Chancellor’s Office Makes Deal with the Governor’s Office Regarding Partnership for Excellence Funds

As you are aware, when Governor Schwarzenegger signed the 2004-05 State Budget on July 31, 2004, he vetoed $31.4 million in Partnership for Excellence (PFE) funds. In his veto message, he noted that he was reducing the funding for PFE in order to maintain the May Revision Proposition 98 spending level for community colleges. The veto message also noted that the Legislature reduced the rigor of the accountability structure for this program as proposed in the Governor�s Budget (introduced in January). Further, the Administration rationalized the reduction in PFE funds because of the lack of accountability at the district level.The Chancellor’s Office has since negotiated with the Governor’s Office to provide local districts fiscal flexibility to restore lost PFE funding. Districts meeting specified criteria would have the option during 2004-05 to use their share of instructional equipment/scheduled maintenance funds ($27.3 million) to continue PFE program expenditures that otherwise would be jeopardized by the $31.4 million veto.

AB 1417 (Pacheco, R-Walnut) was amended during the final days of the legislative session to include language that implements this agreement between the Chancellor�s Office and the Administration. As amended, AB 1417 contains the following provisions:

 The Board of Governors (BOG) shall provide recommendations to the Legislature and the Governor regarding the design of a workable structure for annual evaluation of district-level performance in meeting statewide educational outcome priorities. The BOG is required to submit copies of the study and recommendations on or before March 25, 2005, to the Governor and to the fiscal and higher education policy committees of the Legislature.

 Districts must meet one of the following eligibility criteria:

 The sum of funds allocated to that district from equalization funds and over-cap growth funds equals zero

 The district�s reduction in PFE funds during the 2004-05 fiscal year divided by the sum of funds allocated to that district from equalization funds and from over-cap growth exceeds 50%

 Districts meeting the criteria above may use all or a portion of the funds allocated to that district from instructional equipment/scheduled maintenance funds to maintain prior investments made for program enhancements for student success that otherwise would be jeopardized by the reduction in PFE funding. In no event may the amount of funds used by an applicable district to maintain program enhancements exceed the amount of the reduction in PFE allocations realized by the district in the 2004 05 fiscal year.

 As a condition of utilizing the flexibility authorized by AB 1417, each participating community college district shall report to the Chancellor on its planned expenditures from scheduled maintenance/instructional equipment funds on or before November 30, 2004, in a format as prescribed by the Chancellor. The Chancellor shall provide a summary report of these planned expenditures to the Governor, the Director of Finance, and the fiscal committees of the Legislature on or before December 31, 2004.

 Due to an oversight in the 2004-05 State Budget, provisions were included in AB 1417 regarding the use of part-time faculty compensation. These technical amendments clarify how districts are to spend their share of the $50.8 million for part-time faculty compensation (there is no change from existing law).

The Chancellor�s Office has prepared a spreadsheet identifying 25 districts that meet the specified criteria to receive a share of the $27.3 million. The funds are distributed based upon a uniform amount per FTES, with a minimum amount per district of $100,000.

The Governor has until September 30, 2004, to sign AB 1417, which will become effective upon his signature.

The 2004 Legislative Session Comes to an End�Key Community College Legislation on the Governor�s Desk

The 2004 legislative session came to an end during the early morning hours of August 28, 2004. According to the legislative calendar, the session was scheduled to end on August 31, 2004. However, to eliminate the necessity for legislators to travel back to Sacramento for only two days (August 30 and 31) and to accommodate Republican legislators traveling to New York for the Republican National Convention that started August 30, 2004, the Assembly and Senate concluded their work for the year at about 2:30 a.m. Saturday.

During the final week of the session, the Legislature sent more than 1,000 bills to the Governor for his consideration. The Governor has 30 days to sign or veto legislation that arrives on his desk after August 20, 2004. Legislation sent to the Governor prior to August 20, 2004, must be acted upon within a 12-day period.

The following are key bills on the Governor�s desk that have an impact on California community colleges:

AB 242 (Liu, D-La Canada Flintridge) is one of the bills intended to implement recommendations of the Joint Committee to Develop a Master Plan for Education. The bill contains provisions pertaining to teacher credentialing, professional development, pro rata compensation for part-time faculty, full-time faculty hiring policies, and retreat rights for community college administrators.

AB 745 (Goldberg, D-Los Angeles) would require a county superintendent of schools with more than 50 employees, 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 by certain administrative, certificated, and classified personnel.

