New Fiscal Year Begins with Revenues on Target
The Department of Finance (DOF) reported that General Fund revenues for the first month of the 2004-05 fiscal year met the 2004 Budget Act forecast. The August 2004 Finance Bulletin, which reports July collections, indicates that revenues slightly exceeded the forecast by $108 million. Revenues from the personal income tax and the sales and use tax were right on target, while corporation tax revenues exceeded the projected level by 25%, adding $60 million to the state treasury. The other minor taxes (insurance, estate, alcoholic beverages, and tobacco) added a net $48 million.The Finance Bulletin also highlighted strong gains in the state’s home building market as further evidence that the economic recovery continues. For the first six months of 2004, home building was up 3.4% over the same period in 2003, with major gains in Southern California compensating for reductions in the San Francisco Bay Area. The Los Angeles-Long Beach region registered gains of 18% over 2003, while the Inland Empire showed gains of 15%.
In a separate news release, the Employment Development Department (EDD) reported that California saw its unemployment rate reach its lowest point in almost three years in July. The August 13, 2004, EDD report indicated that the state’s unemployment rate dropped to 6.1% for July 2004 compared to 6.9% in July 2003. In another bit of good news, the EDD noted that the number of people receiving unemployment insurance benefits dropped in July to just over 401,000 compared to 418,000 in June.
Not all of the recent economic news is good, however. The number of payroll jobs in July dropped 17,300 to 14,512,600. This essentially wipes out the 19,100 gain from June. Compared to year-ago levels, payroll employment is up 125,800 jobs (or 0.9%). Unfortunately, this pace of job growth is insufficient to absorb the expected new entrants into the job market that occurs through demographic growth alone. Nevertheless, we remain hopeful that the broader trends in the state�s economy are positive and sustained improvement in the job market is close at hand.
Senate and Assembly Appropriation Committees Take Action on The �Suspense File�
The Senate and Assembly Appropriation Committees took action on more than 300 bills on August 12, 2004. The focus of the committee hearings was to finalize their respective �suspense files.� The �suspense file� is a legislative procedure that allows the Appropriations Committee to vote bills up or down that contain an appropriation of more than $150,000 or impose a state mandate that may have a fiscal impact of more than $150,000.
When a bill is referred to the �suspense file,� the chair and vice-chair of the committee meet behind �closed doors� to decide which bills will be allowed to come before the committee for a vote. All bills that are approved by the Appropriations Committee now move to the floors of the Senate and Assembly. Bills approved by both houses move to the Governor�s desk for his consideration. All bills must now be acted upon by the Legislature by August 31�the date the Legislature adjourns for the remainder of the year. The Governor will have until September 30th to act on legislation forwarded to him.
The following bills were on the �suspense file� in each house and have an impact on community colleges:
AB 745 (Goldberg, D-Los Angeles) would require a county superintendent of schools with more than 50 employees and the governing board of a school district with 10 or more full- time employees and the governing board of a community college district to annually report all compensation received for certain administrative, certificated, and classified personnel. This bill was approved by the committee.
AB 2727 (Laird, D-Santa Cruz) would require the Department of Finance, in consultation with the Chancellor of the California Community Colleges and the Superintendent of Public Instruction, to prepare a proposal to provide adequate funding to both community colleges and K-12 schools (adjusting the Proposition 98 �split�). The bill was held in committee.
AB 3010 (Laird, D-Santa Cruz) would require the Department of General Services to provide a review of community college facility plans at appropriate stages. This bill was approved by the committee.
SB 905 (Chesbro, D-Arcata) would delete the 5% limitation on special admit K-12 students during summer sessions. Also, a district may not admit special part-time or full-time students to a summer academic term unless the governing board certifies that its decision to admit these students will not displace any regular student of the district. This bill was approved by the committee.
SB 1415 (Brulte, R-Rancho Cucamonga) would provide that, not later than June 1, 2006, the community colleges and the California State University shall adopt, and the University of California and private postsecondary institutions may adopt, a common course numbering system for the 20 highest demand majors in the respective segments. This bill was approved by the committee.
SB 1442 (Ducheny, D-San Diego) would establish the Joint Commission on Adult Education for the purpose of making recommendations regarding the coordination of adult education and noncredit community college programs in order to improve adult education services. This bill was approved by the committee.
