The 2025-26 Budget: California Community Colleges

2025-26 BUDGET The 2025-26 Budget: California Community Colleges GABRIEL PETEK | LEGISLATIVE ANALYST | MARCH 2025 SUMMARY Brief Covers the California Community Colleges (CCC). This brief analyzes the Governor’s Proposition 98 spending proposals for CCC. It covers apportionments, selected categorical programs, enrollment growth, the Rising Scholars program, two information technology (IT) projects, and two career education initiatives. Proposed Apportionments Increase Is Reasonable. The Governor’s largest ongoing proposal for CCC is $230 million for a 2.43 percent cost-of-living-adjustment (COLA) for apportionments. This general purpose funding would help community college districts address their core operating costs, including continued salary pressures, rising pension contributions, and higher health care premiums. The Legislature will receive an updated COLA rate in the spring. We recommend approving the COLA for apportionments as long as Proposition 98 funding remains sufficient to cover the associated cost. Recommend Prioritizing Funding for Enrollment Growth. The Governor proposes $30 million ongoing for 0.5 percent systemwide enrollment growth. In 2025-26, community colleges could see enrollment pressures due to several factors, including regional demographic trends, elevated unemployment rates, some districts exceeding their current targets, and potential constraints on California State University (CSU) and University of California (UC) enrollment levels. We recommend funding at least the amount of enrollment growth proposed by the Governor. The Legislature could consider funding more growth by redirecting ongoing funds from proposals that are not well justified. Recommend Rejecting Funding for Both IT Projects. The Chancellor’s Office recently launched the Common Cloud Data Platform, a demonstration project intended to make it easier for participating districts to share student data. The Governor proposes $29 million ongoing and $134 million one time to expand this platform to all districts. We think it would be premature to fund this expansion before the demonstration project is completed in June 2026. The Governor also proposes $168 million one time to develop a common enterprise resource planning (ERP) system. This would replace the existing IT systems that participating districts use to manage their core business functions. We have significant concerns with the lack of planning, large future costs, and other risks associated with this project. Recommend Rejecting Funding for Both Career Education Initiatives. As part of his forthcoming Master Plan for Career Education, the Governor proposes $7 million ongoing and $43 million one time for a credit for prior learning initiative. Although we see potential state benefits in expanding credit for prior learning, we think it would be premature to approve these funds without better information on the outcomes of a similar initiative funded in 2024-25. The Governor also proposes $50 million one time to develop “career passports” that allow individuals to display their skills and credentials. For this proposal, the administration has not provided a clear problem definition, evidence of likely benefits, or certain key details. Recommend Maintaining a One-Time Budget Cushion. Although we have concerns with the Governor’s specific one-time spending proposals, we think his broader approach of designating some Proposition 98 funding for one-time purposes is prudent. This approach creates a cushion that can help protect ongoing programs if the minimum guarantee declines. To maintain the cushion, the Legislature could use any funds redirected from the Governor’s one-time proposals for other one-time purposes, potentially including a discretionary deposit into the Proposition 98 Reserve. www.lao.ca.gov 1 2025-26 BUDGET INTRODUCTION Brief Focuses on CCC. The CCC system is fields. This brief analyzes the Governor’s 2025-26 one of California’s three public higher education budget proposals for CCC. We begin by covering segments. The system consists of 115 colleges the Governor’s overall budget plan for CCC. operated by 72 locally governed districts located The next eight sections of the brief focus on the throughout the state, plus one statewide online Governor’s proposals relating to (1) apportionments, community college administered by the Board (2) select categorical programs, (3) enrollment of Governors. The colleges offer a breadth of growth, (4) the Rising Scholars Network, (5) the academic programs, including lower-division Common Cloud Data Platform, (6) the Common transferable coursework, career technical Enterprise Resource Planning system, (7) credit for education, precollegiate basic skills instruction, prior learning, and (8) career passports. and baccalaureate degrees in certain occupational OVERVIEW In this section, we describe the Governor’s full-time student taking 30 semester units per overall budget plan for CCC and provide a few year. Community college fees in California remain overarching comments about it. the lowest of any state and significantly below the national average. In 2023-24, community Governor’s Budget Plan college tuition and fees averaged approximately Total CCC Funding Is $19 Billion in 2025-26 $5,300 nationally—about four times the CCC level. Under Governor’s Budget. This reflects a Proposition 98 Per-Student Funding 1.6 percent increase over the revised 2024-25 Continues Growing Under Governor’s Budget. level. As Figure 1 shows, $13.6 billion (72 percent) Under the Governor’s budget, the estimated of CCC support in 2025-26 would come from average Proposition 98 per-student funding Proposition 98 funds. Proposition 98 funds, which level at the colleges in 2025-26 is $12,361. This consist of state General Fund and certain local is $227 (1.9 percent) more than the revised property tax revenue, cover community colleges’ 2024-25 level. As a result of many Proposition 98 main operations. An additional $682 million augmentations for community colleges, non-Proposition 98 General Fund would cover per-student Proposition 98 funding has increased certain other costs, including debt service on significantly over the past several years. It is state general obligation bonds for CCC facilities, approximately $1,900 (18 percent) higher than the a portion of CCC faculty retirement costs, and inflation-adjusted 2018-19 level. Chancellor’s Office operations. In recent years, the Governor Has Several Proposition 98 state has also provided non-Proposition 98 General Spending Proposals for CCC. As Figure 2 on Fund for certain student housing projects. page 4 shows, the Governor proposes a total Beyond State Funds, Community Colleges of $752 million in new Proposition 98 spending Receive Support From Various Other Sources. for CCC across the budget window (2023-24 Much of CCC’s remaining funding comes from through 2025-26). Of this amount, $357 million is enrollment fees, other student fees, and various for ongoing augmentations and $395 million is for local sources (such as revenue from facility rentals one-time initiatives. The largest ongoing proposal is and community service programs). The Governor a 2.43 percent COLA for apportionments. Notably, proposes no increase to enrollment fees for the Governor also proposes $30 million ongoing to 2025-26. Since summer 2012, CCC enrollment support 0.5 percent systemwide enrollment growth. fees have been $46 per unit, or $1,380 for a 2 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET Figure 1 Total CCC Funding Increases Under Governor’s Budget (Dollars in Millions, Except Funding Per Student) Change From 2024-25 2023-24 2024-25 2025-26 Revised Revised Proposed Amount Percent Proposition 98 General Fund $8,198a $9,048 $9,041 -$6 -0.1% Local property tax 4,070 4,304 4,538 233 5.4 Subtotals ($12,267) ($13,352) ($13,579) ($227) (1.7%) Other State Other General Fund $610 $643 $682 $38 5.9% Lottery 364 316 316 — — Special funds 58 97 96 -1 -1.1 Subtotals ($1,032) ($1,057) ($1,094) ($37) (3.5%) Other Local Enrollment fees $482 $482 $484 $2 0.3% Other local revenueb 3,313 3,341 3,368 27 0.8 Subtotals ($3,795) ($3,823) ($3,852) ($29) (0.8%) Federal $446 $446 $446 — — Totals $17,540 $18,678 $18,971 $293 1.6% FTE studentsc 1,100,665 1,100,406 1,098,575 -1,831 -0.2%d Funding per studente $11,145 $12,134 $12,361 $227 1.9 a Includes $788 million in withdrawals from the Proposition 98 Reserve. b 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. c Reflects budgeted FTE students. d Reflects the net change after accounting for the proposed 0.5 percent systemwide enrollment growth together with all other enrollment adjustments. e Reflects Proposition 98 funding, including reserve withdrawals, per budgeted FTE student. FTE = full-time equivalent. The majority of the one-time funding is related to Governor Also Proposes Bond Funding two IT projects. for Many CCC Capital Outlay Projects. In Governor’s Budget Creates Proposition 98 November 2024, voters approved Proposition 2, Settle-Up Obligation. As we discuss in The which authorizes $1.5 billion in state general 2025-26 Budget: Proposition 98 Guarantee obligation bonds for community college facilities. and K-12 Spending Plan, total spending on The Governor’s budget proposes to allocate schools and community colleges in 2024-25 the first round of Proposition 2 bond funds for under the Governor’s budget is $1.6 billion less community colleges. Specifically, he proposes than the estimated Proposition 98 guarantee in providing a total of $51 million in bond funds to that year. If revenues remain unchanged, this support the design phases of 29 new CCC capital would create a $1.6 billion settle-up obligation to outlay projects. The Governor’s budget also schools and community colleges that the state provides $29 million from an earlier state general would need to pay in the future. State law does obligation bond measure, Proposition 51, to support not specify what share of these funds would go the construction phases of two continuing capital to community colleges. If the Legislature were outlay projects. Our table, California Community to allocate the funds in proportion to the split of Colleges Capital Outlay Projects, lists these other Proposition 98 spending in the Governor’s projects and their associated costs. We plan to budget, then we estimate $171 million would go to analyze these projects in a forthcoming publication. community colleges. www.lao.ca.gov 3 2025-26 BUDGET Opportunities Exist to Focus Figure 2 Ongoing Spending on Core Costs. Governor Proposes New CCC Ongoing and Beyond the one-time spending, there One-Time Spending is a limited amount of new ongoing Proposition 98 General Fund, 2023-24 Through 2025-26 (In Millions) Proposition 98 funding available in CCC’s budget. With these ongoing Ongoing Spending funds, we recommend prioritizing COLA for apportionments (2.43 percent) $230 actions that address core cost Enrollment growth (0.5 percent) 30 increases, such as providing an COLA for select categorical programs (2.43 percent)a 30 Rising Scholars Network 30 apportionments COLA and funding Common Cloud Data Platform 29 enrollment growth. Most of the Credit for prior learning 7 new ongoing spending in the Subtotal ($357) Governor’s budget goes toward One-Time Initiativesb such purposes. However, the Common Enterprise Resource Planning System $168 Common Cloud Data Platform 134c Governor also proposes ongoing Career passports 50 spending increases for certain Credit for prior learning 43d other purposes, such as the Rising Subtotal ($395) Scholars Network, the Common Total Changes $752 Cloud Data Platform, and credit a Applies to the Adult Education Program, apprenticeship programs, CalWORKs student services, for prior learning. In building the campus child care support, Disabled Students Programs and Services, Extended Opportunity Programs and Services, and mandates block grant. CCC budget, the Legislature has b In addition to these new one-time initiatives, the Governor’s budget provides $10 million for opportunities to increase the amount LGBTQ+ centers in 2025-26, marking the third year of a three-year initiative totaling $30 million. c Includes $2.6 million in reappropriated Proposition 98 funds. of funding available for core costs d Includes $10 million in reappropriated Proposition 98 funds. by redirecting ongoing funds from COLA = cost-of-living adjustment. proposals that are not well justified, as we discuss later in this brief. LAO Comments Proposed One-Time Initiatives Have