AB 1417 (Pacheco, R-Walnut) originally contained provisions intended to provide community colleges with a mechanism to backfill any loss in property tax revenues. However, the bill was amended to address the $31.4 million in PFE funds that were vetoed by the Governor. As amended, the bill provides local community college districts with the flexibility to use a portion of their instructional equipment/scheduled maintenance funds ($27.3 million) to backfill reductions to their PFE allocations (see �Chancellor�s Office Makes Deal with the Governor�s Office Regarding Partnership for Excellence Funds� article in this issue of the Update). Districts must meet specified criteria in order to be eligible for this flexibility.

AB 1852 (Mullin, D-South San Francisco) provides that any member of CalSTRS granted additional credit for service only, service and age, or under the Golden Handshake 2 + 2 provisions would not forfeit that credit if he or she is reemployed at any time after retirement by any other district. If a retired member receives those additional years of service credit at retirement and performs creditable service for a school district, community college district or county office of education from which he or she retired, he or she must wait one year or forfeit their additional credit.

AB 2477 (Liu, D-La Canada Flintridge) would express various findings and declarations of the Legislature with respect to the cost of college textbooks. The bill would urge textbook publishers to take specified actions aimed at reducing the price of textbooks. Higher education institutions are encouraged to work with their respective academic senates to encourage faculty to give consideration to the least costly practices in assigning textbooks.

AB 2678 (Koretz, D-W. Hollywood) would urge the trustees, the governing boards of each community college district in the state, and the regents to establish a textbook rental service for the students at each of their campuses if the president or chancellor of the campus certifies that the recognized student body organization has voted to request the establishment of a textbook rental service. The establishment of a textbook rental service is permissive and not a mandate.

AB 3010 (Laird, D-Santa Cruz) would require the Department of General Services and the community colleges to collaborate on improving the efficiency of the system�s construction projects and would require training on the plan review process.

SB 102 (Burton, D-San Francisco) would include credit for up to one-fifth of one year of unused sick leave in the calculation of credited service for purposes of determining whether a CalSTRS member has more than 25 or 30 years of service when calculating final compensation and the longevity increase for retirement.

SB 905 (Chesbro, D-Arcata) eliminates the restriction placed upon K-12 officials that currently limits the number of students they may recommend for summer session attendance at community colleges. This restriction, which limits such recommendations to 5% of any grade level, would be repealed. The bill also removes unnecessary and outdated language related to the recommendation for summer session attendance.

SB 1415 (Brulte, R-Rancho Cucamonga) states the Legislature�s intent to facilitate articulation and seamless integration of California�s postsecondary institutions by facilitating the adoption and integration of a common course numbering system among the public and private postsecondary institutions. The bill provides legislative affirmation of the value of a common course numbering system.

SB 1442 (Ducheny, D-San Diego) establishes the Joint Commission on Adult Education to make recommendations regarding the coordination of adult education and noncredit community college programs in order to improve adult education services. A report relating to adult education funding is to be submitted to the Governor and appropriate legislative policy committees by November 1, 2006.

SB 1785 (Scott, D-Altadena) would establish a new community college transfer program with the California State University to provide a clear degree path for community college transfer students. The bill requires the establishment of a systemwide lower-division transfer curriculum for each high-demand baccalaureate major degree program prior to June 1, 2006.

Bills That Didn�t Make It to the Governor�s Desk

There were two significant bills that were amended during the final days, but that were not approved by the Legislature. They were AB 2179 (Firebaugh, D-Los Angeles), which would have revised the community college growth formula, and AB 3036 (Yee, D-San Francisco), which would have allowed public utility agencies to charge public education agencies for utility services provided to other consumers. Both of these bills were held in committee.

Finally

A future Update will contain a final report on legislation enacted into law or vetoed by the Governor. Most legislation signed into law becomes effective January 1, 2005 (unless it is an urgency measure). The Legislature is scheduled to convene the 2005-06 legislative session on December 6, 2004, when the introduction of legislation will start all over again.

Master Plan Legislation Contains Administrator Retreat Rights Provisions

The legislative conference committee responsible for developing legislation that will contain the recommendations of the Joint Committee to Develop a Master Plan for Education has amended AB 242 (Liu, D-La Canada Flintridge). It is the intent of the Conference Committee that AB 242 will be the vehicle to implement recommendations that will improve instructional leadership, management skills, and academic subject matter knowledge, and increase the number of qualified administrators in public educational institutions.

