Assembly Budget Subcommittee No. 2 on Education Finance

All right, good afternoon. We will begin today's hearing. This is Assembly Budget Subcommitee on Education Finance. Our May Revise hearing today we're going to focus on higher ed proposals and just an announcement, just higher ed. So none of the K 12 or early. That will be taken up tomorrow morning. We do have public comment at the end of the hearing, and we prefer that the public comment today focus on the higher ed pieces. Certainly we know that's. UC CSU community colleges and the Student Aid Commission. So as we begin today's hearings, looking at the May revised proposals, we'll also frame some of our Assembly proposals as well. And for higher education, our focus and our mantra has always been pretty simple access, affordability and supporting our students. And every issue that we focus on should be framed around these priorities, whether it's a banner budget year like we had in 21 and 22, or this budget year in 23. For UC and CSU specifically, our focus has always been enrollment growth. That's what we hear loud and clear. We're going back home, talking to our constituents. How do we make sure we have adequate access in higher education, especially at the UC segment? We do think that overall, these budget proposals from the Governor both in January and the May Revise are very solid overall financial footing for UC, CSU and community colleges. A lot of departments in the state budget would love to have a 5% increase, or if you're a community college north of an 8% increase. So those are very fortunate issues to be standing on. You go talk to the departments in sub one. They don't quite have that. So there are some overarching issues that we have unfinished business to take care of, and we'll certainly get to that today. So with that, we're going to begin with an overview of the budget, an overall higher education overview from DOF and LAO. And then we'll get presentations from the four departments on specific May revision budget letters. So let's begin with Department of Finance and LAO. We'll start with DOF you have a presentation? I believe. Excellent. Okay, take your time.

Good afternoon, chair and Members. Michelle Nguyen, with the Department of Finance. I'm joined by my colleague, Jack Swalt. Governor's Budget reflected a revenue outlook that was substantially different than what was seen in the last two years, with the Governor's Budget proposing a 22.5 billion solutions package for 23-24 which included a variety of delays, Fund shifts and reductions. The May revision shows a further decline of revenues with a $31.5 billion gap for the revenue outlook. However, the Administration remains committed to the shared goals of the compacts, which include increasing access to the UC and CSU, improving student success while advancing equity, increasing the affordability of higher education, increasing intersegmental collaboration, and supporting workforce preparedness in high demand career pipelines. The May revision, as you noted, Mr. Chair reflects continuing support for the 5% base augmentations reflected in the compacts for the UC and CSU. And the May revision proposes to fully Fund the student centered funding formula with the statutorily computed cost of living adjustment of 8.22%. That being said, we're happy to take any questions, but we'll mention the specific details of the May revision proposals with the specific May revision letters. Thank you.

Okay. Thank you.

Jennifer Pacella, Legislative Analyst Office so as you make your way through the specific May revision higher education proposals later in your agenda, you might just want to keep a few big picture issues in mind. First, on the state's overall budget condition, the LAO estimates of personal income, corporate and sales tax revenue combined are 11 Billion below the governor's May revision level so we think the administration's estimates are optimistic. If revenues were to come in lower, the amount of budget solution and your budget choices will be more difficult. Second, on new spending proposals. So due to the anticipated weakness in state revenues, our overarching guidance is to reject new May revision spending proposals without prejudice. So the point of this would be to protect your core ongoing programs from reductions, whether it be later this year or over the next few years. We would apply this high threshold for any new spending to both the 98 and the non 98 sides of your budget. Again, there might be a few exceptions if you think a new proposal is dealing with an eminent health or safety risk. But again, generally we would encourage you to have a very high standard for new spending. Third, on the community college portion of the Proposition 98 budget, you're going to hear much more about the 98 package tomorrow when you go over the K12 issues. But just focusing on the architecture and on the community college portion, normally we would say or sometimes we would say that the administration's 98 package is a good starting point. But this year we're going to suggest you start with an alternative a baseline budget. Our concern is that the May revision has a lot of ongoing programs supported with one time money. It has a larger structural gap than it did in January. In January, there was no structural gap for the community colleges. Under the May revision, there's slightly more than 500 million in ongoing college costs that are being supported with one time money. So rather than having your starting point have you have these structural gaps that you would have to deal with next year, we recommend a different starting point, which is a baseline budget. Importantly, a baseline budget can accommodate a COLA for all of those 98 programs, including community college apportionments that typically receive a COLA at a 5.1% rate. So still high by historical standards. A baseline budget also has the advantage that you could avoid some of the mid year cuts that are in the May revision. For example, the may revision makes a cut to community colleges, prior COVID block grant funding and prior maintenance project funding funding that's already gone out to the field where there's already plans to use it. You could avoid that under a baseline approach. Again, the big picture of the baseline is just to protect your core ongoing programs moving forward. Lastly, on the University's budgets, whereas the prop 98 minimum guarantee under the May revision is being adjusted downward because your revenues have weakened, the non 98 ongoing spending for the universities is going up. The main revision as you heard, retains those 5% increases for the universities and as you've heard all year, those are higher percentages than many other aspects of the state sectors of the state budget you could consider if you had to moving forward, lowering those rates for UC and CSU. The most notable change under the May revision is that the Governor proposes converting some UC and CSU capital projects that previously were proposed to be funded with cash to debt financing. In total, it's 2.1 billion in projects, capital projects that would be debt financed. This is a relatively large amount of capital projects. The new ongoing debt service associated with those projects is 151,000,000 across UC and CSU combined. That's why you have this higher spending under the May revision. So while your revenues are weakening, the proposal before you is to spend more. This can create challenges for you obviously later this year and out years if you were to see a reduction in revenues. So why debt financing can be a very reasonable way to Fund projects. You might want to do some of that in your budget. We would just encourage you to do those highest priority projects that are state priorities where you have strong justification because of a health safety, life safety, capital renewal, deferred maintenance reason you think it's really important to proceed. So that's just some big picture issues you might want to keep in mind as you walk through the rest of your agenda.

Okay. Thank you. Do we have any questions on the overview piece before we get to the segment proposals? Seeing none, let's bring up first the University of California to have Department of Finance, LAO as well as the UC present their May revised proposals.

Good afternoon, Chairman.

Yes, please begin.