Notable Plan Contains a Reasonable Mix of Ongoing Drawbacks. Though the amount of one-time and One-Time Spending. The Governor spending in the Governor’s budget is reasonable, proposes a certain mix of ongoing and one-time the specific proposals have drawbacks, as we Proposition 98 spending for CCC in 2025-26. discuss in the last four sections of this brief. Some We think that mix is a reasonable starting point. of these proposals lack basic details and planning. Notably, designating some Proposition 98 For other proposals, the state does not yet know funding for one-time purposes creates a cushion the outcomes of related existing efforts. In building that mitigates volatility in the guarantee. The the CCC budget, the Legislature has opportunities expiration of one-time costs could help the state to redirect funding from these proposals toward its accommodate a future reduction in the guarantee own one-time priorities. In addition, it could consider without having to cut ongoing programs. In The using some of these funds to make a discretionary 2025-26 Budget: Proposition 98 Guarantee deposit into the Proposition 98 Reserve. In last and K-12 Spending Plan, we recommend year’s budget package, the state withdrew the entire the Legislature designate at least as much balance of this reserve to address a drop in the Proposition 98 funding for one-time purposes as minimum guarantee in 2023-24. Under the Governor’s the Governor proposes. Within the CCC budget, the budget, the state would make mandatory deposits Governor designates $341 million in funding that into this reserve in 2024-25 and 2025-26, ending counts toward the minimum guarantee in 2025-26 2025-26 with a balance of $1.5 billion. This equates for one-time purposes (consisting of $97 million to 1.3 percent of Proposition 98 spending in 2025-26. for one-time initiatives and $244 million for the Discretionary deposits on top of this amount could repayment of costs deferred from 2024-25). further promote budget resiliency, helping to protect ongoing community college programs in the event the minimum guarantee were to fall in a future year. 4 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET APPORTIONMENTS In this section, we focus on apportionments, which increased staffing across all employee categories, is general purpose funding the state allocates to including part-time and full-time faculty, support community college districts. Districts, in turn, use their staff, and administrators. general purpose funding to cover their core operating Salary Decisions Are Made Locally. Most costs. We begin this section by providing background community college employees are represented on community colleges’ core operating costs. We by labor unions. Several unions represent faculty then explain how the state provides funding for those throughout the state, with the largest two being costs. Next, we describe the Governor’s proposal the California Federation of Teachers and the to provide a COLA for apportionments, assess the California Teachers Association. The California proposal, and provide a recommendation. School Employees Association is the largest union for support staff. Each community college district Cost Pressures negotiates with the local branches of their unions. Compensation Is Largest Community College Community college districts and their local unions Operating Cost. Community college districts use make key compensation decisions, including the bulk of their apportionment funding on employee salary decisions, through collective bargaining. compensation. As Figure 3 shows, salaries and benefits (including retirement benefits, health care Figure 3 benefits, workers’ compensation, Bulk of District Spending Is for Compensation and unemployment insurance) District Operating Expenditures by Type, 2023-24ª accounted for more than 80 percent of district spending in 2023-24. The remainder of a district spending Capital Outlayb was for various other core operating costs, including utilities, insurance, software licenses, equipment and supplies. Staffing Has Rebounded to Supplies, Materials, Pre-Pandemic Level. At the start of and Other the pandemic, as community college districts were facing steep enrollment declines, districts decreased their staffing levels. From fall 2019 to fall 2021, community college staffing statewide declined by 4.5 percent, Salaries Benefits falling from about 65,800 full-time equivalent (FTE) employees to about 62,800 FTE employees. Since then, however, community college staffing has gradually rebounded to the pre-pandemic level, reaching about 65,900 FTE employees in fall 2023. As enrollment has increased over the past two years, a Reflects spending from districts' main operating account. community college districts have b Excludes spending on major capital projects. www.lao.ca.gov 5 2025-26 BUDGET Community college district governing boards—not Districts Regularly Face Various Other the Legislature—ratify local collective bargaining Cost Pressures. Similar to the other education agreements. When the state provides a COLA segments, community college districts have faced for apportionment funding, most districts in turn recent increases in costs for health benefits, negotiate a COLA rate with their local unions. In insurance, equipment, supplies, and utilities. Health negotiating this rate, districts typically account for benefits are the largest of these remaining cost a number of factors, including changes in housing pressures. In the past couple of years, districts and other costs for employees, the district’s salary have faced greater pressure in this area than competitiveness, and the district’s need to address normal because premiums have been increasing non-salary cost pressures. A small proportion of at historically high rates. District contributions districts (likely less than 10 percent) automatically to employee health premiums are collectively apply any state-funded COLA rate to employees. bargained. Districts commonly cover a large Salaries Have Been Generally Increasing. share of the premium increases for their full-time Over the past five years, salaries for community employees. Coverage for part-time employees college employees generally have increased. varies widely among districts, though districts tend For tenured and tenure-track faculty, the average to cover a lower share of the cost increases for salary statewide has grown slightly faster than these employees. inflation, from about $99,300 in fall 2018 to about Systemwide Reserves Continue to Increase. $122,500 in fall 2023. For support staff, the average Community college districts maintain local salary statewide has grown at a similar rate to reserves to help manage revenue declines or inflation, from about $61,100 in fall 2018 to about unexpected costs. Based on best practices from $74,600 in fall 2023. the Government Finance Officers Association, Districts’ Pension Costs Also Have Been the Chancellor’s Office recommends that districts Rising. About half of CCC employees (faculty) maintain unrestricted reserves worth a minimum of participate in the California State Teachers’ 16.7 percent (two months) of annual expenditures. Retirement System (CalSTRS), while the other As Figure 4 shows, districts’ unrestricted reserves half (staff and administrators) have increased over the past several years. participate in the California Public Employees’ Retirement System Figure 4 (CalPERS). Because employer Community College Reserves Have Grown contribution rates for these two Significantly Over Pre-Pandemic Levels systems are set by their respective state boards, all community college Unrestricted District Reserves as Percent of Annual Operating Expenditures districts statewide are subject to the same rates. Districts’ pension 35% costs have been increasing 30 over time. In 2014-15, districts’ employer contribution rate was 25 8.9 percent of payroll for CalSTRS 20 and 11.8 percent of payroll for CalPERS. In 2024-25, those rates 15 are up to 19.1 percent of payroll 10 for CalSTRS and 27.1 percent of payroll for CalPERS. 5 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 6 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET Whereas unrestricted reserves totaled $1.8 billion those districts to ramp down their budgets to their (22 percent of expenditures) in 2018-19, they new SCFF-calculated amounts or find ways to grew to $3.5 billion (33 percent of expenditures) in increase the amount they generate through SCFF 2023-24. The increase in reserves over the past five (such as by enrolling more low-income students years is likely the result of several factors—including or improving student outcomes). Under this significant increases in state funding, an influx provision, districts receive whatever they generated of federal relief funds during the pandemic, and in 2017-18 under the old formula, adjusted for any lower student enrollment and staffing levels during subsequent COLAs provided by the state through the pandemic. 2024-25. Districts are funded according to this provision if their hold harmless amount exceeds Funding both their SCFF-calculated amount and the Community Colleges Rely Heavily on Funding stability amount discussed in the next paragraph. From Apportionments. All community college More than 25 districts were on hold harmless in districts (except the statewide online Calbright each year from 2018-19 through 2021-22, before College) receive funding from apportionments. declining to only 12 districts in 2022-23. (The In 2023-24, community college districts collectively decline in 2022-23 was related to a $600 million received $9.6 billion in apportionment funding. augmentation the state provided to increase Apportionments account for about 70 percent of SCFF base funding rates, thereby decreasing total Proposition 98 CCC funding. the number of districts whose hold harmless State Has Formula to Determine Districts’ amount exceeded their SCFF-calculated amount.) Apportionment Funding. Historically, districts In 2023-24, the 11 districts remaining on hold received apportionment funding based almost harmless received $90 million in apportionment entirely on student enrollment. In 2018-19, the funding above their SCFF-calculated amount. state adopted a new formula called the Student On average, these districts received more funding Centered Funding Formula (SCFF). This formula per student than other districts. The per-student is intended to create stronger incentives for apportionment funding level was $9,574 across colleges to enroll lower-income students and districts on hold harmless in 2023-24, compared improve student outcomes for them and overall. to $8,895 across districts that received their Under SCFF, districts receive apportionment SCFF-calculated amount. funding for regular credit courses based on Other Districts Are Receiving Additional three components: (1) a base allocation linked to Funding Through Stability Provision. State law enrollment, (2) a supplemental allocation linked also creates a second funding protection called to low-income student counts, and (3) a student “stability.” This provision allows a district to receive success allocation linked to specified student its SCFF-calculated amount in the previous year outcomes. These three components account for adjusted for COLA. Districts are funded according about 70 percent, 20 percent, and 10 percent to stability if the associated funding exceeds of apportionment funding, respectively. Districts both their SCFF-calculated amount for that year continue to receive apportionment funding for and their hold harmless amount. The number noncredit courses, as well as credit courses of districts on stability has fluctuated over the for dual enrollment students and incarcerated past few years. In 2023-24, 26 districts were on students, based entirely on enrollment. stability, with these districts receiving $70 million in Some Districts Are Receiving Additional apportionment funding above their SCFF-calculated Funding Through Hold Harmless Provision. amount. Like districts on hold harmless, districts When the state adopted SCFF, it created a on stability tended on average to receive more temporary funding protection called “hold harmless” funding per student than districts that received for those districts that would have received more their SCFF-calculated amount. The per-student funding under the previous apportionment formula. apportionment funding level was $9,390 across This provision was intended to provide time for districts on stability in 2023-24. www.lao.ca.gov 7 2025-26 BUDGET “Basic Aid” Districts Also Are Receiving Assessment Additional Funding. Certain community college Districts Face Several Notable Cost districts receive local revenue—primarily from Pressures in 2025-26. Although inflation has property taxes—that exceeds the apportionment slowed notably since its peak in 2022, it remains funding they would receive under SCFF, hold above the historical average, likely translating harmless, or stability. These districts are commonly to continued salary pressures in 2025-26. referred to as basic aid districts. Basic aid districts Districts are also facing increased pension retain their excess local property tax revenue, with costs. Based on current assumptions, districts’ none redistributed to other districts. Accordingly, CalSTRS contribution rate is projected to remain these districts’ funding levels are much more closely at 19.1 percent in 2025-26, but the CalPERS tied to local property tax trends than the factors contribution rate is projected to increase to underlying the SCFF calculation and any COLA that 27.4 percent (0.3 percentage points higher than might be applied to SCFF. In 2023-24, there were in 2024-25). Across both retirement systems, eight basic aid districts. Given notable variations in districts’ pension contribution costs are expected their local property tax revenue, their per-student to increase by a combined $88 million in 2025-26. apportionment funding amounts after accounting In addition, districts continue to report that health for the excess revenue ranged from $8,939 (Sierra) care premiums are growing quickly. Beyond these to $22,504 (Marin). All but one of these districts had employee compensation costs, districts generally per-student apportionment funding rates that were are expecting increases in other costs such as higher than the systemwide average. insurance, utilities, and equipment in 2025-26. State Typically Provides a COLA for Additional COLA Data Is Forthcoming. In Apportionment Funding. Although the state late January, the federal government released is not statutorily required to provide a COLA for updated data on the price index that the state apportionments, it has a long-standing practice of uses to calculate the COLA rate. Based on this doing so when Proposition 98 funds are available. data, we estimate the COLA rate for 2025-26 (In contrast, the state is statutorily required to is 2.26 percent—slightly lower than estimated provide a COLA for the Local Control Funding under the Governor’s budget. The COLA rate Formula [LCFF], which applies to school districts.) will be finalized in late April, when the federal The COLA rate is based on a price index published government releases the last round of data used in by the federal government that reflects changes the calculation. in the cost of goods and services purchased by Providing a COLA for Apportionments Helps state and local governments across the country. Districts Pay Core Costs. The proposed COLA Over the past 30 years, the average COLA rate has rate for apportionments would help districts been just under 3 percent. In some recent years, address anticipated cost increases for their core however, the COLA rate has been historically high— operations. Doing so would help maintain the 5.07 percent in 2021-22, 6.56 percent in 2022-23, quality of CCC’s core instructional programs, while and 8.22 percent in 2023-24. also providing flexibility for districts to address particularly pressing local spending priorities. Governor’s Proposal Historically, the Legislature has made providing Governor Proposes COLA for a COLA for apportionments its top CCC budget Apportionments. The Governor’s budget includes priority for these reasons. $230 million ongoing Proposition 98 General Fund Certain Districts Are Not Expected to Receive to cover a 2.43 percent COLA for apportionments. a COLA in 2025-26. Under state law, a new hold This is the same COLA rate the Governor proposes harmless policy is scheduled to take effect in for the K-12 LCFF. 2025-26. Under the new policy, a district’s hold harmless amount will be set at its apportionment level in 2024-25, without any subsequent COLA adjustments. The intent of this policy is to phase 8 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET down the additional funding that districts on hold Recommendation harmless are receiving and gradually transition Make COLA Decision Once Better these districts onto SCFF. As the state continues Information Is Available This Spring. By the to provide COLAs for SCFF, these districts’ May Revision, the Legislature will have not only a SCFF-calculated amounts will rise, and, at some finalized COLA rate calculation but also updated point, exceed their hold harmless amounts. The state revenue estimates. Those revenue estimates more quickly these districts grow their enrollment will, in turn, affect the amount available for ongoing and improve their outcomes, the more quickly their Proposition 98 spending at CCC. If Proposition 98 funding will begin to grow again. Though these resources in May remain sufficient to support districts will not see a COLA in 2025-26, they the updated COLA, then we recommend the will still benefit from receiving more per-student Legislature approve the proposal at that time. funding, on average, than other districts with Providing a COLA for SCFF can help districts SCFF-calculated funding levels. address their core operating cost increases, while helping to bring more districts that would otherwise be on hold harmless onto the formula. SELECT CATEGORICAL PROGRAMS In this section, we focus on CCC categorical programs tend to experience cost pressures over programs. We first provide background on these time. The key cost drivers for some categorical programs, next describe the Governor’s proposal to programs are employee related, with costs rising provide a COLA for a subset of programs, and then as compensation increases. Some categorical raise an issue for legislative consideration. programs also have enrollment-related cost drivers, State Funds Many CCC Categorical with costs rising as the number of program-eligible Programs. Whereas most CCC Proposition 98 students increases. funding is for apportionments and is intended to State Has Provided Increases for Select cover core instructional and operating costs, about Categorical Programs. Historically, the 30 percent is for categorical programs. The state Legislature’s CCC COLA decisions have been has more than 40 categorical programs. These driven by the availability of Proposition 98 funding programs provide community college districts with and its relative budget priorities. In some years, funding designated for specific purposes. The state the Legislature has provided a COLA for a subset is providing a total of $3.8 billion ongoing across of categorical programs. As Figure 5 on the next all CCC categorical programs in 2024-25. The five page shows, the state has consistently provided a largest programs—the California Adult Education COLA for seven specific categorical programs in Program, the Student Equity and Achievement almost every year since 2019-10. (In 2020-21, the Program, Student Success Completion Grants, state did not provide a COLA for any CCC programs the Strong Workforce Program, and Extended because it anticipated a significant budget shortfall Opportunity Programs and Services—account for due to the pandemic.) The state has also provided more than half of that spending. The remaining a COLA for certain other categorical programs in programs serve a range of purposes, from financial one or two of these years. Separate from providing aid administration and technology services to a COLA, the state sometimes provides other specific types of student and faculty support. funding increases to expand categorical programs. Underlying Costs Tend to Grow Over For example, the state increased funding for the Time. As with apportionments, statute does Student Equity and Achievement Program by not authorize an automatic COLA for any CCC $24 million (5 percent) in 2021-22 and another categorical program. Nonetheless, categorical $25 million (5 percent) in 2022-23. www.lao.ca.gov 9 2025-26 BUDGET Figure 5 Certain Categorical Programs Have Received a COLA in Recent Years 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Academic Senate  Adult Education Program      Apprenticeship programs      CalWORKs student services      Campus child care support      Disabled Students Programs and Services      Extended Opportunity Programs and Services      Mandates Block Grant      MESA program   Middle College High School  NextUp foster youth program  Part-time faculty compensation  Part-time faculty office hours  Puente Project   Rapid rehousing  Student basic needs centers  Student mental health services  Umoja program   Veteran resource centers  COLA = cost-of-living adjustment and MESA = Mathematics, Engineering, Science Achievement. Governor Proposes to Provide Seven deliberations. The Legislature could adopt the Categorical Programs With a COLA. The proposal, or it could choose to provide a COLA Governor’s budget includes a total of $30 million for a different set of categorical programs based ongoing Proposition 98 General Fund to on its priorities this year. Given the limited amount provide seven CCC categorical programs with a of ongoing CCC Proposition 98 spending under 2.43 percent COLA. These are the same seven the Governor’s budget, the Legislature will face programs that have received a COLA in almost a trade-off between providing more funding for every year since 2019-20. Figure 6 lists these categorical programs and reserving those funds programs and the cost of the associated COLA. for other ongoing budget priorities, such as More than half of the cost is for the California Adult enrollment growth. Education Program, which supports precollegiate adult education at both community colleges and Figure 6 adult schools operated by school districts. (As we Governor’s Budget Includes Increases note in the “Apportionments” section, the data used for Select Categorical Programs to calculate the COLA will not be finalized until late Reflects Funding for 2.43 Percent COLA (In Millions) April. The final rate could be slightly higher or lower than the Governor proposes, with corresponding Program Cost changes in the associated cost.) Adult Education Program $15.9 Proposal Is a Reasonable Starting Point, Extended Opportunity Programs and Services 5.3 but Legislature Could Consider Other Options. Disabled Student Programs and Services 4.2 Given that the Governor’s proposal includes Apprenticeship programs 2.3 CalWORKs student services 1.4 many of the categorical programs the Legislature Mandates Block Grant 1.0 has prioritized for a COLA in recent years, it is Campus child care support 0.1 a reasonable starting point for 2025-26 budget Total $30.2 COLA = cost-of-living adjustment. 