Community College Administrators� Retreat Rights

Prior to the enactment of community college reform legislation, AB 1725, community college administrators were granted probationary status as faculty members while simultaneously serving in an administrative capacity. If an administrator was reassigned from his/her position after the probationary period had been completed, he/she was entitled, under law, to permanent status as a faculty member. However, AB 1725 removed that statutory provision. In its place, authority was provided to local districts to enter into multiyear contracts with administrators. Under current law, an individual forfeits not only seniority in a former district of employment, but is also precluded from earning probationary status as a faculty member while serving in an administrative position.

It is the intent of Assembly Member Carol Liu and Senator Jack Scott, who serve on the conference committee, to provide community college administrators with an incentive to move from district to district. Specifically, the language in AB 242 states:

It is the intent of the Legislature that the California Community Colleges improve the terms and conditions of administrative employment in community colleges by providing a qualified administrator with the right to be reinstated to a permanent faculty position at the campus at which he or she is employed as an administrator, if the administrator previously held a tenured faculty position with the California Community Colleges and has not held a faculty position for less than six years, as an incentive to attract outstanding professionals to community college leadership positions.

Although the provisions of AB 242 do not go as far as some administrators would like, it is a step in the right direction. Faculty organizations were opposed to administrators being able to transfer their total �tenure� from district to district. As a result, the provisions contained in AB 242 are a compromise.

Other Provisions

AB 242 contains numerous provisions pertaining to both K-12 and higher education teachers and administrators. The following provisions apply to community colleges:

 The bill would require the Board of Governors and the California State University Trustees, and would request the UC Regents, to submit an annual report to the Legislature setting forth the ratio of permanent/tenure-track faculty to temporary faculty who are employed by their respective systems and how this ratio compares to their respective systemwide policies

 The bill would require the Board of Governors and the California State University Trustees, and would request the UC Regents, to submit, no later than January 1, 2006, a report to the Legislature on the activities reserved for permanent/tenure-track faculty in their respective systems

 The bill would express the intent of the Legislature that the community colleges, CSU, and UC provide adequate pro rata compensation to temporary faculty who agree to perform functions usually restricted to permanent/tenure-track faculty and direct an examination of faculty promotion, tenure, and review policies and practices, and revise them, as needed, to ensure that teaching excellence is given significant weight in decisions that affect the compensation awarded to faculty

 Expresses legislative intent that CSU and UC develop and offer preparation and professional development programs for community college leadership development that will prepare college leaders in numbers sufficient to meet the needs of community colleges and districts. It is further the intent of the Legislature that CSU and UC partner with community colleges in the development of those programs to ensure that they meet the needs of colleges and districts

Conclusion

AB 242 was approved by the Legislature and is currently on the Governor�s desk for his consideration. He has until September 30, 2004, to sign or veto the bill.

Update on Federal Legislation to Revise Social Security Benefits

The July 20, 2004, Update contained an article titled �CalSTRS Supports Federal Legislation to Revise Social Security Benefits for CalSTRS Members� (see page 185). Also, on July 20, 2004, the House Ways and Means Social Security Subcommittee held a hearing on H.R. 4391, the �Public Servant Retirement Protection Act,� which would modify the calculation of the offset against the Social Security benefits of state and local government retirees known as the Windfall Elimination Provision (WEP). The legislation would replace the statutory WEP offset formula of current law with an approach based on each worker�s actual work history.

According to CalSTRS, employee organizations testifying at the Ways and Means hearing, in general, supported H.R. 4391, echoing a common theme that the bill was �a good first step� in addressing the concerns raised by the WEP. Martin Gerry, a Deputy Commissioner at the Social Security Administration (SSA), testified on behalf of the SSA. STRS reports that Mr. Gerry expressed support for the concept of the bill to provide for an equal amount of wage replacement under Social Security for private sector workers and state and local workers with non-covered earnings. At the same time, he expressed concerns about the feasibility of administering the approach recommended by the bill.

When Congress returns from its recess following Labor Day, its focus is expected to be on the enactment of the appropriations bill to keep the federal government operating. Congress has a limited window in which to act because it is scheduled to recess in October to allow for campaigning. Because of H.R. 4391�s $7 billion cost and the sunset time of the congressional fall session, Congress is likely to put off the issue until next year. It appears that the issue of WEP reform will be addressed next year as part of broader Social Security reform.

Redevelopment Agency Pass-Through Fix Sent to Governor

Assembly Bill 2115 (Budget Committee), a cleanup bill to the local government trailer bill that implemented the $2.6 billion local government reduction (over two years) and property tax shift, went to enrollment on August 27, 2004, and is now awaiting the Governor�s action.

Among other things, this measure corrects a potential problem with the pass-through of revenues from redevelopment agencies to schools. Because the amount of revenues transferred from redevelopment agencies to schools is determined by the school�s share of property tax revenues, the local government property tax shift�s reduction of property taxes to schools would have resulted in a corresponding cut in transfers from the redevelopment agencies.

AB 2115 specifies that redevelopment agency pass-throughs to schools would be held harmless for the property tax diversions from the county Educational Revenue Augmentation Fund (ERAF) to fund vehicle license fee replacement revenues and to backfill �triple-flip� local sales tax revenue reductions. Thus, schools would not be short changed because of the local government budget deal.

Assembly Bill 2115 passed the Assembly 77 to 1 and passed the Senate 28 to 4. The measure is expected to be signed by the Governor.

Legislative Analyst�s Office Raises Concerns About the Governor�s California Performance Review Report

The Legislative Analyst�s Office (LAO) has released a report that expresses significant concerns about the California Performance Review (CPR) report commissioned by Governor Schwarzenegger. The CPR estimated that the state could save $32 billion over the next five years by enacting sweeping reforms to government operations, and the LAO calls these calculations over-optimistic and under-researched.

Although the LAO praised the spirit of the proposed reforms, saying that the Governor�s CPR provides the state with a valuable opportunity to comprehensively examine how it does business, the LAO said that the plan was a spotty attempt at the opportunity. The rationale for some of the CPR reorganization proposals is not clear, it does not examine whether or not the state should continue to perform certain functions, and many of its fiscal savings estimates are overstated. The LAO projected that the savings from the proposed reforms could amount to $15 billion in the next five years (not $32 billion)�but that was a guess, at best.

Higher Education Recommendations

 The CPR proposes to consolidate several higher education agencies, including the community college Chancellor�s Office, California Postsecondary Education Commission (CPEC), and the Bureau for Private Postsecondary Education into a single, unified �Higher Education Division.� The division would be led by a Deputy Secretary for Education, appointed by the Governor and reporting to the Secretary for Education. This recommendation is expected to result in annual savings of about $1.5 million in General Fund support and another $1.5 million in special funds, largely due to the elimination of staff positions.

 The CPR proposes various policy changes concerning the enrollment of high school students at community colleges. The CPR proposal would both remove some limitations on concurrent enrollment (such as the requirement for high school permission to be granted) and impose some new ones (such as limiting the number and type of student concurrent enrollments).

 The CPR recommends that a pilot program be developed that allows certain community colleges to offer baccalaureate degrees, with the goal of increasing opportunities for students to earn such degrees.

 The CPR recommends that career-technical courses be excluded from the statutory requirement that full-time faculty constitute at least 75% of community colleges� faculty.

LAO Comments

It is unclear why the community college Chancellor�s Office was included as part of the CPR�s proposed consolidation, especially when the other two public segments (the UC and the CSU) were not included. At the same time, the report raises important questions about the structure and function of the Chancellor�s Office and the Board of Governors to which it currently reports.

The objective of the above proposals merit legislative consideration. In general, there is a need to better ensure that students are enrolling in appropriate classes consistent with their educational objectives and that the entire higher education system is sufficiently integrated and coordinated.

The proposal to permit community colleges to offer baccalaureate degrees runs counter to state law and the state Master Plan for Higher Education, which assigns community colleges the role of offering lower-division instruction to students, who then may wish to transfer to a university to earn a baccalaureate degree.

Concerning the full-time faculty requirement, ACCCA has recommended in the past that the 75% requirement should be eliminated. Instead, we believe that individual colleges should be permitted to select the mix of full and part-time faculty that they believe would result in the best education for their students given their available financial resources.

Finally

The Governor�s Office greeted the LAO�s review as an opportunity for dialogue rather than just beginning his own review of the report, soliciting comments from citizens and officials throughout California, and noted that the recommendations can change significantly before they are put into action.

For a more complete review of the LAO�s comments, go to www.lao.ca.gov.