Gavri La, Chavez Department of Finance the May Revision maintains the multiyear compact with the University of California and sustains an increase of approximately 215.5 million ongoing General Fund to support operating costs representing a 5% base increase. Also, there is a shift of 4.8 million from UC's main appropriation to provide continued support for UC agricultural and natural resources. There is a couple of shift in financing approach in an effort to address the current fiscal challenges. The May Revision shifts the financing approach of several 2022 capital outlet projects. More specifically, onetime funding for several projects is replaced with debt service as follows, 30 million ongoing General Fund is provided to support debt service costs associated with the UC Higher Education Student Housing Grant program. This funding replaces approximately 437,000,000 in current year and planned General Fund support for UC. My college will continue to discuss more about this issuing housing in a little bit. There's also a 33.3 million ongoing General Fund to support debt service costs associated with UC Merced and UC Riverside Campus expansion project and the UC Berkeley Clean Energy Campus project. This action replaces 498,000,000 one time General Fund providing the 2022 Budget Act. The Administration is committed to supporting these projects. The debt service and funding approach makes it possible for all projects to receive the appropriate support. The May revision also includes a 2 million ongoing General Fund to support the UC Riverside School of Medicine, also 5,000,000 one time General Fund to support the University of California, Los Angeles. Rob J Bunch Center for African American Studies. And lastly, the May revision includes 2,000,000 one time General Fund to pilot an Entrepreneur in residence project for foreign born entrepreneurs and UC students in support of job creation and foresting global talent for innovation in areas of need. This complement recent investments in immigration talent and an opportunity through efforts for youth, college students, workers and pursuing professional license and entrepreneurship. Happy to answer any questions.

I have a quick presentation.

Yes, go ahead.

On student housing. Good afternoon, chair and Members. Michelle Nguyen with the Department of Finance for the Higher Education Student Housing Grant program. The May Revision proposes structural changes to the program as part of a $31.5 billion solutions package. The May Revision proposes to shift the current and planned General Fund support of approximately 1.1 billion for both the UC and the CSU under this program to now be funded by UC and CSU issued bonds rather than be funded with upfront General Fund. In addition, the May Revision also proposes 75 million ongoing General Fund to support the underlying debt service on these bonds, of which 30 million is proposed for debt service for these UC projects specifically, which was mentioned earlier by my colleague. In addition, the May Revision does continue to propose General Fund for this program but for the community college's share of the program, specifically, the May Revision proposes 450,000,000 one time General Fund for 2023-24 and 95.41,000,000 one time General Fund for 202425 for affordable student housing projects at the community colleges. For the student housing revolving loan program, the May Revision proposes no changes beyond what was proposed at the Governor's Budget. Though the May Revision proposes to shift from General Fund support to bond financing for these UC and CSU projects, the May Revision maintains the overall funding commitment for the student housing grant program given the May Revision outlook, and the Administration continues to recognize the importance of affordable student housing, but proposes to take these actions given what we're seeing at the May Revision. So with that, happy to take any questions you have.

Okay, thank you. Next, let's hear from LAO.

You inclined with the lao? The largest changes in the May Revision for UC involves the shifting of how the student housing projects and capital outlay projects are going to be funded moving from General Fund to University bond funded with the state paying the associated debt service. In the interest of time, I'm going to focus the bulk of my presentation on these projects regarding student housing. This proposal would shift UC's entire $437,000,000 allocation from a General Fund to University bond funded with the state paying the associated debt service roughly $30 million annually. As you just heard earlier, there are a couple of items to consider for this proposal. Debt financing projects such as these allows the state to move forward with high priority projects even when there is not cash available to complete the projects all upfront as it spreads these project costs across the useful life of the facility. One consequence of this action is that this significantly increases the total cost of these projects due to interest payments, roughly doubling the project's cost. This is going to be true for all of the projects that I'll be speaking on momentarily for this particular item. It also commits state funds to projects that traditionally have been self supporting, while not addressing billions of dollars in renovations identified as needed on UC's existing academic buildings. An alternative to the May Revision proposal is to cover the debt service on already approved projects totaling 389,000,000, but approve no new projects. Of the 30 million in proposed ongoing debt service payments, 26.7 million is for previously approved projects. This approach is more prudent than the May Revision approach in that it lowers ongoing spending, making balancing future budgets and supporting ongoing programs more manageable. Regarding the Berkeley Clean Energy Campus project, this project was also shifted from General Fund to University bond funded with the state paying the associated debt service, which would be roughly 16.7 million annually. If the Legislature determines that this project remains a high priority, it could approve the shift to debt financing. However, UC has indicated that it is unclear at this time if additional state support will be needed in excess of the 249,000,000 in state contribution that's already been programmed to complete the project. Furthermore, the campus's nonstate contribution toward the project also remains unclear, leaving some questions unanswered as to how the entire project's cost will be financed. Regarding the Riverside campus expansion project, the $154.5 million project was also shifted from General Fund to University bond funded with the state paying the associated debt service roughly $10.3 million annually. We recommend approving this project as it is in line with our recommendations that we made earlier this year. This project was listed as UCR's top funding priority in UC's 2021-27 capital financing plan. Additionally, UCR has recently experienced substantial headcount enrollment growth growing by over 5600 students, or roughly 27% over the past 10 years. Additionally, facility utilization reports indicate that UCR is using existing classroom space at in excess of 100% of legislative standards and lab spaces in excess of 125% of legislative standards, which this project would help to mitigate. Regarding the Merced campus expansion project, the May revision also shifts this project from 94.5 million in General Fund to University bond funded with the state paying the associated debt service roughly $6.3 million annually. Regardless of the funding approach, we recommend rejecting the proposal at this time. The project does not serve an immediate campus or state need, and it is still in its early planning phases. Merced indicated that it likely will not need additional academic space until enrollment reaches 12,500 students. If Merced continues to grow at the same pace over the next five years as it has over the previous five years, its enrollment would still fall far below that threshold, totaling roughly 10,400 students by the 2027-2028 academic year. With respect to the new onetime initiatives, there are two new onetime initiatives that we recommend rejecting without prejudice. Due to the anticipated revenue weakness facing the state, we recommend against any new spending unless those proposals address immediate health and safety risks, which these proposals do not. Thank you very much.

Thank you. Next, let's hear from the University of California.

