Receive • High school electives, plus college credit. • College credit only. www.lao.ca.gov 23 analysis full gutter 2021-22 BUDGET Figure 8 Enrollment in College and Career Access Pathways Has Grown Rapidly Full-Time Equivalent Students 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 2016-17a 2017-18 2018-19 2019-20 a Represents 28 full-time equivalent students. FACULTY PROFESSIONAL DEVELOPMENT In this section, we focus on CCC faculty state also has funded the statewide Institutional professional development, particularly around Effectiveness Partnership Initiative (IEPI), which online instruction. We first provide background on provides technical assistance and professional the issue, then describe the Governor’s proposal to development to colleges seeking to improve provide one-time funding for online-focused faculty student learning and overall operations. The largest professional development, assess the proposal, program within IEPI consists of regional workshops and offer an associated recommendation. and other trainings that are open to faculty and staff. The Chancellor’s Office, which administers Background IEPI, has wide discretion to select workshop and Community College Faculty Have Access to training topics. The Academic Senate for CCC Multiple Forms of Professional Development. also conducts various institutes, workshops, and Common types of faculty professional development webinars throughout the year for faculty on course at the colleges include workshops, conferences, design, teaching methods, and various other and department- and campus-wide seminars. topics. These trainings allow faculty time to work State Funds Various Initiatives Aimed at individually or in groups to develop or revise Improving Online Instruction at CCC. As curriculum and learn new teaching methods, among mentioned earlier in this report, the state provides various other professional activities. Campuses $20 million ongoing Proposition 98 General Fund support faculty professional development through support for OEI. Through OEI’s Online Network a mix of fund sources, most commonly using of Educators program (more commonly known their state apportionments. Since 2014-15, the as “@ONE”), faculty and staff can participate in courses, webinars, workshops, and other forums 24 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2021-22 BUDGET focused on developing and teaching online Assessment courses. In 2019-20, the state also provided the Further Needs Assessment Is Important Office of Planning and Research with $10 million to Obtain. Given the professional development ongoing for the California Education Learning programs the state already funds at the colleges, Laboratory, an intersegmental program that the considerable flexibility CCC has to choose similarly aims to expand online and hybrid course training topics, and the federal relief funds colleges offerings. In addition to these programs, the state are receiving, the need for additional professional has supported multiple one-time initiatives at development funding for online instruction is the segments to develop and expand the use of unclear. Moreover, the administration has not open educational resources in online, hybrid, and undertaken a full assessment of the need for face-to-face courses. additional professional development in this area. Federal Relief Funds Also Are Available to Lacking such an assessment, some key information Support Professional Development for Online remains unknown. Most notably, it is unknown how Classes. Since the onset of the pandemic and many CCC faculty still need additional support with the rapid transition to primarily online instruction, online instruction, what types of support they would community colleges have offered online-focused benefit from, and the cost of providing that support. professional development and other related support to faculty. Based on data collected by Recommendation the Chancellor’s Office, community colleges are Reject Governor’s Proposal. We recommend on track to spend about $40 million through the Legislature reject the Governor’s proposal to 2020-21 in extraordinary costs for faculty trainings provide additional one-time funding for faculty on how to convert courses from in person to online professional development, as various state-funded and how to deliver those new online courses programs and federal relief funds are available effectively. In addition to the state funds mentioned for this purpose in the budget year. Though we above, federal relief funds are available to support recommend not providing a state augmentation these types of costs. at this time, the Legislature could revisit this issue Proposal upon learning more about faculty professional development needs. Specifically, the Legislature Proposes One-Time Funds for Faculty could direct CCC to include an assessment of Professional Development. The Governor the need for additional faculty support as part proposes $20 million one-time Proposition 98 of the online education report we recommended General Fund for CCC faculty professional developing earlier in the “Apportionments” section. development related to online education. The More information about faculty professional administration indicates the proposal is intended development needs could allow the Legislature to support faculty as they continue to adapt to determine whether existing professional to teaching online during the pandemic. The development programs and their associated provisional language specifies that the funds are funding levels are sufficient or if program to support “culturally competent professional modifications and an augmentation (one time or development,” which the administration suggests ongoing) might be warranted in the future. would mean integrating principles of equity into the training. The Chancellor’s Office would have flexibility to provide the funds to one or more districts to support systemwide training or directly to districts for their own local trainings. www.lao.ca.gov 25 analysis full gutter 2021-22 BUDGET LAO PUBLICATIONS This report was prepared by Paul Steenhausen, and reviewed by Jennifer Pacella and Anthony Simbol. 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 report 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. 26 LEGISLATIVE ANALYST’S OFFICE