SB 1463 (Scott, D-Altadena) would require, for the 2004-05 fiscal year and each fiscal year thereafter, specified calculations to be made for the purposes of determining the allocation of funds for community college districts and K-12 schools (Proposition 98 �split�). This bill is being held in committee.
SB 1785 (Scott, D-Altadena) would establish a program with the purpose of ensuring that community college students who wish to earn baccalaureate degrees at a campus of the California State University are able to do so. The bill would require CSU to establish admissions requirements for community college transfer students in accordance with specified criteria. This bill was approved by the committee.
SB 1817 (Scott, D-Altadena) would give the board of governors maximum financial responsibility and greater flexibility in the financial affairs and operations of the Chancellor�s Office. Also, the bill would remove the requirement for approval by the Department of Personnel Administration of the salaries of the chancellor and the deputy and vice chancellors. This bill was approved by the committee.
All of the above bills, except for those held in committee, now move to the floors of the Assembly and Senate for action. Watch future issues of this publication to see if these bills made it to the Governor�s desk.
Conference Committee on Master Plan for Education
The July 20, 2004, Update (see page 187) reported that the Joint Committee to Develop a Master Plan for Education had been convened into a legislative Conference Committee to work out the recommendations of the Master Plan Committee for implementation purposes. There are now five bills being considered by the Conference Committee:
AB 242 (Liu, D-La Canada Flintridge)
AB 1550 (Goldberg, D-Los Angeles)
AB 56 (Steinberg, D-Sacramento)
SB 6 (Alpert, D-San Diego)
SB 550 (Vasconcellos, D-Santa Clara)
The Conference Committee has met several times and will continue to meet over the next two weeks. It is the intent of the Conference Committee to produce legislation that can be placed on the Governor�s desk by August 31, 2004.
Based on the short time frame that the Conference Committee has to develop legislation, it is not anticipated that any major policy changes will occur in the state�s Master Plan for Education this year. However, it is assumed that the Conference Committee will develop legislative intent and study bills that may lead to more comprehensive policy changes during the 2005 legislative session.
At this time there are no significant governance or other changes proposed for community colleges in any of the bills before the Conference Committee. You will recall that SB 6 (Alpert), as originally introduced, contained major governance issues pertaining to community colleges. These issues are no longer in the bill.
As of this date, the key issues in SB 6 are:
Should the Superintendent of Public Instruction (SPI) be redefined as the education �inspector general�?
Should policy program, and finance authority be consolidated with the Governor�s Secretary for Education? (Similar issues are contained in the California Performance Review report�recommendations that would have the Chancellor�s Office under the oversight of the Secretary for Education and eliminate the Board of Governors.)
Should the Secretary for Education be confirmed by the Senate, irrespective of his/her responsibilities?
Is there any additional protection authority for the SPI to carry out its new (or existing) role?
Where should fiscal accountability (e.g., loan, takeover process) reside?
Where should responsibility for the school improvement process reside?
How can school district unification be promoted?
As you can see, the majority of the above key issues deal with the K-12 system and not community colleges. However, since SB 6, and the other pieces of legislation, are in draft form, the bills could be amended during the Conference Committee process to include community colleges. Community college representatives will continue to monitor the actions of the conference committee.
California Performance Review as Related to California Community Colleges
On August 3, 2004, Governor Schwarzenegger formally received the recommendations of the California Performance Review (CPR), a panel he assembled five months ago with a mandate to �blow up the boxes� of state government. The report contains 2,500 pages of the most detailed and overarching reorganization plan in state history. The recommendations aim to shift power from lawmakers to the Governor and propose changes estimated to save $32 billion over the next five years by cutting thousands of state jobs and hundreds of regulatory agencies and by privatizing more services.
Some of the changes proposed in the CPR report could be done by executive order, but many would require changes to state law or the State Constitution. The Governor�s Communication Director, Rob Stutzman, stressed that the Governor hasn�t even begun to decide which of the proposals to embrace. However, some legislators and state agency representatives who have seen the report have already began to speak out in opposition to many of the recommendations. Once the Governor decides on which recommendations to support, the Legislature will have the responsibility of voting those proposals up or down.