10 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET ENROLLMENT In this section, we provide background on how the As its enrollment increases, its apportionment state funds community college enrollment, discuss funding also increases until it uses up this authority. recent enrollment trends, describe the Governor’s In 2024-25, districts are adding back an estimated proposal to fund enrollment growth, assess the 14,802 FTE students through restoration. proposal, and offer an associated recommendation. State Allocates Enrollment Growth Funding Separately. Enrollment growth funding is provided Background on top of the funding generated from all other Enrollment Is a Key Factor in Determining components of the apportionment formula. Growth Apportionment Funding. Under SCFF, the largest funding supports enrollment increases at districts factor in determining a district’s apportionment that have not seen recent declines in funded funding is its enrollment level. The SCFF enrollment enrollment, as well as districts that already have calculation for regular credit courses is based on a used up their restoration authority. State law does three-year average. Specifically, it uses the average not prescribe how to determine the amount of of the FTE student count in that given year and growth funding to provide CCC in any given year. the two previous years. In 2024-25, the funded Historically, the state has considered several factors, enrollment level based on the three-year average is including changes in the adult population, the estimated at 1,064,141 FTE students systemwide. unemployment rate, prior-year enrollment trends, This is an estimated 4,432 FTE students and the availability of Proposition 98 funding. From (0.4 percent) higher than the reported enrollment 2021-22 through 2024-25, the state provided funding level in 2024-25. for 0.5 percent systemwide growth annually. In Certain Cases, Funding Is Based on State Funds Enrollment Growth at a Alternative Years of Enrollment Data. In 2024-25, Per-Student Rate. The per-student rate varies by one key reason the systemwide funded enrollment type of instruction. In 2024-25, the base rate for level (using the three-year average) is slightly higher regular credit courses is $5,294 per FTE student, than reported enrollment is a provision called with districts generating additional funding (on top the “emergency conditions allowance.” Under of the base rate) for enrolling students who are low this provision, the Chancellor’s Office may use income or for attaining specified student outcomes. alternative years of enrollment data to calculate a The base rate for dual enrollment students, district’s apportionment funding in extraordinary incarcerated students, and most noncredit students cases. During the pandemic, the Chancellor’s is higher ($7,425 per FTE student), as districts do not Office calculated apportionment funding for nearly earn additional funding based on these students’ all districts using pre-pandemic enrollment data income level or outcomes. in place of their lower reported enrollment levels State Has Certain Rules for Allocating for 2019-20 through 2022-23. This affects the Enrollment Growth Funds Across Districts. three-year averages used to calculate districts’ State law directs the Chancellor’s Office to allocate apportionment funding through 2024-25. enrollment growth funding across all districts using Districts With Recent Enrollment Declines a formula that accounts for several local factors. Can Recover Apportionment Funding. When a These factors include the number of individuals district’s enrollment decreases, its SCFF-calculated within the district’s service area who do not have a apportionment funding generally also decreases. college degree, are unemployed, or are in poverty. Under state law, the district may subsequently If a district does not fully use its enrollment growth increase its apportionment funding through allocation, then the remaining funds are redistributed a process called “restoration.” Through this to other districts that are growing beyond their initial process, a district is authorized to receive funding growth allocation. State law caps the total amount for adding back as many FTE students as it has of enrollment growth funded at any given district at cumulatively lost funding over the past three years. 10 percent annually. www.lao.ca.gov 11 2025-26 BUDGET Recent Trends by 4.4 percent in 2022-23 and further increased by 11.3 percent in 2023-24. The Chancellor’s Office CCC Enrollment Declined Prior to and recently released its initial estimates of 2024-25 Especially During the Pandemic. As Figure 7 enrollment, based on data submitted by districts shows, CCC enrollment declined for much of as of January 2025. Under these estimates, the past decade. From 2015-16 to 2019-20, the enrollment is on track to increase by an additional enrollment decline was gradual. This trend has 1.3 percent in 2024-25. With these increases, about commonly been attributed to a long economic 40 percent of districts were back at or above their expansion, reflected in a strong labor market and pre-pandemic enrollment levels in 2024-25, as historically low unemployment during that period. Figure 8 shows. Historically, increases in unemployment have been accompanied by increases in community Enrollment Trends Have Varied Notably college enrollment, as more individuals return to by Region. As Figure 9 shows, estimated school for training. The pandemic, however, was CCC enrollment in 2024-25 is up relative to an exception. Due to the public health emergency, pre-pandemic levels in two regions: the Central community college enrollment dropped notably Valley and the Inland Empire. This generally aligns even as unemployment temporarily surged. with broader demographic trends, as these regions Between 2019-20 and 2021-22, the number have experienced population growth since 2018-19. of FTE students at CCC declined by about In all other regions, estimated CCC enrollment 195,000 (18 percent). This decline was consistent remains below pre-pandemic levels. The enrollment with national community college enrollment trends decrease has been largest in the Bay Area, a region over the period. that has experienced above-average population declines over this period. Within each region, Enrollment Levels Are Now Recovering enrollment trends vary among some districts. in Many Districts. After declining for several In every region experiencing declining enrollment, years, CCC enrollment began to increase again in one or more community college districts are 2022-23. The number of FTE students increased growing despite the regional trend. Figure 7 After Several Years of Declines, CCC Enrollment Is Recovering Resident Full-Time Equivalent Students 1,200,000 1,000,000 800,000 600,000 400,000 200,000 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25ª a Reflects estimate from Chancellor's Office based on district data reported as of January 2025. 12 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET Several Factors Are Likely Contributing to Some Districts Have Recently Grown Beyond Recent Enrollment Increases. In addition to Their Enrollment Targets. In 2024-25, the state demographic growth in certain regions, several provided $28 million to support 0.5 percent other factors are likely contributing to the recent enrollment growth systemwide. Districts are on rebound in community college enrollment. track to fully use this available growth funding. The state’s unemployment rate has steadily increased over the Figure 8 past two years, from a low of 3.8 percent in September 2022 to Some Districts Have Returned to 5.5 percent as of December 2024. Pre-Pandemic Enrollment Levels This weaker labor market likely has Percent Change in FTE Students, 2024-25 Compared to 2018-19ª led more individuals to return to school. Districts are also pursuing More than 20% a variety of growth strategies, 10% to 20% including expanding high school partnerships, reengaging students 0% to 10% who recently dropped out of 0 to -10% college, and offering more flexible courses (including courses with -10% to -20% shorter terms and more frequent -20% or less start dates). 5 10 15 20 25 Enrollment Is Shifting Toward Number of Districts Different Types of Instruction. a 2024-25 enrollment levels reflect estimates from Chancellor's Office based on district data reported Though the overall enrollment as of January 2025. level is recovering, the mix of FTE = full-time equivalent. enrollment has changed somewhat compared to before the pandemic. Figure 9 In 2024-25, enrollment in regular credit courses was approximately CCC Enrollment Is Up in the 71,000 FTE students lower than Central Valley and Inland Empire in 2018-19, as Figure 10 on the Percent Change in FTE Students, 2024-25 Compared to 2018-19 next page shows. This decrease was partly offset by increases in Central Valley/Mother Lode other types of instruction, most notably dual enrollment courses Inland Empire/Desert for high school students. Dual Los Angeles/Orange County enrollment at CCC rose from about 37,400 FTE students in 2018-19 to South Central Coast an estimated 57,200 FTE students North/Far North in 2024-25—a 53 percent increase over just six years. During this time San Diego/Imperial frame, noncredit enrollment also Bay Area increased, though by a much lower rate (11 percent). -15% -10 -5 5 10 15% Note: Districts are grouped according to the regions used to administer various CCC programs, including career technical education. 2024-25 enrollment levels reflect estimates from Chancellor's Office based on district data reported as of January 2025. FTE = full-time equivalent. www.lao.ca.gov 13 2025-26 BUDGET Moreover, after accounting for this growth funding, CCC in 2025-26. This equates to an estimated 25 districts are on track to enroll more students 5,439 additional FTE students. The average base than their 2024-25 enrollment target. As Figure 11 rate for each of these students is $5,597. The shows, these districts are estimated to collectively proposed 0.5 percent growth rate is the same rate exceed their enrollment targets by 22,420 FTE the state has adopted in each of the past four years. students, equating to 4.8 percent of their total Assessment enrollment. (Five of these districts, accounting for a combined 4,075 FTE students above the target, Statewide Demographic Trends Are Not are basic aid districts.) The districts estimated to Likely to Generate Enrollment Pressure exceed their targets are located throughout the in 2025-26. Under both our office’s and the state, with districts in the Los Angeles/Orange administration’s projections, the total adult County, Central Valley, and Inland Empire regions population (ages 18-59) in California is roughly flat accounting for the majority of the students above in 2025-26, compared to the previous year. the target. Districts that exceed their enrollment The number of high school graduates is projected targets initially accommodate the associated to decline by 3 percent in 2024-25, which could impacts, commonly by having larger class lead to a smaller incoming class of traditional-age sizes or opening up additional course sections. college students in 2025-26. This is particularly the Subsequently, districts typically aim to realign case because college-going rates among recent their enrollment with their funding using various high school graduates have been roughly flat over enrollment management strategies, such as the past few years for which this data is available. adjusting their course offerings. Largely in response Taken together, these statewide demographic to some districts recently exceeding their targets, factors likely are not generating notable pressure for CCC is requesting the state fund a higher rate of CCC enrollment growth in 2025-26. enrollment growth—1.5 percent—in 2025-26. Regional Trends Could Create Some Enrollment Pressure. Though demographic Proposal pressures statewide are not likely to be significant Governor’s Budget Funds Some Enrollment in 2025-26, certain regions of the state still are Growth. The Governor’s budget includes expected to experience growth in their adult $30 million ongoing Proposition 98 General Fund population. When we map the administration’s for 0.5 percent systemwide enrollment growth at county-level population projections to community Figure 10 Dual Enrollment Is Growing Much Faster Than Other Types of Enrollment Full-Time Equivalent Students Change Enrollment Category Description 2018-19 2024-25a Number Percent Regular Credit Students generally enrolled in lower-division 990,925 919,920 -71,005 -7% academic or CTE courses. Noncredit Adult students enrolled primarily in precollegiate 70,300 77,907 7,607 11 basic skills, ESL, or CTE courses. Dual Enrollment High school students enrolled in credit-bearing 37,370 57,246 19,876 53 community college courses. Incarcerated Students Students currently incarcerated enrolled in 4,697 4,636 -61 -1 credit-bearing community college courses. Totals 1,103,292 1,059,709 -43,584 -4% a Reflects estimate from Chancellor’s Office based on district data reported as of January 2025. CTE = career technical education and ESL = English as a second language. 14 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET the pre-pandemic unemployment Figure 11 rate (about 4 percent), though still below the historical average 25 Districts Are Above Their Enrollment Targets over the past 30 years (about Full-Time Equivalent Students Above Enrollment Target, 2024-25ª 7 percent). Under our office’s projections, unemployment continues to increase in 2025-26 State Center South Orangeb and the out-years. This trend could Rancho Santiago lead more individuals to enroll at Kern the colleges. Southwestern Mt. San Antonio Some Districts Likely Victor Valley Remain Above Their Enrollment Mt. San Jacinto Targets. Another upward Glendale enrollment pressure is related to West Valley-Missionb Merced the 25 districts that exceeded San Diego their enrollment growth targets in Sequoias 2024-25. Without new enrollment Riverside funding, these districts could begin Sierrab San Mateob employing enrollment management Long Beach strategies (such as adjusting their Yosemite course offerings) to constrain Hartnell their growth. Conversely, with Los Rios Lake Tahoe additional funding, these districts San Bernardino might continue on their stronger Solano growth trajectories. Marinb Gavilan University Budget Constraints Could Increase CCC Enrollment 500 1,000 1,500 2,000 2,500 3,000 Demand. A fourth reason a Reflects estimate from Chancellor's Office based on district data reported as of January 2025. b Basic aid district. CCC might experience upward enrollment pressure is related to state budget constraints college regions, we find the adult population (ages affecting CSU and UC in 2025-26. 18-59) in the Central Valley and Inland Empire As we discuss in The 2025-26 Budget: Higher regions are projected to continue growing at Education Overview, the state might not have above-average rates through 2028-29. During the sufficient non-Proposition 98 General Fund to same period, the adult population is projected support enrollment growth at CSU and UC in to decrease in the Bay Area and Los Angeles/ 2025-26. If CSU and UC do not receive enrollment Orange County regions. Under current law, the growth funding, more students might enroll at Chancellor’s Office will take local demographic community colleges. factors into account when allocating new enrollment growth funding. Recommendation Labor Market Trends Could Continue to Prioritize Enrollment Growth Within Generate Enrollment Pressure. Some districts Available Ongoing Funds. We recommend also could see upward enrollment pressures for the Legislature fund at least the 0.5 percent other reasons, including labor market trends. enrollment growth proposed by the Governor. After climbing gradually for the past two years, The Legislature could consider funding more California’s unemployment rate has reached enrollment growth—potentially up to the 1.5 percent 5.5 percent as of December 2024. This is above requested by CCC—by redirecting funds from www.lao.ca.gov 15 2025-26 BUDGET lower-priority ongoing proposals. (We would not potential constraints on CSU and UC enrollment recommend redirecting funds from one-time levels all could drive up CCC enrollment levels in proposals toward enrollment growth, as this would 2025-26. Providing funding for additional growth reduce the one-time cushion within the CCC could help districts maintain programmatic quality budget.) Community colleges could see upward as they enroll more students. We estimate each enrollment pressures from several fronts. Regional additional 0.5 percent of enrollment growth would demographic trends, rising unemployment rates, cost $30 million ongoing. enrollment in excess of existing targets, and RISING SCHOLARS NETWORK In this section, we provide background on State Primarily Supports These Students the Rising Scholars Network, describe the Through Apportionments. For currently Governor’s proposal to increase funding for incarcerated students, the state provides colleges this program, assess the proposal, and provide with apportionment funding based entirely on associated recommendations. the number of these students they enroll. In 2023-24, the state provided colleges collectively Background with $41 million in apportionment funding for Some CCC Students Are Currently or incarcerated students in credit-bearing courses. Formerly Incarcerated. As Figure 12 shows, the For formerly incarcerated students, the state number of incarcerated students enrolled at the provides colleges with apportionment funding community colleges has increased over the past based on the same factors used for the broader decade—from about 2,200 FTE students in 2014-15 community college student population—enrollment, to about 7,100 FTE students in 2023-24. The low-income student counts, and specified majority of these students were in state prisons, student outcomes. We estimate the amount of and the remaining students were in other facilities such as county jails, county juvenile facilities, or federal Figure 12 facilities. (Juvenile facilities house CCC Enrolls a Growing Number of youth up to age 23 or, in some Currently and Formerly Incarcerated Students cases, age 25.) Whereas colleges historically provided instruction Full-Time Equivalent Students to incarcerated students primarily through correspondence courses, 14,000 they have been providing a growing Formerly Incarcerateda 12,000 amount of in-person instruction Incarcerated over the past decade. Community 10,000 colleges also enroll formerly 8,000 incarcerated students. Based 6,000 on data from the Chancellor’s Office, the number of formerly 4,000 incarcerated students has doubled 2,000 since 2019-20, reaching about 4,500 FTE students in 2023-24. 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 a Reflects students who voluntarily disclose this information. The Chancellor's Office began collecting this data in summer 2018. Data from that first year of reporting might have been incomplete. 16 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET apportionment funding for formerly incarcerated spending the majority of their program funds on students was in the low tens of millions of dollars personnel, including staff to provide specialized in 2023-24. In addition to apportionments, a CCC support for currently and formerly incarcerated categorical program provides $3 million ongoing students and instructional designers to adapt Proposition 98 General Fund for textbooks or courses to be delivered in correctional settings. digital course content for incarcerated students Other program expenses include technology, across all types of correctional facilities. Colleges classroom space, and professional development. may also use funding from certain other broader State Added Juvenile Justice Component categorical programs, including the Student Equity to Program in 2022-23. The 2022-23 Budget and Achievement Program, to provide support Act provided $15 million ongoing to add a new services for currently and formerly incarcerated component to the Rising Scholars Network that students. Data is not available on the amount of focuses on youth impacted by the juvenile justice categorical funding colleges are using to support system. The majority of these funds are to support these students. up to 45 colleges in providing instruction and State Established Rising Scholars Network support services (such as basic needs assistance in 2021-22. Chapter 558 of 2021 (AB 417, and education planning) on campus and in local McCarty) established the Rising Scholars Network juvenile facilities. Of the total program funding, to provide support services to incarcerated $1.3 million is designated for technical assistance, and formerly incarcerated students enrolled in including staff to oversee program implementation community college courses. The 2021-22 budget and provide training and support. In addition, package provided $10 million ongoing for this $750,000 was designated on a one-time basis in categorical program. These funds are to support 2022-23 for a program evaluation that examines the up to 65 colleges in providing various services, first cohort of participating colleges over a period including academic advising, tutoring, financial aid of at least five years. Since 2022-23, the state has application assistance, and assistance accessing retained the provisional budget language funding other campus and community resources. State this program. law authorizes the Chancellor’s Office to designate Some of Same Colleges Are Participating up to 5 percent of program funding for program in Juvenile Justice Component. In 2023, the administration, development, and accountability. Chancellor’s Office awarded the juvenile justice The Chancellor’s Office is required to report on funds through a competitive process. Of the December 31, 2023 and every two years thereafter 47 colleges that applied, 44 colleges received on colleges’ efforts to serve currently and formerly awards of $312,500 annually through 2026-27. incarcerated students. (Each college’s award amount was slightly lower Just Over Half of Colleges Are Participating in 2022-23 because of the one-time set-aside for in Original Program. In 2022, the Chancellor’s a program evaluation.) Two colleges that applied Office awarded the Rising Scholars Network funds for the program did not receive awards, and one through a competitive process that accounted for a college declined an award. Most of the colleges college’s readiness based on its current programs participating in the juvenile justice component of and services for currently or formerly incarcerated the program are also participating in the original students. Of the 68 applicants, 59 were selected for component focused on adult students. In total, awards of between $100,000 to $190,000 annually 75 colleges are participating in one or both program through 2024-25. Two of the selected applicants components in 2024-25. As with the original were multi-college districts, bringing the total count component, colleges are spending the majority of of participating colleges potentially up to 62—just program funds from the juvenile justice component under the cap of 65. The remaining applicants on personnel costs. did not receive the minimum number of points to be eligible for funding. Based on information from the Chancellor’s Office, participating colleges are www.lao.ca.gov 17 2025-26 BUDGET Proposal component of the program, each of which has different rules. It also does not specify whether the Governor Proposes to Increase Funding funds are intended to support currently or formerly for Rising Scholars Network. The Governor’s incarcerated students—two student groups that budget increases funding for the Rising Scholars may have differing needs and differing access to Network by $30 million ongoing Proposition 98 support services. In addition, it does not specify General Fund, bringing total program funding to how the Chancellor’s Office is to allocate the $55 million. The Governor proposes trailer bill funds among interested colleges, including how language removing the cap on the number of much grant funding each college would be eligible colleges participating in the adult component of the to receive. The administration indicates that the program. (Budget bill language would continue to Chancellor’s Office would have flexibility to make limit participation in the juvenile justice component these types of decisions. to 45 colleges.) The administration proposes no changes to program requirements for either the State Does Not Yet Know Outcomes of adult or juvenile components. Current Program. In March 2024, the Chancellor’s Office submitted the first of its biennial reports to Assessment the Legislature on its efforts to serve currently and Increasing Support for Incarcerated Students formerly incarcerated students. The report provides Could Have Benefits. As we discuss in our report, data on enrollment and outcomes for these student Assessing Community College Programs at groups from 2018-19 through 2020-21—the three State Prisons, some research conducted in other years prior to the state establishing the Rising states has identified benefits to higher education Scholars Network. Our office has requested data for incarcerated students, including reductions from the Chancellor’s Office on student outcomes in recidivism. Support services might help these since the program was established in 2021-22. students attain their educational goals. Data is not As of this writing, we have not yet received this available on the amount or the impact of support data. In addition, the program evaluation the services provided to incarcerated students in CCC state funded in 2022-23 budget has not yet courses. Based on the meetings and site visits begun. The Chancellor’s Office indicates they are we conducted for this report, however, relatively currently developing a request for proposals for few counselors advise incarcerated students, and this evaluation. these students typically do not have access to Recommendations trained tutors. With Limited Available Ongoing Funds, Proposed Funding Increase for Rising Prioritize Supporting Core Programs. As we Scholars Network Is Relatively Large. The discuss in the “Overview” section, we recommend Governor’s proposed $30 million increase for the the Legislature prioritize ongoing funding for core Rising Scholars Network would more than double costs. We recommend considering other program the ongoing program funding level. It is also three expansions only if ongoing funding remains times the increase