Thank you, Chair Mccarthy, and Members of the Committee. I'm Seija Virtanen for the University of California. The University is grateful to Governor Newsom for his May revision proposal that would give the University additional funds for special programs and continue to propose the 5% base budget increase for the University. This increase would allow us to enroll more students and continue the services that we currently have and cover those cost increases. And we are requesting your support for the Governor's May revision. Because you have a very long hearing ahead of you. I'm going to keep my remarks rather short today. The Governor is proposing to shift the Higher Education Housing Grant program from direct state appropriation to UC's own internal AB 94 bond funds. We do believe we can make this proposal work. We will be able to maintain the low income rental requirements under this program with our own AB 94 bond funds as long as we're getting that debt service annually from the state. There's a few things I do want to note about that. We do have enough room in our AB 94 bonds currently to make the shift happen. We are required by state law to keep our internal bond financing at 15% or below of our state General Fund allocation. We still have enough room to absorb these housing grants into our AB 94 bond funds. Our current AB 94 planning rate on interest is 4.25%. Interest rates have been changing and increasing recently, and there's a possibility that these interest rates will increase or change before we're able to sell the bonds. And if that is the case, if the debt service is not sufficient, we would like to come back for a conversation on a technical adjustment. The Governor is also proposing to shift capital outlay funding from UC Berkeley Clean Energy Project and the UC Merced and UC Riverside classroom expansion projects onto UC's AB 94 debt financing. We also believe we can absorb these and make that shift work, so we're able to do that. The new classroom space provided by UC Merced and UC Riverside campuses expansion projects will be necessary for the UC system to continue expanding enrollment. And last time I was invited to speak with you in front of this Committee, this Committee made it very clear that you would like to see additional California undergraduate enrollment take place at the University of California. President Drake heard you and the campuses are working on admitting more students for fall of 2023. At this point, I want to be cautious on making any sorts of promises, but at this point we are looking at enrolling about 8000 new California undergraduates for fall of 2023. Last time I spoke to you, the number was 4200. So we have shifted that upward greatly in response to legislative interest in seeing that number increased. It will require us to receive the 5% base budget increase for us to be able to meet that 8000 and take care of those students as well as the nonresident replacement funding that the Governor has proposed for the University. Thank you very much for your time today, and I'm available for questions.

Okay, thank you. Sure. There'll be some questions. Start with Mr. Fong.

Thank you so much, Mr. Chair. And thank you so much to everyone, all the panelists here today. In terms of the UC enrollment, that's been a very big priority for our Committee and for the budget sub two Committee. So it's good to hear that 8000 new California admittees. But we know that the impacted campuses of UCLA, UC San Diego, UC Berkeley, then there's still more work to be done to enroll more California students. What are some of those plans to enroll more California students at those highly impacted campuses?

The plans for Berkeley, LA and San Diego include the replacement of nonresident students in order to bring the nonresident student ratio to 18% of the undergraduate population. So that's one plan. The other plans include adding student housing at Berkeley and San Diego in order to accommodate more students. UCLA just added 3500 new student housing beds for undergraduates, so they're doing well in that promise of student housing. And the plans also have to include steady hiring of faculty, which we are able to do with both the 5% base budget increase as proposed by the Governor, which will accommodate about 2000 additional students annually. If we continue to receive that 5% and the funding we received from the Legislature in the current year, the $51 million is being used in part to hire faculty that will be able to teach the students that will be arriving.

Thank you so much for that context. And when we look at the hiring of faculty, we want to make sure that reflects the diversity of California as well. That's something that's very critical to the future of our higher education system and going forward in our Committee as well, and pretty sure the Committee Members here as well. In terms of the student housing piece, we heard some of the shift in financing for the capital and student housing projects. How does that affect the timeline for these projects?

The shift in funding should not impact the timeline for the construction at UC. We will be able to sell the bonds when needed. The things that are impacting the timeline for the projects currently have to do with community lawsuits against some projects. And the redesign of one of the projects at San Diego is impacting the timeline a bit for those affordable beds. But for the proposed projects, for ongoing, the shift in funding will not impact that. Unfortunately, we don't have that much money left for the UC portion there, so we have to pick one of the six projects that has been proposed, and I believe this Committee will pick that for us, but it will not impact the construction timeline.

Thank you so much for that context as well as for that update. I know for the student housing grant program and the student housing revolving loan fund, the $900 million in the revolving loan fund and the $250,000,000 in the grants. I know our budget scenario has worsened since February, but I know that student housing for us to meet the target goals, to really make sure that we're serving California students, is so critical to really making sure we get these housing programs off the ground and that are so ready, that are ready to go. So I really want to amplify those supports for the student housing grant funds to really make sure that we're continuing to amplify that conversation. And lastly, in terms of the enrollment picture, the 8000 students, in terms of future projections, do we have any future projections as to beyond 8000?

Yes. The University of California will enroll approximately 2000 additional students annually under the Governor's compact. So in budget year plus one, we plan to enroll another 2000 California undergraduates if we receive the 5% intended for that year. So those 5% increases will help support a 1% annual increase in California undergraduates. We also have the 2030 plan by which by 2030, we intend to increase campus enrollments by over 17,000 California undergraduates and also intend to increase graduate student enrollment during that time period.

Thank you for that context as we continue to look at how we ramp up to meet the targets to really make sure that we're serving California students going forward. So thank you for that context. And then in terms of the student housing piece, that's something that we're going to continue to amplify and support in terms of the needs of meeting the housing crisis here in California for our students in our UC system. Thank you so much, Mr. Chair.

Okay. Thank you, Assembly Member Muratsuchi.

Thank you very much, Ms. Virtanen. And I want to thank you for what sounds to me like good news. That I want to thank President Dr. Drake and the University of California for hearing this Committee loud and clear. That we want to admit more California residents, undergraduates, so that we can extend the privilege and the opportunity for our California kids to attend our great University of California system. I wanted to see if there was a breakdown by campus in terms of the increase in 8000 students by fall of 2023.

I don't have the breakdown with me right now. We're still making some offers on the waitlist. But we did ask every single campus to increase the amount of students that they were admitting. Now the largest amount of admits would be at LA, Riverside. and San Diego. So two of the very selective campuses will be admitting many of the students.

And so the process is to extend an offer to more students that are currently on the waitlist, is that correct?

That's correct.

So in terms of us communicating this news to our constituents, if they got a rejection, they should not be expecting any reconsideration.

Let me double check on that for you.

All right, thank you. The 8000 enrollment increase for California residents by fall of 2023, is that on top of the 2000 annual increase pursuant to the compact?

That includes the 2000 from the compact.

Okay. So it's an increase from the existing compact of 6000 students then, is that correct?

It's an increase over the 4200 that we were planning on enrolling earlier in the year. So in January, we had a plan to enroll 4200 students for fall of this coming fall. Now we're increasing that plan to about 8000 students and that includes the 4700 students that the Legislature wanted us to enroll plus the 2000 from the compact.

Okay. And then a question, if I may pivot to Mr. Klein with the LAO. You talked about how the AB 94 bond financing mechanism would double the total cost because of the interest payments. Did I hear you correct? Yeah, but given the circumstances with the increase in the overall state budget deficit with the LAO's estimate that it's even worse than what the Governor is projecting. Is the LAO recommending that this AB 94 process is the wiser course of action as the Governor is proposing?

We think at this time there are certain projects that would meet the specifications for moving forward with these types of projects. One of those projects, as mentioned, would be that UC Riverside project where there is a clear need that has been illustrated and that would be addressed by using this funding mechanism. There are other projects where there are other items that would be worth considering whether or not it would be appropriate to move forward with them. And those include those the UC Berkeley project. However, that UC Merced project is one where we would even, irrespective of any funding mechanism we would recommend against moving forward with at this time.

Does the University of California have a response to the UC Merced recommendation?