Public hearings are scheduled to receive input on the CPR report:
August 13�Riverside
August 20�San Diego
August 27�San Jose
September 10�Long Beach
September 17�Fresno
The most recent information indicates that educational issues will be discussed at the August 20th meeting at UC San Diego, Price Center, Ballroom A & B. All hearings will run from 10:00 a.m. to 3:00 p.m., allowing five minutes per speaker. In addition, some of these issues/recommendations may be accomplished through implementation of recommendations from the Master Plan Committee.
Impact on California Community Colleges
We have attempted to provide an overview of the CPR report and suggestions on its impact on community colleges. A variety of education programs and issues can be found throughout the document and within various proposed new departments. Based upon our initial review, this summary should provide an overview of the major issues and recommendations.
The CPR framework was guided by two principles: programs should be aligned by function, and administrative services should be consolidated. Therefore, the CPR seeks to realign existing agencies and departments into 11 integrated departments and eliminate more than 100 boards and commissions. The integrated departments proposed by CPR are:
Health and Human Services
Education and Workforce Preparation
Labor and Economic Development
Public Safety and Homeland Security
Environmental Protection
Infrastructure
Natural Resources
Commerce and Consumer Protection
Correctional Services
Food and Agriculture
Veterans Affairs
The report recognizes that not all students are college-bound and that there is a need for more apprenticeships and workforce development. The report calls for restructuring the role of the Secretary for Education into four divisions:
1. Division of Higher Education
2. Division of Teacher and Program Accountability
3. Division of Workforce Preparation
4. California State Library
The Secretary would report directly to the Governor and oversee the new divisions. The Higher Education Division would consolidate the California Community College Chancellor�s Office, the California Postsecondary Education Commission, the California Student Aid Commission, the State Board of Guide Dogs for the Blind, and the Bureau for Private Postsecondary and Vocational Education. CSU and UC would communicate with the Higher Education Division on behalf of the Governor (UC and CSU would maintain their existing governing board structure).
The CPR report recommends the repeal of SB 1419 (Alarcon, D-Sun Valley), the �contracting out� legislation. Also, the report further attempts to enhance volunteerism in a variety of ways. For school districts, the report recommends that all volunteers should be exempt from prevailing wage requirements. Additional impediments to use volunteers should be removed, and school districts (and other state and local agencies) should be encouraged to utilize volunteers.
The CPR report makes a number of changes to improve concurrent enrollment programs. The proposals encourage concurrent enrollment for students who want to perform at college level. The recommendations include:
Allowing in any student who passes the accepted college placement criteria and obtains parental permission to participate without school district permission.
Requiring all high schools to notify 10th and 11th grade students of these options by March 1st of each year.
Requiring community colleges to assess high school students to determine if they are ready to take college level courses.
Limiting concurrent enrollment to classes taught at the postsecondary institution.
Allowing high schools to contract with community colleges to provide college courses on the high school campus as long as the school district pays contracted fees out of its ADA allotment and community colleges do not claim FTES for these courses.
Limiting high school students to 10% of any college class.
Providing a higher per-ADA funding level for concurrently enrolled high school students, but requiring distribution of the per-ADA allocation based on a formula that provides a percentage to the high school and the postsecondary institution as payment for instructional costs.
Eliminating funding for noncredit and basic skills courses for concurrently enrolled high school students.
There are approximately 16 recommendations contained in the CPR report that directly or indirectly impact California Community Colleges. The Chancellor�s Office has done an analysis of those recommendations, in Attachment C.
For those of you who would like to review the 2,500-page CPR report in its entirety, it can be found online at www.report.cpr.ca.gov.
By the Way . . .
Voters Don�t Like Idea of Eliminating Community College Board. California voters like the overall thrust of the California Performance Review�s plan to overhaul state government, but a Field Poll released last week indicates that they�re concerned that it would consolidate too much power in the Executive Branch. According to the latest results from the statewide Field Poll, 74% of registered voters agree that the plan�which has been received but not yet endorsed by Governor Schwarzenegger�is a good idea because state government is in need of a major overhaul.
Poll results showed that voters are not particularly thrilled with several specific proposals included in the plan, such as abolishing county boards of education and the Community College Board of Governors to give more education policy authority to the Governor�s Office. Only 34% of voters polled supported abolishing the boards and consolidating them into a centralized State Department of Education that reports to the Governor; 57% were opposed to the idea.
Fifty-one percent of poll respondents agreed with the statement that the California Performance Review plan �is a bad idea because it consolidates too much power in the hands of fewer people in the Executive Branch.�
