ERIC ED503859: Community College Funding 2008-09. Enrollment Growth Outpaces Resources. Issue Brief

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by  ERIC

JANUARY 2009
ISSUE
BRIEF
Community College Funding 2008–09
Enrollment Growth Outpaces Resources
California’s community colleges are expected to provide a broad range of affordable educational opportu-
nities to everyone who wants access. Fulfilling that mission in 2008–09 will be especially difficult given
the state’s dire fiscal situation and an increasing demand.
The number of community college students “enrichment” classes want to take them at enrollment at the colleges generally goes up
is swelling, but the system does not have their local community colleges. when times are bad and unemployment rises.
the funding to serve them all well The 2008–09 state budget assumes that Based on the funds provided in the en-
In response to today’s challenging job mar- California’s 72 community college districts acted state budget, keeping up with the surge
ket, many people are enrolling in a commu- and their 110 colleges will serve about 2.7 mil- of students and their diverse needs is already
nity college to upgrade their skills. They are lion students, many of whom will attend part difficult. Funding for the system increased
part of a diverse set of students with a variety time. Altogether, these individuals constitute only slightly and included just a partial cost-
of goals. Some recent high school graduates about 1.2 million “full-time equivalent stu- of-living adjustment. In addition, as already
without clear direction hope community col- dents.” (For example, two half-time students stated, “growth” funding appears to be well
lege classes will help them define their inter- equal one full-time equivalent student or below actual increases in student enrollments.
ests. Other graduates who are determined FTES.) This figure reflects an estimation, for Furthermore, the 2008–09 budget contained
to earn a bachelor’s degree from the outset funding purposes, of 2% growth compared enough funding to keep a small set of state
take their first two years of coursework at a with last year. But state budget analysts mandates in force, but not enough to cover
community college. And people looking for acknowledged when the budget was enacted the cost of fulfilling those mandates.
that actual enrollment growth was likely to Worse yet, since the 2008–09 budget was
be higher. enacted in late September 2008, the state’s
Official enrollment numbers are not cur- financial situation has deteriorated rapidly.
HigHligHts
rently available. However, according to a Analysts are predicting that the current fis-
n Community colleges and K–12 survey by the Community College League cal year could end with a $14.8 billion state
education share Proposition 98 funds ......2 of California—the primary advocacy organ- deficit, which could rise to more than $40 bil-
n Most funding that the colleges receive ization for community college districts—the lion by the end of 2009–10 if state leaders do
is “discretionary” ......................................3 average growth rate among the districts not revise expenditure and revenue plans.
this year is 10.2%. Whatever the official tal- Addressing this fiscal crisis could result in
n State officials acknowledge
lies eventually are, they will probably show spending cuts during the current year, which
that funding falls short of actual
widely varying rates of growth throughout would further affect the colleges’ ability
enrollment growth.....................................3
the state. to serve students. Policymakers will likely
n Student fees remain relatively low—
Current economic problems are adding to contemplate raising student fees, a move
for now.. ....................................................4
more serious concerns about the community that would backfill the state General Fund.
colleges’ ability to meet demand in the future. Higher fees would not, however, provide
A recent announcement by California’s pub- extra funds with which colleges could offer
lic four-year universities that they will likely more course sections to students. Indeed,
reduce their enrollments will put pressure the magnitude of the state’s fiscal crisis may
EdSource thanks the William and Flora Hewlett on community colleges to educate these necessitate higher fees and overall net cuts
Foundation for its investment in our core work. displaced students next year. In addition, that will lead to course reductions.
EdSource® is a not-for-profit 501(c)(3) organization established in California in 1977.
Independent and impartial, EdSource strives to advance the common good by developing and widely distributing trustworthy, useful
information that clarifies complex K–12 education issues and promotes thoughtful decisions about California’s public school system.