Thank you for the opportunity to respond. The UC Merced project will allow for new classrooms and faculty office space that will allow that campus to start offering new majors. And we think that by offering new majors we can attract more students to the campus. This is really their second phase of growth for that campus. That building will support the campus growing by another 5000 students. This is the start of that phase by offering those new majors. So we think that even though it appears that the campus is doing fine at its current capacity we want UC Merced to grow beyond that 10,000 student mark. And by building this classroom building, we think they can get there and offer more majors that will be attractive to students in the Central Valley.

Thank you Mr. Chair.

Okay, Mr. Alvarez.

Thank you all for the update. Appreciate it. I have questions about the new requested expenditures UC Riverside School of Medicine and the Global Entrepreneurs. Is there more information outside of what's provided in the letters about these two programs and what the funding would accomplish?

I can briefly speak about the UC Riverside Medical School project. Basically, this funding is to support the operation costs, enrollment growth and support the school in the area.

Enrollment growth of how much?

We don't provide a specific. Mostly it's to support the school to continue increasing the students. And this is also part of the 2022 Budget Act.

Okay. If you could provide further information on the expected growth, that would be appreciated.

Sir, if I can comment on the UC Riverside School of Medicine growth the Legislature provided funding for a new building that will allow them to grow by 125 students annually. So the total growth of 500 students and they are now starting to ramp up those students. This $2 million represents a 5% increase to their operating budget that the school thinks was necessary for them to be able to fully support those students.

So is it a 5% increase in the number of students being admitted to the medical school?

No, it's more than a 5%.

More than that? Yeah. What's the percentage of increased number of medical students?

I don't remember that off the top of my head. I'll have to get it for you. Thank you.

And I think the building is still not constructed, is that correct?

The building is done.

It's completed?

It is done, yes. They're expecting a new class this fall.

Great, thank you. And the Global Entrepreneurs Program?

Sure. Big picture. Talking about the project is to support foreign born UC associate individuals. This could be students, this could be faculty that they want to become entrepreneurs, and they typically don't qualify for grants due to their status. This proposal aims to help them with their immigration status, but also support the creation and foster global talent for innovation.

So it's current UC students.

Correct. UC associated individuals. So this could also be faculty and students.

And this program would allow them to apply for grants for their research or.

For entrepreneurial projects. So that could be a professional license or starting a business. So a lot of these individuals don't qualify for federal grants. And this will be a way to support them, continue to be in the country, and provide the global enrichment.

Where would this be housed on a campus.

This is still in development, but I'm happy to take your feedback.

What about the UCLA? I have two questions on UCLA. One is the current new request of $5 million, and the other is on the prior request. And I don't remember the figure, but I have to say it was probably 100 million or more for a center that was in the original budget. That still remains in the budget.

To speak, about the Rob J. Bunch program. So that is to provide support to increase the African American Studies. As you recall, during the last hearings, we hear a lot about the need to increase diversity. So we hope that this support will help black students to getting this support in the center, as the center provides research, academics, fellowship opportunities. So that's part of the one time investment. I think, on the other part, you referred to the UCLA Immunology and Immunotherapy.

That continues to be the same as the governance budget proposal.

Thank you.

What was that proposal amount for?

So it was a 2022 budget act, and it provides 100 million this year and then 300 million on the following budget act. Sorry, budget year.

I know I had questions, I believe other colleagues had questions about where this proposal came from. And this was not on the list of projects that the UC had submitted as priority projects or capital projects, I think.

So this was part of the 2022 budget act. What we're doing currently is simply changing the funding mechanism, in this case, changing the timing that we're providing the funding but overall it's part of the 22 Budget Act and is to create Immunology and Immunotherapy Center at UCLA.

Does the LAO have comments on that?

So again, for the UC Immunology Institute it was 100 million in 2223 under the Governor's Budget proposal, 100 million in 2324 and 300 million in 242500 $1.0 million. And all of the concerns that I think folks, including us, expressed in January remain in terms of not having much detail on the basics of the proposal, the cost, the schedule, the scope, the ownership, the research that would be conducted within it. So the May revised doesn't change any of the details of the proposal. Just going back for a moment to the UC Riverside School of Medicine. Our understanding is the augmentation before you is just to cover things like salary increases. It's just to keep the school abreast of inflationary pressures. It's not to deal with enrollment growth. The state provided 25 million ongoing a few years ago to help the school ramp up its enrollment. Now the school does implicitly benefit from the 5% base increase you might offer them. It doesn't believe because it's a smaller program without a teaching hospital, it doesn't have the same clinical resources as other hospitals. So it's in a different situation. But just so that, I think is what the proposal is for is to help them cover salary increases and other operating cost increases.

Okay. And then on the maybe LAO and others could help answer the question. Through budget we approve projects that then enter into debt service like the UC Merced and Riverside campus expansion projects. Is that done on a budgetary decision on an annual basis?

No. So I think the decision before you right now is if you want to rescind the General Fund that you have provided for those projects or that you would otherwise provide over the next few years, give UC the authority now to go out and sell the bonds. If you can choose to approve the projects, give them authority to sell the bonds. The state will be bearing the debt service for the next 30 years on those projects.

But it would be for these two specific projects?

Yes. The May revision proposal before you is for the UCR campus expansion, the UC Merced campus expansion, the Cal clean energy projects, the student housing all of that would be converted to debt. So again, the state's debt burden is going to go up notably.

Right. This is not bond financing that requires voter approval then?

No. The state has made a sort of exception for UC and CSU under state law to allow them to sell University bonds. They don't have to go to the voters for those purposes.

Thank you very much.

Yes. Good questions there, Mr. Alvarez, on that last one. That's a trade off. If you ask UC Riverside and Merced, do you want this project? They said sure. Well, we're going to put it on the credit card. It's going to cost double what it would be having playing in General Fund. They've kind of shrugged their shoulders and say, okay, we'll still take the project. So that's on us. That's a policy choice that we're making. And we think these are worthy investments. If you want to expand enrollment like you just talked about, UC Merced and Riverside are a big piece of the puzzle to make sure we can expand. You know, it's one of these things where I'd prefer that we did what we did last year with one time money spent on one time things. We're in a different world now, so I don't want these projects to go back. So I think all things can be equal. This is the best we can get for that. I did want to talk more about the debt service idea for the housing, and this is for the grant. I'll get to the loan program in a second. So I hear that UC said, fine, that's fine, we'll take it. We'll take whatever it is. I'm sure there's a formula for every $100 million we pay X amount for you to cover your debt service for 30 years. I guess a couple of questions is we always heard that there's a limited debt capacity, which is why we came up with this idea in the first place. Because, UC Chancellors, as you know, we've been talking to for years, and we had this kind of epiphany three years ago with some Member Ting myself, Skinner, and I forget who the other Senator was at the time. With some chancellors talking about, hey, maybe the state could come in and help us finance some of these housing projects because we have limited capacity on our own books. And so this kind of undercuts that. So I guess it's not a problem. You're saying that it's not an issue with the overall UC debt capacity.