requested by the Chancellor’s available after these core costs are addressed. Office in the CCC 2025-26 budget request for this Regarding the Rising Scholars Network, we caution purpose ($10 million). The administration has not against significantly expanding this program before provided a strong rationale for proposing such a the state has any information on its outcomes significant increase for the program. Notably, the to date. Over the next few years, the Legislature administration has not offered evidence of demand expects to receive more information on how the among additional community colleges for this program is going, including the results of the amount of program funding. evaluation it funded in the 2022-23 budget. After Proposal Lacks Clarity on Intended Use of it has this information, it will be in a better position Funds. The proposed trailer bill language does not to revisit various aspects of the program, including specify whether the additional funding is intended its funding level. In the meantime, the Legislature for the adult component or the juvenile justice 18 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET could reject the proposed augmentation for we recommend modifying SCFF to include a 2025-26 and (1) redirect the funds to other ongoing performance component for incarcerated students priorities, (2) designate the funds for one-time (as it does for most other students), thus creating purposes, or (3) make a discretionary deposit into better incentives for colleges to help these students the Proposition 98 Reserve. Either of these last attain their educational goals. Second, in that two options would result in a larger budget cushion report, we also recommend using untapped federal for protecting existing core community college Pell Grants to cover enrollment fees, textbooks, programs moving forward. and technology costs for incarcerated students. Consider Other Approaches to Supporting This would free up state funding currently going Incarcerated Students. Although the state has toward these purposes, which the Legislature could limited budget capacity to expand programs such in turn use for other purposes, such as providing as the Rising Scholars Network, it has other options additional support for incarcerated or formerly to improve support for incarcerated students incarcerated students. We estimate this would free without incurring additional net costs. Our report, up approximately $9 million ongoing Proposition 98 Assessing Community College Programs at General Fund as well as non-Proposition 98 State Prisons, contains two recommendations General Fund in the low tens of millions of dollars. related to this objective. First, in that report, COMMON CLOUD DATA PLATFORM In this section, we first provide background on Chancellor’s Office Recently Launched the Common Cloud Data Platform, a demonstration Demonstration Project to Share Student Data project the Chancellor’s Office launched to More Easily. In October 2023, the Chancellor’s provide shared access to student data across Office launched a demonstration project called the participating districts. We then describe the “Common Cloud Data Platform.” The goal of this Governor’s proposal to expand this platform project is to develop a platform through which the systemwide, assess that proposal, and provide an Chancellor’s Office and participating districts could associated recommendation. share student data on a “near real-time” basis. The platform would be compatible with districts’ Background existing ERP systems. By making the sharing of Each District Maintains Its Own Student student data easier, this project is intended to Data. Community colleges collect various types streamline certain systemwide reporting processes. of student data, including data on enrollment, It is also intended to enable the development of demographics, academic outcomes, and financial data analytics tools, such as timelier enrollment aid. Each district stores this student data in an and student outcomes dashboards, which the IT system called an enterprise resource planning Chancellor’s Office indicates could improve (ERP) system. (Districts also use their ERP systems decision-making and student support. The for many other purposes, as we discuss in the Chancellor’s Office is supporting this demonstration next section of this brief.) The Chancellor’s Office project using $10 million in one-time funds set does not have direct access to this data. Instead, aside from the Student Equity and Achievement it requires districts to report certain data, including Program. (Under state law, the Chancellor’s Office on enrollment and student outcomes, periodically may designate up to 5 percent of funding for that during the course of the year. These district reports program for systemwide activities.) Currently, six are in turn used for various systemwide purposes, districts—representing a range of sizes, locations, including determining apportionment funding and and ERP systems—are participating in the complying with state reporting requirements. demonstration project. The Chancellor’s Office is preparing to add a second cohort of about six more districts to the project over the next few months. www.lao.ca.gov 19 2025-26 BUDGET Proposal instructors and counselors better support specific students. It is unclear, however, whether this Governor Proposes Expanding Student Data project would significantly improve the data that Platform Systemwide. The Governor’s budget districts have on their own students, except to the provides $163 million Proposition 98 General extent those students are also enrolled at other Fund ($29 million ongoing and $134 million one participating institutions. time) for the Common Cloud Data Platform. Based on the proposed trailer bill language, the Proposed Funding Level Could Exceed funds would be used to develop and expand the Project Costs. The $163 million included in the platform to all districts, incorporate new analytics Governor’s budget is based on CCC’s 2025-26 tools, and support related data quality assurance systemwide budget request. In that request, and governance processes. The Chancellor’s however, this amount was intended to cover not Office would allocate these funds to a district or only the expansion of the Common Cloud Data districts to administer these activities under its Platform but also the launch of the Common ERP oversight. (The state commonly takes this approach project (which we discuss in the next section of this with CCC systemwide initiatives to ensure that brief). We think that the full amount likely would not Proposition 98 General Fund is allocated to local be needed for the Common Cloud Data Platform educational agencies.) The language directs the alone. A January 2025 Board of Governors meeting Chancellor’s Office to submit a report on the agenda cites a significantly lower cost ($96 million project’s implementation status to the Legislature one time to be spent across several years) for by January 31, 2028. The language does not expanding the Common Cloud Data Platform specify how long the funds would be available systemwide. The Chancellor’s Office indicates, for expenditure. however, that this cost estimate is not final. Assessment Recommendation Demonstration Project Is Still Underway. Reject Funding at This Time and Require The Common Cloud Data Platform demonstration Reporting on Demonstration Project. Given the project provides an opportunity for the Chancellor’s issues above, we think it would be premature to Office to develop and test the platform with a small fund the systemwide expansion of the Common group of districts, assess the outcomes, and apply Cloud Data Platform. Instead, we recommend the lessons learned toward future decisions about requiring the Chancellor’s Office to report on the expanding the platform. The Chancellor’s Office current demonstration project upon its completion. anticipates completing the demonstration project The report could cover the outcomes of the in June 2026. We do not see a clear rationale for project for participating districts, any challenges funding the systemwide expansion of this platform encountered and lessons learned, the projected before the demonstration is complete and the state and local benefits of expanding the platform Legislature has information on its outcomes. systemwide, a refined cost estimate for that expansion, and an analysis of alternatives and More Information Is Needed on Project’s their respective costs. This information would Benefits. While expanding the Common Cloud be similar to the information provided to the Data Platform systemwide could lead to more Legislature for other IT projects through the state’s efficient reporting processes, these administrative IT project approval process, as we discuss in the efficiencies are unlikely to be enough on their own nearby box. The Legislature could require the to justify a project of this size. To better understand Chancellor’s Office to report on these items by the justification for systemwide expansion, the October 30, 2026. This is a few months after the Legislature would likely want more information on completion of the demonstration project and a the state benefits of having more timely student few months before the start of the state’s 2027-28 data, relative to the data currently available. budget process. If the Legislature decided to For example, the Legislature may want specific expand the platform based on the demonstration examples of how near real-time data is needed project’s results, it could initiate state funding in for state decision-making. Real-time data likely is 2027-28, funds permitting. most useful at the local level, where it could help 20 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET State Information Technology (IT) Project Approval Process State Has Standard Approval Process for Most IT Projects. Historically, the state has experienced considerable challenges successfully implementing IT projects. In 2016, the California Department of Technology (CDT) implemented a new project approval process—known as the Project Approval Lifecycle (PAL)—with the goal of helping bolster project planning and reduce the likelihood of project challenges or failure. As the figure below shows, the PAL process has four stages. Each stage requires departments to conduct specific planning-related analyses and submit an associated planning document to CDT for approval. Collectively, these documents form a comprehensive plan for implementing the proposed project. These documents can give the Legislature a better understanding of—and more confidence in—the project cost, schedule, and scope prior to approving funding for project implementation through the annual budget process. Whereas current policy requires most state agencies to use the PAL process, the California Community Colleges Chancellor’s Office and community college districts are not required to go through the process. Stages of the PAL Process B S u ta si g n e e s 1 s S Al t t a e g rn e a t 2 ives A P s ro s g e r s a s m E m xi i s n t g in g M Re a s rk e e a t r ch D M So e id l v u - e t L l i o o e p n ve l I S d o e l n u t t i i f o y n R So ec lu o ti m on mend F A i n n a a l n y c si i s al CDT Decision U e re n p s t o o it n i u e r s a c p e c p s a r n f o o r v r e a q l, u est Analysis Analysis Processes Requirements Alternatives development and implementation Identify Programmatic Problem/Opportunity Establish Business Stage 3 CDT Decision Case/Need Develop Solution Solution Develop Solicitation Requirements Identify Objectives Analysis Assess Departmental Readiness CDT Decision Stage 4 AAwwaarrdd CCoonnttrraacctt Solicitation Select Contract Baseline DOF/Legislative CDT Decision P an ro d j e A c p t p R r e o a v d al iness Release Vendor Management Project Approval SSttaarrt a t a n P n P dd rroo jjeecctt = Reject = Revise and Resubmit Upon approval, entities = Approve can request planning resources to complete the PAL process PAL = Project Approval Lifecycle; CDT = California Department of Technology; and DOF = Department of Finance. COMMON ENTERPRISE RESOURCE PLANNING SYSTEM In this section, we first provide background on Background the ERP systems that districts use to manage their Each District Has Its Own ERP System. core business functions. We then describe the Community college districts use their ERP systems Governor’s proposal to develop a common ERP to manage numerous functions relating to student across multiple districts, assess that proposal, and