ISSUE BRIEF
Nearly three-quarters of the colleges’ funding figure 1 California’s community colleges receive funding from multiple sources
comes from the state General Fund and local
property taxes Federal Funds
2.9%
Based on the enacted budget for 2008– Student Fees State Lottery
3.3% 1.9%
09, the California Community Colleges
State Non-Proposition
(CCC) are scheduled to receive total rev- 98 Funds
3.5%
enues of about $8.8 billion, which is about
$312 million more than in the prior year,
according to the Department of Finance. Other Local Funds
15.6%
Those figures include revenues from the
state General Fund, local property taxes,
student fees, federal funds, state lottery
funds, and miscellaneous other funds. (See
Figure 1.) Proposition 98 State Funds
49.5%
Community colleges and K–12 education
share Proposition 98 funds
Most of the revenues that the colleges receive
from the state General Fund and local prop-
erty taxes are counted toward Proposition Proposition 98
Local Property Taxes
98’s minimum funding guarantee, which was 23.3%
established in the state constitution by vot-
ers in 1988. The intent of that measure is to
ensure that total spending on K–12 schools total estimated revenues for community colleges in 2008–09 from all sources are about $8.8 billion,* including:
and community colleges (together known as state funds $4.7 billion includes $4.4 billion from Proposition 98 General Fund sources
K–14) at least keeps pace with growth in the
local property taxes $2.1 billion, all of which counts toward the Proposition 98 minimum funding guarantee
K–12 student population and the personal
income of Californians, and at best increases Other local funds $1.4 billion
the amount K–14 receives.
student fees $290 million
Although changes in K–12 attendance (a
Federal funds $258 million
slight decline in 2008–09) help drive the
Proposition 98 minimum spending level, California state lottery funds $167 million
growth in community college attendance
*The subtotals do not add up to $8.8 billion due to rounding.
does not affect the state’s funding obli-
gation. (For more on Proposition 98, see
Data: California Department of Finance EdSource 1/09
www.edsource.org/pub_prop98.html.) Stat-
ute specifies that the CCC receive the same
share of annual Proposition 98 spending that Office itself does not count toward the Prop- In recent years, policymakers have also
they received when voters approved that osition 98 minimum spending level. The law elected to support certain statewide activi-
measure—which was 10.9%. Although poli- does not require that a specific amount be ties through contracts with local district
cymakers have frequently suspended the spent on the Chancellor’s Office, and state offices instead of directing the Chancellor’s
requirement and provided the colleges with policymakers have cut funding for the office Office to perform them. For example, the
a slightly smaller portion of Proposition 98 in recent years as they have sought ways state created a process in which districts
spending, the CCC are receiving 10.9% this to reduce state spending overall. In the competed to conduct a statewide financial
year. Of the $58.1 billion Proposition 98 2008–09 budget, lawmakers cut about aid outreach campaign and a major research
spending in the enacted 2008–09 budget, the $200,000 in General Fund support for the and professional development effort. When the
CCC are receiving about $6.4 billion. Chancellor’s Office, reducing that funding to state provided funding to district offices to
The Chancellor’s Office of the CCC dis- $9.8 million. Subsequently, another $436,000 implement those programs, it counted that
tributes the General Fund monies that the was eliminated from the Chancellor’s Office spending toward the Proposition 98 mini-
state’s 72 community college districts receive. support budget through the governor’s line- mum guarantee. One could argue that those
Funding for the operation of the Chancellor’s item vetoes and an executive order. activities are more appropriately done by the
 n Community College Funding 2008–09 n January 2009 © Copyright 2009 by EdSource, Inc.
ISSUE BRIEF
Chancellor’s Office, with the Proposition figure  Community colleges’ categorical programs funded at $20 million or more in 2008–09
98 funding that districts receive reserved
Funding in the
for providing direct services to their local
Enacted 2008–09
students.