Current state law limits UC's AB 94 debt capacity to 15% of our state General Fund annual appropriation. So you're talking about shifting over $900 million onto our AB 94. That leaves us with about $300 million left for other projects after this shift. So we're getting pushed close to that 15%. Were the Legislature in a future year to have to cut the University dramatically, say, if we have another down budget year where we receive a big cut that might impact that. Debt service is not going away. We have to cover it first. It might push down that 15% and put us into trouble. So that's a discussion for a future year, hoping that there is no such cut. Sure, but, yeah, we can absorb it now. But it does mean that future classroom projects and other projects are going to be much more limited. We do have about $6 billion in deferred maintenance that we have need for. We have $12 billion of seismic renovations on our campuses. A lot of those will be pushed down into. Future years until we can issue more debt again.

Okay, and then how does this impact the timing of delivering these projects? Whereas one, you would had a check in your hand on July 1 of several 100 million for this and this you have to do the bonds and DA DA DA down the road. So how does this focus? Walk me through how this impacts delivery of these projects.

So for student housing, because the funding was already appropriated, one time funds are preferable from the state. This doesn't impact the timing, it just means we have to go back to some of the construction vendors and just make certain that we have appropriate mechanisms in place to shift the funding to this new funding source. We have people who can take care of that relatively seamlessly. So we don't think it will slow down any of the student housing projects. For the projects at Merced, Riverside and Berkeley that the Governor was proposing to delay, this actually allows us to construct those projects faster than if they were delayed to future years.

Yeah.

Correct?

Yes. That's good news there. And then on the grant program we had those joint community college UC projects. The community colleges may mention this in a little bit, but does this have any impact on delivering those joint projects?

So we only have money for one project under this proposal. So yes, it does impact the joint projects in that we'd have to pick between them. Or maybe the Legislature wants to pick a non joint project for UC. I don't want to make that decision or try to force it on you. What it does mean for the UC component of those other projects, we can still move forward with them, but the UC half would not be affordable beds or they would not be at this affordable rate as prescribed by the Higher Education Student Housing Grant Program. We'd be issuing them as lease revenue bonds, meaning we'd have to charge the students the full rate to cover the debt service and the operations. So there would still be more housing stock, but it just would not be at this very affordable rate.

Yeah, okay. And then just lastly, just commentary that there was an action in here for the revolving loan Fund, which was supposed to have 900 million in this year and 900 million again in budget year plus one. That continues to be a top priority of the Committee but also the Assembly. And we understand the Governor and the architecture had to make some tough choices with the spending gap increasing by 9 billion. But this is something that we are working to try to make a reality because we know if we're going to get to the number one issue we talked about earlier, enrollment growth, we need this student housing to get there, so stay tuned for that. But we will be working, of course with the Administration and hope to come to a conclusion that allows us to not delay the Student housing revolving loan Fund, as Mr. Fong said, but start that and launch it. I think it's just a great opportunity for the future. We have one time money. Park it in there, you get jobs, you get infrastructure, you get housing, enroll more students. And then, hey, when UC starts paying it back, you can recirculate that in years to come. So a gift that keeps giving. Lastly on the enrollment, that's great news. As Mr. Fong and Maritzuchi said, I will note that the 8000, it's a big number, but remember last year, pretty much we didn't have anything, so this focuses on that. Plus, this 8000 number, I think is part of our five year implementation of the non resident swap. So it's not just new, it's kind of those swap. So when you look at apples to apples, this is slightly more than we would have hoped per year going forward, over the years. But great news. And we want to keep it going. We don't want these ups and downs. I know that you see, are like, hey, that's why we want this compact, to allow us to have stability. But we were in the pandemic. Things changed. But having these ups and downs, I don't think it is helpful. It leads to frustration, not to mention more rejection letters for amazingly qualified students. So I think we're looking at what we can do to have a minimum. And if you overreach, we'll give you a bit more. I'm trying to think of a basketball analogy. I know you're Lakers fans over here, so it's kind of like the warriors saying Jordan Poole next year in the playoffs, condition of scoring 20 points a game during the year, make some shots in the playoffs, score some points, and we'll give you a bonus on top of your base salary. So what we want to do here is a similar type thing to have a threshold of enrollment. And if you over deliver, we will make sure we settle up and pay for that accordingly. Any further questions? Seeing none, let's move on to CSU. Thank you.

Thank you for your time.

Okay, thank you. DOF LAO CSU. I think your mic issue here.

Pardon me. Good afternoon, Mr. Chair and Members. Jennifer Lui with the Department of Finance. The May Revision for the California State University reflects the continued support of the multi year compact as mentioned by my colleague in the Overview for Higher Education, with an ongoing based augmentation remaining unchanged since Governor's Budget. The May revision includes augmentations to the budget year and General Fund reversion shifts in both the past year and current year projects to be financed through the Geobo on debt service for 2122.

The one time Journal Fund reversions to debt service financing includes the Cal Poly Humble infrastructure projects of 201,000,001 time Journal Fund and a corresponding increase of 16 million ongoing Journal funds starting in the 2324 budget year to support the debt service, followed by a 2223 current year onetime General Fund adjustment to withdraw the proposal of 75,000,001 time General Fund for University farms to debt service financing, thus adjusting the CSU capital outlay shift for 2223 to 329.81,000,001 time General Fund to support such debt service financing.

The May revision also includes a shift in financing for the CSU Affordable Student Housing Grant, an approximately total of 655,000,000 in current and planned support for CSU affordable housing, and an accompanying increase of 2324 of 45 million ongoing Journal Fund to support the debt service financing. My colleague Michelle Wynn of Finance, who oversees a higher education student housing grant program, will provide further details on this initiative during her presentation.

Lastly, the May revision includes 3.1 million ongoing General Fund for the construction of the Human Identification Laboratory at CSU Cheat Go with the total ongoing General Fund commitment towards CSU debt service totaling 91.1 million. With that, I'm happy to answer any questions you may have about the May revision for the California State University, and I will pass off the presentation to my Finance colleague, Michelle Nguyen, regarding the CSU Affordable Student Housing grant. Thank you.

Afternoon again, Chair and Members, Michelle Nguyen with the Department of Finance. I'll keep my remarks very brief because this was discussed in the UC portion. As was just mentioned, the May Revision proposes structural changes to the higher education student housing grant program. The May Revision proposes to shift the current and planned General Fund support of approximately 655,000,000 for the California State University under this program, to now be funded by CSU issued bonds.