information, finance, and human resources. provide an associated recommendation. www.lao.ca.gov 21 2025-26 BUDGET Currently, each district contracts separately with a Assessment vendor for its ERP system, with nearly all districts Project Has Not Undergone Typical Planning using one of three main products. Each district also Process. Most state IT projects undergo a planning employs its own IT staff to administer and maintain process managed by the California Department its ERP system. The Chancellor’s Office believes of Technology (CDT), in consultation with the this approach has several drawbacks—including Department of Finance, called the Project Approval inconsistencies in the technology experience Lifecycle (PAL). The box on page 21 describes for students and employees across the system, this process. Because the Chancellor’s Office information security vulnerabilities at districts with is considered an independent agency outside outdated ERP systems, and IT staffing challenges of CDT’s authority, its projects are not required at smaller districts. to go through the PAL process. The Common Chancellor’s Office Recently Initiated a ERP project has not undergone a comparable Common ERP Project. In February 2024, the planning process, and the documentation currently Chancellor’s Office convened a task force to available on this project is not equivalent to what provide input on systemwide technology issues. the Legislature typically receives for other state One issue the task force considered was the IT projects. development of a common ERP—a centrally Alternatives to Achieving Project Objectives administered IT system that would replace existing, Have Not Been Thoroughly Studied. The locally administered IT systems. At the conclusion first and second stages of the PAL process, of the task force, the Chancellor’s Office decided respectively, require departments to identify to continue exploring the development of an opt-in project objectives and evaluate various alternatives common ERP system with interested districts. In for accomplishing those objectives. While the November 2024, the Chancellor’s Office began the Chancellor’s Office has identified several potential planning process for this project with a group of objectives for a systemwide technology project, it about a dozen districts. has not thoroughly evaluated the alternatives for accomplishing those objectives. Some of these Proposal alternatives might be more cost-effective or lower Governor Proposes Funding for a Common risk than the proposed Common ERP project. For ERP Project. The Governor’s budget provides example, districts with outdated ERP systems could $168 million one-time Proposition 98 General turn to the Foundation for California Community Fund for this purpose. Under the proposed Colleges to negotiate better pricing through its trailer bill language, the funds would be used to shared procurement program. Alternatively, these develop, implement, and expand the Common districts could create a joint powers authority to ERP project and support related data governance pool their IT resources and expertise, leveraging activities. The Chancellor’s Office would allocate their larger combined size to negotiate better these funds to a district or districts to administer prices. Without an analysis of these types of these activities under its oversight. The language alternatives, the Legislature cannot determine directs the Chancellor’s Office to submit a report whether the Common ERP project is the best way to the Legislature containing a project time line, to address the identified objectives. budget, and progress update by January 31, 2027. State Lacks Basic Information on Project It also directs the Chancellor’s Office to submit a Scope, Schedule, and Cost. The trailer bill second report to the Legislature on the project’s language does not specify how many districts are to implementation status by January 31, 2030. participate in the Common ERP project or whether The language does not specify how long the funds the intent is to implement it systemwide. The would be available for expenditure. Chancellor’s Office indicates, however, that its intent is to eventually implement the project at all districts over multiple waves. Implementing a project of this scope would require significant time and costs. 22 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET Whereas the Legislature typically has information greater standardization across districts in various on a project’s schedule and cost prior to approving areas, ranging from financial accounts to salary and funding for development and implementation, it benefits structures. In addition, districts would need would not receive this information on the Common to provide support to staff, faculty, and students ERP project until well afterward. Under the proposed in using the new system. The Chancellor’s Office trailer bill language, the report due to the Legislature indicates it would like to support districts with by January 31, 2027 would include a project time change management costs. These costs would line and “the budget and expenditures of resources largely be on top of the future project costs cited in appropriated, and any identified one-time and future the previous paragraph. funding needs necessary for completing the work.” Moving to One Systemwide Vendor Can Raise Project Would Likely Require Large Future Risks and Costs. While centralized procurement Augmentations. The Chancellor’s Office anticipates sometimes results in lower local costs, giving all spending the $168 million included in the Governor’s systemwide business to a single ERP vendor has the budget over the first two years of the Common risk of increasing overall costs. Currently, multiple ERP project. It estimates this would be enough to ERP vendors are competing for contracts among fund the project for the first wave of districts (likely districts, creating incentives for those vendors about a dozen districts). Additional funding would to keep their prices low and their product quality be needed in the future to implement the project high. If CCC were to implement one common ERP at more districts. In conversations with our office, systemwide, the selected vendor effectively would the Chancellor’s Office indicated the amount of no longer face competition in the short term. The additional funding needed in future years could be state has had such experiences with similar types roughly $300 million, before accounting for cost of IT projects in the past. Another risk is that a escalation and certain local implementation issues vendor selected based on the needs of the first described below. Given the magnitude of these wave of districts might end up not being the best future costs, we are particularly concerned that the fit for districts in future waves. Some large districts Legislature is being asked to approve initial funding with complex technology needs have indicated for this project before receiving a total project an initial lack of interest in joining the project. If a budget, as well as a complete project plan. subset of districts opts out of the project, this would Project Involves Significant Changes in presumably dilute whatever systemwide benefits Local Processes. Given that districts rely on were envisioned. their ERP systems for numerous aspects of their Recommendation operations, transitioning to a new system is likely Reject Proposal. Given the overall lack of to present significant challenges relating to change planning, the large future costs, and the significant management. Over the years, each district has project risks, we recommend rejecting the Governor’s customized its existing ERP system to reflect its local proposal to fund the Common ERP project. The processes. Transitioning to a common ERP system Legislature could redirect the funds toward other would require revisiting some of these processes. one-time CCC activities or make a discretionary For example, the Chancellor’s Office indicates deposit into the Proposition 98 Reserve. that implementing a common ERP would require CREDIT FOR PRIOR LEARNING In this section, we provide background on credit Background for prior learning at CCC, describe the Governor’s Credit for Prior Learning Takes Various proposal to provide new ongoing and one-time Forms. Credit for prior learning generally refers funding for this purpose, assess that proposal, and to the awarding of college credit for skills learned provide an associated recommendation. outside the classroom, such as through work www.lao.ca.gov 23 2025-26 BUDGET experience or military service. Students may All California Community Colleges Currently earn credit for these experiences in various ways, Offer Some Credit for Prior Learning. In 2020, including by passing an exam, submitting a portfolio the CCC Chancellor’s Office adopted regulations of their work for faculty review, or demonstrating requiring all community college districts to have they have earned an industry credential that credit for prior learning policies. These locally faculty have deemed equivalent to certain courses. developed policies are to include procedures (Some definitions of credit for prior learning also for students to earn credit for prior learning include credit earned through standardized exams, through joint services transcripts, examinations, such as Advanced Placement exams.) Nationally, student-created portfolios, and industry-recognized one of the most well-established forms of credit for credentials. The Chancellor’s Office reports that prior learning applies to active-duty military and all 115 credit-granting colleges in the system now veteran students. These students typically receive offer some form of credit for prior learning, though “joint services transcripts” from their branch of the practice has not been implemented at scale service documenting their military training and at most colleges. Systemwide data on the current experiences. The American Council on Education, state of credit for prior learning is incomplete. in turn, has developed recommendations for Based on the best available data, the Chancellor’s converting certain types of military training and Office estimates that at least 4,100 veteran students experiences into certain types and amounts earned a total of about 23,000 credits for prior of college credit. Colleges may consider these learning in 2023-24. These students earned an recommendations when deciding how much credit average of about six credits each (the equivalent to grant. For example, a college might decide to of two typical college courses). The Chancellor’s grant three introductory health sciences credits Office further estimates that at least 36,000 other and two physical education credits for completing students earned credit for prior learning in basic training. 