Budget (all dollar
Major programs figures are in millions)
Colleges receive mostly “discretionary” funding
Disabled Students Programs and Services $115
Most of community colleges’ Proposition 98
funding is known as “apportionment” fund- Extended Opportunity Programs and Services (EOPS)—support for disadvantaged 107
ing, which pays for items such as faculty students
salaries, equipment, and supplies. Although Matriculation—helping students complete courses and achieve their educational goals 102
apportionment funds are often called “dis-
Financial Aid Administration 51
cretionary,” the colleges must follow certain
Part-time Faculty Compensation 51
rules as they conduct their programs so the
Economic Development—job-related training and technical assistance to businesses 47
use of the funds is somewhat restricted. For
and organizations
example, districts must spend at least 50% of
their operating budgets on instructors’ sala- Special Services for CalWORKs (“welfare”) Recipients 44
ries and benefits each fiscal year. As another Basic Skills 33
example, districts face financial penalties Physical Plant and Instructional Support 27
if they do not have specific numbers of full-
Telecommunications, Technology Services, and California Virtual University 26
time faculty members.
Nursing 22
The remainder of Proposition 98 fund-
ing—11% in 2008–09—is “categorical” fund- Career Technical Education (CTE) 20*
ing, which is dedicated to specific purposes, * This does not reflect $38 million provided as part of the second year of the settlement of CTA vs. Schwarzenegger, a lawsuit over
such as instructional support for students Proposition 98 funding.
with disabilities.
Data: Community College League of California EdSource 1/09
The state generally provides a cost-of-
living adjustment (COLA) on apportion- The first component recognizes the fixed Categorical funding helps the colleges meet
ments and selected categoricals. The Board of costs of operating each facility. The second the expense of providing specific services
Governors, which sets policy and provides component takes into account varying dis- The state has created 22 categorical programs
guidance for the state’s community colleges, trict costs based on the number of students for the community colleges, which provide a
makes an annual budget request to the state. served and the type of courses offered. For total of $699 million in the 2008–09 enacted
This includes a COLA that is typically based this second component, there are two major budget. Twelve of these programs are funded
on a government inflation index. In 2008–09, types of course offerings: for $20 million or more, and most will receive
policymakers chose to fund a 0.68% COLA n “Credit”—Coursework leading to an as- the same amount as was provided in last
for apportionments only (not for any cate- sociate’s degree, certificate, or transfer to year’s enacted budget. (See Figure 2 above.)
goricals). If the state’s finances had been a four-year college/university, plus some Exceptions are due to changes made midyear
healthy, policymakers would most likely have basic skills courses. These are funded at last year or technical changes this year.
provided a 5.66% adjustment in accordance $4,596 per full-time student in 2008–09. The other 10 smaller programs, not listed
with the inflation index. n Noncredit, career development, and college in Figure 2, range in size from $467,000 to
preparation courses, for which the state $16 million. These are generally funded at
General apportionment funding is based on fixed is providing $3,254 per FTES this year. the same level as last year; the one exception
and variable costs and the types of courses provided In addition, about 40 of the state’s 110 is a decrease because of a technical change to
Enrollment numbers do not drive CCC sys- campuses offer noncredit courses that one program.
temwide funding, but they do help determine provide students with “skills that are critical
the general apportionment to individual dis- to their ability to become or remain inde- State officials acknowledge that funding falls
tricts. A district’s general apportionment has pendent and to contribute to the economy short of actual enrollment growth
two components—one based on the number of California,” according to the Chancellor’s As part of its Proposition 98 allotment, the
of colleges and off-campus centers of a cer- Office website. Examples are courses in community college system also receives
tain size (at least 1,000 FTES) that a district parenting and home economics. The state “growth” funding to accommodate an in-
runs, and another, much larger one based on is funding these classes at $2,764 per FTES creasing number of FTES. The system’s annual
the number of FTES it serves. in 2008–09. request for growth funding is based on the
© Copyright 2009 by EdSource, Inc. January 2009 n Community College Funding 2008–09 n 
ISSUE BRIEF
state’s population growth and is adjusted ac- During the past few years, however, recommended during the November 2008
cording to a set of formulas if unemployment policymakers have not provided enough special legislative session that the state raise
in the prior year exceeded 5%. The 2008–09 funding for the state to cover college dis- student fees 30% beginning Jan. 1, 2009, and
budget provides $114 million to fund enroll- tricts’ costs of complying with mandates. In an additional 15% starting on July 1, 2009.