In addition, the May revision proposes 45 million ongoing General Fund to support the underlying debt service for these CSU issued bonds. In addition, the May revision proposes 450,000,001 time General Fund for 202324 and 95.41,000,001 time General Fund for 2425 for affordable student housing projects for the community colleges. As was mentioned for the student housing revolving loan program, the May Revision proposes no changes beyond what was proposed at the Governor's Budget. And with that, happy to take any questions you have.

Okay, thank you. Next, please.

Lisa King with the lao. There is significant overlap between the issues in the CSU item and the issues in the UC item. So I'll try to be brief. As with UC, the largest proposal at the Mayor revision for CSU affects the financing approach for student housing. The approach would be changed from cash funding to debt financing through University bonds. The same assessment we discussed for the previous issue applies here.

There's a similar proposal at CSU that would shift a portion of previously approved cash funding for the Cal Poly Humboldt Capital projects from cash to debt financing through University bonds. Given that this approach would significantly increase the cost of these projects, you could consider at this time whether these projects remain among your highest budget priorities. If so, you could move forward with debt financing them as the Governor is proposed. If not, you could consider instead scaling back state support for them.

There is one new discretionary proposal in the May revision for CSU, and that's 3.1 million ongoing to debt finance the CSU Chico Human Identification Lab. As my colleagues noted, our overarching guidance, given the state budget condition this year, is to reject any new proposals unless they address immediate health and safety concerns. Since this particular proposal doesn't meet that high threshold, we would recommend rejecting it. Thank you. Happy to take any questions.

Okay. Thank you, CSU.

All right. Good afternoon, chair and Members. I am Ryan Storm. I'm the Assistant Vice Chancellor for budget for the University system. The CSU is grateful for the ongoing support of our 23 campuses as the Mayor vision continues to honor the multiyear commitment to increase base funding by $227,000,000. Now, your past, current, and future support of our most critical Unfundamental priorities include student success, enrollment growth, employee compensation, facilities and infrastructure, as well as basic needs.

And that has been and will continue to be essential and deeply appreciated as well. We recognize a significant revenue declines in the General Fund the state is currently facing, and that will require some tough decisions by this body. We, too, have some challenging choices to make for this upcoming year. We will have to prioritize the proposed $227,000,000, as it does not fully cover the CSU's projected ongoing operating costs, as confirmed by the Legislative Analyst Office in their analysis.

So, given the challenges both the state and the CSU are currently facing, it's important to note that the CSU's available funding and bargaining unit expectations are misaligned. We have prioritized a sizable portion of the proposed base increase toward workforce investments, including 92 million of that compact money for faculty and staff compensation pool, as well as $50 million towards healthcare premium increases. This is nearly two thirds of the proposed funding of workforce investments of the compact.

However, the expectations of CSU bargaining units are extremely high, and as are the associated costs to meet those expectations. So just wanted to put that topic on the radar. As we move into the next year. As mentioned last Friday by the Governor, if something is a legislative priority, all enacted legislation with the fiscal implications we believe should be funded in the budget to allow for proper implementation and to prevent encroachment on base funding.

The University is not in a position to be able to simply redirect funding to new programs or requirements with any unfunded legislation. And with increased operating costs due to inflation, rising health care premiums like I mentioned, and compensation demands it's, careful consideration of how additional unfunded legislation affects the overall system will allow us to remain competitive in attracting and retaining our high quality personnel and in maintaining the quality of our academic programs.

I want to reiterate the CSU's sincere appreciation for the funding increase proposed in January and sustained in the May revision. And in terms of the funding shifts as described, the Cal Poly, Humboldt, as well as a number of the campus projects and the student housing. We have the same sort of comments that dovetail in with what the University of California suggested. We don't anticipate any delay in any of the projects. It's simply a changing of the color of money, so to speak.

Many of these projects are in the preliminary plan and working drawing phase, and so we are moving along on those. So we don't anticipate any change.

I think one thing to note is that, like, you see in the event that interest rates do become more problematic over time, and if this anticipated debt service level that the Administration has proposed is insufficient, we would hope that you'd be open to future discussions about making technical adjustments to the base budget so that we can make sure that those projects are fully covered, as you anticipated. And with that, happy to take any questions.

Okay, thank you. Assembly Member Alvarez.

Just one question on the Chico project, maybe to the CSU system. Was that project on the list of capital projects prior? Is that a new project? Can you tell me more about that project in particular?

Sure. Last year, the Human ID lab was a project that was fairly new to the scene. It had been had some support in the Legislature last year in the final budget agreement, that particular project was not added. Since that time, that project has been placed on the five year capital plan for the Cal State University Chico campus.

It is its number three priority right now behind basic infrastructure, very significant replacement of an academic facility, academic building, and then the Human ID Lab is number three on the list there.

Thank you very much. Questions, Mr. Fogg?

Thank you so much, Mr. Chair. And thank you, CSU, for the presentation. Just a quick question on the enrollment projections for 2324. Can we get a quick update on enrollment, please?

Sure. If you'll recall, we were in that very tiny hearing room where we were all sitting right next to each other at that point. My colleague, Dr. Nathan Evans mentioned that last fall we had anticipated that our enrollment would be about 7% under the funded target at the conclusion of this academic year. We were happy to report at that hearing that we were all at that things have actually turned around and we are now improved on our enrollment for the current year.

We anticipate that it will be only 5.6 below our funded target. Since that time, it's been about a month or so. There has been no real significant change simply because at the time of that hearing, we had a very good sense of what spring enrollments were. So since that time there's just been very small fine tuning. So we're a little under target at the moment, but we've improved based on what our forecast was last fall. So that's good news so far.

Thank you for that update. And in terms of the community college transfer rates, are we seeing particular districts that are feeding into various campuses more or that's more of a case by case basis?

I think that's more on a case by case basis. I don't have the information handy.

Okay, thank you. Thank you for the update. That the shift in financing for these projects. We ought to continue to just want to echo my comments from earlier as well. For the UC system. We need to continue to look at how we sustain student housing projects and proposals going forward as well and look at how we can expand those opportunities for our CSU students as well. Thank you, Mr.

Chair. Okay, thank you. You kind of mentioned this in your overview already. So maybe analogy similar to what we heard with Seha from UC. With this AB 94 policy. We of course pay debt service and you have your own debt capacity. How close are we there to the limit? And where does this put us in relation to that?

Yes, we have quite a bit of room in our statutory limitation. When that law was passed, it was broken up into actually there were two different laws. First, the UC law was enacted. AB 94 established. That 15% cap, so to speak. The CSU's cap a year later was capped at 12%. And the history behind that, in brief, is that essentially that's what the carrying load of universities was at the time. And so that was what was implemented in law.

But in terms of our load, right now we're hovering around 5%. So we still have a lot of capacity. But the same comments apply with as you see, if there is in the future a major budget reduction, we could run into that room. The other thing too could be considered would be to proactively raising those caps in the event of need to maximize those in the future.