2023-24, though the number of credits earned Some Research Suggests Credit for Prior by these other students is not well-documented. Learning Can Improve Student Outcomes. (This count may also include students earning Some research suggests that students who receive credit through standardized exams, such as credit for prior learning are more likely to persist Advanced Placement exams.) and complete their degrees, while also completing State Recently Provided One-Time Funding in less time. The largest-scale study, which was for Credit for Prior Learning Initiative. The conducted by the Council for Adult and Experiential 2024-25 Budget Act provided $6 million one-time Learning, examined the outcomes of adult learners Proposition 98 General Fund for a credit for prior across about 70 colleges and universities nationally. learning initiative at CCC. The Chancellor’s Office Of the students in the sample, those who received indicates these funds are supporting the Mapping credit for prior learning completed a certificate Articulated Pathways (MAP) Initiative, which it or degree within eight years at a higher rate than administers jointly with the Riverside Community those who did not receive credit for prior learning College District. (This initiative previously received (49 percent versus 27 percent). Though certain $2 million one-time Proposition 98 General Fund student groups (such as higher-income students) in 2021-22, as well as part of a $2 million one-time were overrepresented among those receiving Proposition 98 General Fund allocation for veterans’ credit for prior learning, the study found positive services in 2017-18.) The MAP Initiative provides outcomes across income and race/ethnicity groups. technology, training, and support to colleges in In addition, part-time students in the sample implementing credit for prior learning. With the who received at least 12 credits for prior learning 2024-25 appropriation, the Chancellor’s Office completed an associate degree faster than those reports the MAP Initiative is now available to all who did not receive any credit for prior learning colleges across the system. While the spending (32 months versus 45 months). A few smaller-scale plan for the $6 million is still being finalized, studies completed at specific institutions have the Chancellor’s Office currently anticipates also found higher completion rates and a faster spending $1.7 million in 2024-25 and the remaining time to degree among students with credit for $4.3 million in 2025-26. The Chancellor’s Office prior learning. indicates these funds will cover staffing costs, 24 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET consulting services, and the development and capacity for colleges to serve additional students maintenance of a systemwide technology platform or, alternatively, reduce unneeded course sections. to support credit for prior learning activities. Previous Funding for Related Activities The Chancellor’s Office indicates that roughly Remains Available. Of the $6 million provided for $1 million of these funds could go toward facilitating credit for prior learning in last year’s budget, the 40 faculty work groups. These work groups would Chancellor’s Office indicates $4.3 million would be have the goal of developing 1,000 systemwide available for MAP Initiative activities in 2025-26. credit recommendations mapping certain forms The planned expenditures for these existing funds of prior learning (such as specific industry are similar to the proposed expenditures under credentials) to equivalent college courses. the Governor’s new initiative. For example, both Such recommendations could make it easier for the existing and the new initiatives are intended to colleges to implement credit for prior learning support development and management of a credit and yield greater consistency in its application for prior learning technology platform. In addition, across colleges. both initiatives are intended to support faculty work groups that would develop systemwide Proposal credit recommendations. Given that the previous Governor Proposes Additional Funding for appropriation remains available, additional funding Credit for Prior Learning. The Governor’s budget for these systemwide activities might not be provides $7 million ongoing Proposition 98 General needed in 2025-26. Fund and $43 million one-time Proposition 98 Colleges Have Existing Incentives and General Fund for the Chancellor’s Office to Funding to Implement Credit for Prior establish a systemwide credit for prior learning Learning. Under SCFF, colleges receive more initiative that builds upon prior initiatives, including funding for increasing enrollment and improving the MAP Initiative. The ongoing funds are for student outcomes. If credit for prior learning systemwide purposes, including coordination, increases persistence and completion, colleges technology infrastructure, and faculty work groups. already have a financial incentive to grant it. The one-time funds are to support local While implementing credit for prior learning implementation of credit for prior learning. could involve some start-up costs, colleges have The proposed trailer bill language directs the existing funding that could help with these costs. Chancellor’s Office to allocate the one-time funds Most notably, the Strong Workforce Program to colleges based on metrics related to their use of provides funding to regional consortia and credit for prior learning to increase access, increase colleges to support career technical education. completion, and advance career attainment. The The statutory language for this program explicitly language specifies that colleges must demonstrate encourages colleges to use the funds to develop they are doing those things prior to receiving any workforce training programs that grant credit for funding. The Governor presents this proposal as prior learning. The Governor’s budget includes part of a Master Plan for Career Education, as the $290 million ongoing for this program, of which box on the next page explains. $219 million is available for spending on regional and local priorities in 2025-26. (The remaining Assessment amount is designated for a nursing initiative, as Credit for Prior Learning Could Have State well as systemwide activities.) In addition, the Benefits. Based on the available research, credit Student Equity and Achievement Program provides for prior learning could lead to improved student funding to districts for various student support outcomes, including higher completion rates. services, which could include counseling on credit The potential to reduce time to degree is also for prior learning. The Governor’s budget includes noteworthy, as this could lead not only to savings $524 million ongoing for this program in 2025-26. for students but also greater efficiency for the Given these existing fund sources, combined state. If students are able to complete their degrees with the fiscal incentives under SCFF, it is unclear through fewer courses (while still demonstrating the whether (or how much) additional funding is needed same skills and competencies), this could free up to support local implementation of credit for prior learning. www.lao.ca.gov 25 2025-26 BUDGET Master Plan for Career Education Governor Has Called for a New Education and Workforce Plan. In August 2023, the Governor issued an executive order calling for a new Master Plan for Career Education. The state’s various education and workforce agencies, including the California Community Colleges (CCC), are to participate in the development of this plan. In December 2024, the Governor released a high-level framework for the Master Plan that identifies six primary areas of action: (1) creating a state planning and coordinating body, (2) strengthening regional coordination, (3) supporting skills-based hiring, (4) developing career pathways for students, (5) strengthening workforce training, and (6) increasing education access and affordability. The administration indicates the full plan will be released at later date. Governor’s Budget Includes a Few Related Spending Proposals. Within the CCC budget, the Governor provides $50 million Proposition 98 General Fund ($43 million one time and $7 million ongoing) to expand credit for prior learning and $50 million one-time Proposition 98 General Fund to develop career passports. The Governor also has a couple of related proposals at other agencies. Specifically, he proposes $5 million ongoing non-Proposition 98 General Fund for the Government Operations Agency to establish a state coordinating body for education and workforce agencies, and he proposes $4 million one-time non-Proposition 98 General Fund for the Labor and Workforce Development Agency to support regional coordination for career education. Recommendation the $6 million provided in the 2024-25 Budget Act for this purpose, the outcomes of those efforts, Reject Funding at This Time and Require the remaining barriers to expanding credit for prior Reporting on Existing Initiative. Although we see learning, and any associated costs that cannot be potential state benefits in expanding credit for prior addressed using existing CCC funding streams. The learning, we think it would be premature to provide Legislature could require the Chancellor’s Office additional funding for this purpose without better to report on these items by October 30, 2026. If information about the outcomes of existing credit the report documents state benefits and identifies for prior learning efforts. We recommend requiring unaddressed costs, the Legislature could consider the Chancellor’s Office to report on how it used supporting those costs in a future budget. CAREER PASSPORTS In this section, we describe the Governor’s passport as “a secure digital tool that displays proposal to fund the development of a new tool called individuals’ preparation for employment, their a “career passport.” We then assess that proposal academic records, and credit for prior learning, and provide an associated recommendation. including but not limited to military service.” Under the proposed language, the funds could be used Proposal to support the infrastructure needed to develop Governor Proposes Funding the Development career passports, data security measures, and of Career Passports. As part of his forthcoming other technology features. The funds could also be Master Plan on Career Education, the Governor’s used to support outreach activities to promote the budget provides $50 million one-time Proposition 98 use of career passports. The language directs the General Fund to CCC to develop this new tool. The Chancellor’s Office, in collaboration with the Office of proposed trailer bill language describes a career 26 LEGISLATIVE ANALYST’S OFFICE 2025-26 BUDGET Cradle-to-Career Data and the Labor and Workforce passports will have positive impacts for job seekers, Development Agency, to develop a time line for key employers, and the state. Moreover, given that the deliverables by March 1, 2026. The funds would be concept is new and unfamiliar, there is a risk that available for expenditure until June 30, 2030. employers will not value the tool. Although the trailer bill language identifies the California Department of Assessment Human Resources as a potential early adopter, a tool Proposal Does Not Address a Clearly Defined developed for the state’s unique hiring process might Problem. Although career passports are intended not be useful to a broader set of employers, including to help job seekers communicate with prospective in the private sector. employers, the administration has not identified Project Schedule and Total Costs Are specific existing barriers to communication that Unknown. Whereas the state typically expects career passports would address. Moreover, the projects to have a clear scope, schedule, and cost administration has not explained how career before funds are appropriated, these details are still passports would improve upon existing tools for under development for career passports. Under this purpose, including resumes and professional the proposed trailer bill language, the Legislature networking platforms (such as LinkedIn). These would not receive a time line of key deliverables until existing tools provide job seekers various ways to March 1, 2026—eight months after the funds would convey their education, skills, industry credentials, have been appropriated. Moreover, it is difficult work experiences, and other related experiences. to assess whether the proposed funding level is Employers in both the public and private sectors reasonable for the proposal, as the administration are familiar with these tools. Beyond these tools, has not explained how it arrived at the $50 million employers can develop their own ways to assess cost estimate. The Chancellor’s Office indicates the prospective job candidates, such as by creating amount probably would be enough to develop the specialized skills assessments tailored to the tool, yet it also suggests that ongoing funding may be requirements of specific job positions or conducting needed to keep the tool available to users at no or low interviews that provide candidates an opportunity to cost. This could lead to ongoing cost pressures within convey their full array of skills and experiences. the Proposition 98 budget for CCC. Proposed Approach Is Largely Unproven. Recommendation Although the administration has pointed to some early pilot projects related to career passports, we are Reject Proposal. Given the concerns above, not aware of any projects resembling the Governor’s we recommend rejecting the proposed funding for proposal that have demonstrated outcomes, career passports. The Legislature could redirect the such as decreases in the length of a job search or funds toward other one-time CCC activities or make a improvements in the quality of a job match. This discretionary deposit into the Proposition 98 Reserve. makes it difficult to assess the likelihood that career www.lao.ca.gov 27 2025-26 BUDGET LAO PUBLICATIONS This report was prepared by Lisa Qing, and reviewed by Jennifer Pacella and Ross Brown. 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, California 95814. 28 LEGISLATIVE ANALYST’S OFFICE