ment growth of 2%, or about 23,000 FTES. 2008–09, the state set aside $4 million for The proposal would have maintained fee
State policymakers acknowledged that that mandate reimbursement—enough to keep the waivers for low-income students. The LAO
level of growth funding may be insufficient requirements in force but nowhere near the argued that the increased fee levels would
to match the actual demand for classes. $30 million needed to cover this year’s costs. still be extremely reasonable as seen from the
How individual districts are affected The Legislative Analyst’s Office (LAO) esti- national context. In addition, the LAO said
depends on local growth patterns. Each dis- mates that the accumulated debt by the end the increase would bring in some additional
trict has a “maximum” number of funded of 2008–09 will be $300 million. money and could also prompt students to
FTES or an enrollment “cap.” However, the choose their courses more wisely. However,
cap is on funding, not the number of stu- Student fees remain relatively low—for now the special session ended with no action.
dents a campus accepts. State law requires California’s community college fees are the Any potential fee increase must be
community colleges to enroll any Califor- lowest in the nation. According to the Col- understood in the context of how the CCC
nia resident with a high school diploma or lege Board, the average annual published are funded. Revenues generated from fees
equivalent who wishes to attend and would price for tuition and fees for two-year public currently account for about 3% of total rev-
benefit from instruction. Although many of colleges in 2008–09 in the rest of the country enues for the system. Those fees are used to
the state’s college districts have declining is $2,761. In contrast, a year’s full-time course offset state aid to community college dis-
enrollments, others will experience enroll- load of 30 units at a California Community tricts and do not directly improve funding
ment growth in 2008–09 that is beyond College costs $600. And low-income Cali- for individual campuses. In today’s fiscal cli-
their caps. fornians who meet eligibility requirements mate, however, fee increases would generate
Districts with declining enrollment do have their enrollment fees waived. A March much-needed revenue for the state, helping
not receive growth funding, but they main- 2007 study of the CCC by The National to mitigate General Fund cuts that are likely
tain base enrollment funding for the first Center for Public Policy and Higher Edu- to come.
year they experience a decrease. This is cation reported that about 52% of full-time
called “stability funding,” and it is intended students have fee waivers. Tough times are ahead for the CCC
to smooth out funding changes caused by a California’s low fees make it relatively Due to the state’s calamitous fiscal situation,
temporary enrollment drop. easy for students to attend a community col- state leaders may cut 2008–09 spending in
In contrast, when districts have more lege, but they also mean that students do not many policy areas. Gov. Arnold Schwarze-
students than they received funding for, have much incentive to make sure that all negger already proposed such midyear
they cannot expand the number of courses their classes serve their needs well. In addi- reductions for the CCC. During the Novem-
they offer to meet the increased demand. tion, California’s fee policy results in tax- ber 2008 special legislative session, the gov-
Instead, they generally must scale back on payers’ covering significant portions of the ernor proposed cutting $332.2 million from
what is available to any individual student education costs of middle- and upper-income the colleges’ budget—including $39.8 million
in order to provide some level of service to students who could pay for a larger share of for the partial COLA and $292.4 million
all who enroll. their college education. in apportionments—but allowing college
Student fees may be relatively low in part districts to transfer funds from categorical
The enacted budget did not provide funding because elected officials in Sacramento are programs to apportionments.