Sure. That raises another issue for the housing and the same comments here. This is a priority. So we're going to be working to include the money for the revolving Fund. But if you're at 5% and we hear from CSU campuses quite often that they have a housing, student housing, supply, demand, imbalance. And if it's a good business Proposition, students are there, they come there every year. We know they can fill those.

So why aren't you using more of your own money if you're way under the 15th percent to bond to finance student housing projects on your own?

Sure. The way that it has historically worked is for decades we have had the bonding authority to issue debt for student housing forever. The difference in the statute today is that it's very specific about any state appropriation that's used to pay the bonds on particular projects. With student housing being outside of the General Fund and the appropriation, it hasn't ever been a factor. So now the question is so if.

You change that and have the well.

If you change it back right. I can't recall.

And we're not writing a Bill up here, but could you do.

That to like you could it would.

Not be the guarantee, but it would be the backstop. If you don't get the rent payments, for example. Yeah.

One of the things that was done in last year's Budget Act was explicit exemption from Education code that any of these one time projects at the time would count towards those caps both at UC and at CSU. And so what was written in each one of those projects in the Budget Act was it was exempt from the cap. So that allowed for you to invest more one time money, use that money in our appropriation and not count against our cap. Same could be applied this year.

I can't recall off the top of my head if that actually has been proposed by the Administration in their May revision, but that would be a really good move in terms of keeping that threshold where it is by just exempting these additional projects that are slated for the swap of funding.

Okay, thank you. I think that's it. Further questions seeing none. Thank you. Hold these issues open. We'll see you next week. Community colleges. Okay, well, government of Finance, Lao and then our community colleges. Great.

Good afternoon. Chair and Members. Madison Sheffield Department of Finance. As my colleagues discussed in the overview, the Mayor vision includes additional reductions to the overall budget and thus each budget segment. That being said, just like at the Governor's Budget, the Administration remains committed to the second year of the multiyear roadmap, and the Mayor vision continues to fully support community college apportionments, despite the necessity to make reductions in some areas. I'll walk through some of the notable changes included in the Governor's mayor vision for Proposition 98.

The Mayor revision proposes 12.3 billion in local assistance funding for community colleges and adult education in 2324. This is a reduction of or decrease of approximately 258,000,000 from the Governor's Budget. We projected the total computational revenue for the student centered funding formuLA of about 9.4 billion in 2324 an increase of 398,000,000 over the 2324 SCFF we had projected at the Governor's Budget. Included in this increase from the Governor's Budget to Mayor vision is an increase of 25.4 million.

Ongoing Proposition 98 General Fund to reflect a change in the COLA from 8.13% to 8.22% and a decrease of approximately 2.4 million, ongoing Proposition 98 General Fund needed to sustain the 0.5% enrollment growth to align with revised estimates of enrollment in 2324. For reference, the K 12 side has the same COLA percentage. In addition, the May revision includes an increase of 3 million ongoing Prop . 98 General Fund Fund the 8.22% COLA for the same select categorical programs that were included at the Governor's Budget.

As a result of a decrease in the projected overall General Fund revenue, the total Prop. 98 guarantee declined in decline compared to the governance budget by approximately 2 billion, of which 503,000,000 is the proportional reduction to the community college's budget. The Mayor Vision proposes to fully Fund apportionments at the new COLA despite the necessity to make this overall reduction to the community college's budget.

This is done by shifting onetime resources to support the apportionments in 2324 and out years will be considered during the next budget cycle with a new revenue picture. The 503,000,000 in apportionments backfill is supported by prior years apportionment savings, reduction to the COVID-19 Recovery Block grant, and reduction to the Ferd maintenance allocation. I'll give a bit more detail on each of the reductions I just mentioned that are made in order to support the SCFF in full.

The COVID-19 Recovery block grant includes a decrease of 345,000,001 time Prop 98 General Fund bringing the block grant total to 305,000,001 time Prop . 98 General Fund for Deferred Maintenance we have a decrease of approximately 239,000,001 time Prop 98 General Fund deferred for deferred maintenance needs for a total reduction of 452,000,001 time Prop . 98 General Fund when combined with the reduction proposed at the Governor's Budget.

We also have included in the May revision a decrease of 100 million Prop 98 General Fund in proposed support for community college efforts and focused strategies to increase student retention rates and enrollment, bringing the Governor's Budget proposal to 100 million, so essentially cutting it in half. We also included a decrease of 50,000,001 time Prop . 98 General Fund for the Student Success and Completion Grant program to reflect revised program participation estimates, bringing the cumulative 2324 support for this program to approximately 362.6 million.

Prop 98 General Fund you also see an increase of 10,000,001 time Prop . 98 General Fund per year for three years to support the LGBTQ Plus pilot project. This builds upon the 2021 Budget Act investment of 10,000,001 time Prop . 98 General Fund and includes provisional language referencing that Budget Act investment, noting an error in the A pages that mentioned that this was only for LA community College District. We also have an increase of 2.5 million.

One time Prop 98 General Fund for the Small Business, Entrepreneurship and Innovation Center at East Los Angeles College. Mayor Vision also proposes statutory changes to allow community college all community college districts to spend flexibly among the following specified categorical programs beginning in 2324. Those programs are the Student Equity and Achievement Program, student Financial Aid Administration and student mental health services.

The proposed statutory changes would stipulate that after five years, the Chancellor's Office would assess district level progress in meeting five of the roadmap goals as selected by the Chancellor's Office. Districts that are not making sufficient progress towards roadmap goals would have their flexible spending authority revoked and be offered technical assistance. And the language also provides the Chancellor's Office authority to align reporting requirements.

In addition, the Mayor Vision proposes statutory changes to clarify eligible uses of funding for the community college's strong workforce program funding and to clarify our understanding is that what is stipulated in the proposed language is already permitted by current law, but we wanted to provide additional signaling to districts that this work is permitted. I'll note two capital outlay projects beyond the continuation of existing projects. We have 3.1 million Proposition.

51 General obligation funds for the design of Coast Community College District, golden West College Fine Arts renovation and San Mateo Community College District's College of San Mateo building a library modernization. That concludes my overview of the notable proposals for the community college system and Mayor Revision. I'll turn it over to my colleague Michelle to discuss Mayor Vision student housing proposals for the community colleges, and happy to take any questions on my presentation after that.

Okay, thank you. Please proceed.

Good afternoon again, Mr. Chair Members. Michelle Nguyen with the Department of Finance. I'll go quickly again. For the Higher Education Student Housing Grant program, as you know, the May revision proposes to shift current and plan General Fund support for the UC and CSU under this program, to now be funded with UC and CSU issued bonds. In addition, the May Revision does continue to propose General Fund for this program for the community college's share of the program, specifically. The May revision.