to reimburse districts fully for complying with responsible for setting them, in contrast to In response, Democratic legislators pro-
specific state mandates the tuition and fees of the California State posed a more targeted set of reductions for
Since 1979, the California Constitution has University (CSU) and University of Califor- the colleges totaling $92.6 million. The Dem-
required that the state reimburse local agen- nia (UC), which are set by appointed officials. ocrats’ plan would have decreased fund-
cies for the cost of implementing new pro- Fee increases for the CCC are thus a highly ing for the physical plant, instructional
grams or levels of service mandated by the politicized decision. Any action on the part of support, career technical education, the par-
state. For example, the state has required legislators that can be construed as curtailing tial COLA, and mandate reimbursements. In
community college districts that pro- access to the colleges has typically created a addition, their proposal would have reduced
vided their students with health services in great deal of controversy for a relatively mod- funding for the Puente program, which seeks
1986–87 to maintain those services, and it is est financial return to the state. to boost the academic achievement and
supposed to reimburse those districts for the However, the Legislature’s fiscal and pol- college-going rates of Hispanic youth, but
cost of doing so. icy adviser, the Legislative Analyst’s Office, would have also given the Chancellor’s office
 n Community College Funding 2008–09 n January 2009 © Copyright 2009 by EdSource, Inc.
ISSUE BRIEF
access to other funds to offset that cut. As University of California contemplating a simi-
previously stated, the special session ended lar move, more students planning to attain a
with no policy action. bachelor’s degree may enroll in the commu-
As this report went to press, state lead- nity colleges beginning next year. And most
ers were discussing another set of midyear economic projections for 2009–10 hold that
trish Williams
budget proposals. Thus, the colleges must the current recession will deepen. All of that
EdSource Executive Director
remain prepared to alter their spending can be expected to increase the demand for
2008–09 Edsource Board of Directors
plans for 2008–09—plans they just finalized community college services even as the state’s
in late September 2008. revenues drop substantially. State policy- Davis Campbell, President
Next year will almost certainly be more makers will face difficult choices as they al- President, California School Boards Association
Governance Institute
challenging than this year has been. With the locate especially scarce resources and attempt
Lawrence O. Picus, Vice President
California State University announcing in to adequately support a system that is one of
Professor, Rossier School of Education,
November 2008 that it is considering reduc- California’s largest and most cost-effective University of Southern California
ing its 2009–10 enrollment by 10,000 and the education and training institutions.
Martha Kanter, Fiscal Officer
Chancellor, Foothill–De Anza Community
College District
to learn More About California school and Community College Finance John B. Mockler, Secretary
President, John Mockler & Associates, Inc.
T he EdSource website provides additional information related to this report:
Susan K. Burr
Executive Director, California County
n F or background information on California’s community college system, go to:
Superintendents Educational Services Association
www.edsource.org/iss_secondary_cc.html
Carl A. Cohn
n A report on K–12 school finance can be ordered at: www.edsource.org/pub_cat.html Distinguished Leader in Residence, College
of Education, San Diego State University
Additional resources from official state agencies: Christopher Cross
Chair and CEO, Cross & Joftus, LLC
n T o view the 2008–09 state budget, go to the California Department of Finance (DOF) website:
Kenneth F. Hall
www.dof.ca.gov
Executive in Residence, University
n T o see the analysis of the budget by the Legislative Analyst’s Office (LAO), go to: www.lao.ca.gov of Southern California
Reed Hastings
n T o view the governor’s proposed budget for 2009–10, go to: www.dof.ca.gov
CEO, Netflix, Inc.
Gerald C. Hayward
Co-Director (Retired), Policy Analysis for California
Education
Janis R. Hirohama
Acknowledgments President, League of Women Voters of California
This report was researched Santiago Jackson
and written by: Director, Office of Legislative and Governmental
Affairs, Los Angeles Unified School District
Brian Edwards
Julian leichty Kelvin K. Lee
Superintendent (Retired), Dry Creek Joint
Elementary School District
Jo A.S. Loss
President-Elect, California State PTA
Paul J. Markowitz
Teacher (Retired), Las Virgenes Unified School District
Amado M. Padilla
Professor, School of Education, Stanford University
Don Shalvey
CEO and Co-Founder, Aspire Public Schools
Gloria Taylor
Co-President, American Association of University
Women–California
© Copyright 2009 by EdSource, Inc. Reprints permitted with credit to EdSource.
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