For that share, the May Revision proposes 450,000,001 time General Fund for 202324 and 95.41,000,001 time General Fund for 202425 for affordable student housing projects. The sum of the amounts across these two years reflect the remaining amount allocated for the community colleges under this program and again for the Student Housing Revolving Loan Program. The Mayor Vision proposes no changes beyond what was proposed at the Governor's Budget. Happy to take any questions that you have.

Okay. Thank you, Lao.

Good afternoon. Paul Steenhausen, with the analyst office. As the Department of Finance just mentioned, and as you will hear in much more detail tomorrow in part six of the agenda on Proposition 98. The May revisions estimate of the Proposition 98 minimum guarantee, which is the main funding source for community colleges and schools, is down about $2 billion from the Governor's Budget across the budget window.

And the lower minimum guarantee is based on the May revised estimate of state revenues being down by over $6 billion relative to January. As my colleague Ms. PacelLA noted in her overview remarks, the governor's May revision revenues are more optimistic than ours. We think they're down even more than the $6 billion. But even with the relatively optimistic revenue forecast by the Governor, the May revision contains a $503,000,000 structural deficit in community college apportionment funding.

And apportionments are the main funding source of funding for the colleges, their General purpose monies, as you're going to hear in part six of the agenda, there's even a larger structural deficit for K 12 schools and their Local Control Funding Formula. The main reason why portion costs are so high is because of the historically high COLA proposed here at May Revise, the 8.22% for the budget year.

The May Revise proposes to cover apportionment costs in part by using money that's already been appropriated by the Legislature, already been sent out to the districts, actually, and that's for the COVID-19 block grant and deferred maintenance and then cutting that money, the money that the colleges have already received. Now, because those initiatives and solutions are one time in nature, in the out years under the May revision, apportionments would have a structural gap that the Legislature would have to somehow address next year.

Given the situation and significant risks and downside risks of revenues be even lower than May revision estimates, we recommend the Legislature adopt a different starting point to the governors that funds baseline costs and seeks to Fund community colleges in a sustainable way. Now, adopting a 5.1% cost of living adjustment would better align costs with available ongoing funds.

And in so doing, the Legislature could avoid making reductions to those previously authorized initiatives, the deferred maintenance and the COVID-19 Block grant, and increase the likelihood the state can Fund E COLA and other priorities for districts in the out years. So under a baseline budget approach, no funding would be provided for newly proposed initiatives. So we would recommend the Legislature reject, for example, another round of funding for the Enrollment and Retention Strategies initiative.

At any rate, as this Subcommitee heard just a few weeks ago, districts have substantial funding remaining from prior state allocations for that purpose for enrollment and retention. So apart from funding, the May revision proposes flexibility for three categorical programs that you just heard from the Department of Finance. We recommend the Legislature reject this proposal, as it would not really provide districts with meaningful flexibility. Districts, for example, already have flexibility, considerable flexibility with the Student Equity and Achievement program. They can use that money in flexible ways.

In addition, the Legislature has an interest in ensuring that districts spend money on financial aid services and mental health support. So we don't think it would be a good idea for the Legislature to grant flexibility to districts and have them perhaps shift money intended for mental health for other purposes. Finally, on student housing, of course the Governor is proposing to use Non Proposition 98 General Fund.

Non 98 side of the House is an even worse situation than Proposition 98 with an estimated 30 plus $1.0 billion budget deficit. So, given that, we recommend the Legislature hold off this year on making a decision whether to appropriate or not appropriate funds for student housing, revisit it as the General Fund condition improves. Thank you.

Thank you, Chair McCarty. Good afternoon, Chair McCarty, Members of the Assembly Budget Subcommitee too, Lizette Everett with the California Community Colleges. Thank you for the opportunity to share our perspective on the Governor's May revision. Want to first appreciate the Governor's commitment to the Roadmap for the Future and the consistency in supporting our efforts for student success and equity. In particular, I want to highlight a couple of points.

I know that there are lengthy items and lots of discussion points, but I want to highlight just a few. The first is the California Community Colleges are in support of the provided COLA. The COLA provides core services and resources for all aspects of the California screen college's operations and needs, including student supports and other efforts. These are essential as they keep with pace of operating costs, but also inflation. That also supports the individuals that serve our colleges and campuses.

We also see that this is in alignment with the commitments that were made in the Roadmap for the Future. So we do think that that is essential if it's not fully provided. Community colleges don't have an automatic backfill mechanism and so that would be lost purchasing power that we would not have a guarantee to have back. So that is very important to us.

We recognize that there are some tough choices to make in this budget and we want to be partners with you and the Governor, the Legislature, to explore some solutions that could ensure that we can sustain some of the commitments that were made in prior years and the efforts that have been funded through these resources. For example, around deferred, maintenance and instructional equipment. We have nearly 5000 efforts and projects that are already on the docket to move forward.

And so for that reason, we would explore conversation to think about a cash deferral instead, so that we don't have to see cuts to those projects. And we recognize that the state needs time to bounce back from its current economic conditions, but that would allow these substantial investments in much larger projects that are really beneficial to the health and safety of our campuses to move forward.

We also see some alignment within the COVID-19 Block grant and enrollment that could be cross purposes, so really creating linkages between those two to minimize the impact and cuts to that as well. I want to highlight our strong support for the language that's been included for a Strong Workforce program.

We see this as a student centered evolution for the Strong Workforce program as it allows colleges to really get clarity on language that may already exist or projects that already may be possible, but that assurance that it is something that the state wants to see them move forward. It allows colleges to invest in work based learning programs, work Experience program, to really help in the career mobility aspects of our programs.

It also allows a student centered component that then helps students get to that final finish line of employment and certification by allowing colleges to invest in the certification program. Examples of what that may include are some of the It certificates that allow them to then be employable, the NCLEX for Nursing, some of the early childhood certifications that are required. All of these career education programs often have a certificate or some certification aboard that is licensing that is needed.

And so that final emergency grant type support really could help students then meet that final finish line so that they can be employed and move on to the socioeconomic opportunities that have been promised by our colleges and that they've looked forward to. So we're in strong support of that proposal. I want to end my comments by highlighting that we are in strong support of the Governor's student housing proposal, and we want to thank the Legislature also for their commitment to affordability within these projects.

For the community colleges would provide in the projects that have been proposed and have scored highest for this year, over 3700 beds. Most of them, you'll see, are offering rents that are even 15% lower than is required. Because affordability is such a core component to our efforts in affordable student housing, it is part of our movement. It is part of what we see is necessary for student success.

We also see that in our projects, nearly $500 million of local dollars have been invested as part of their own local contributions and efforts to make these feasible and also affordable. Lastly, all of the projects have a very substantial commitment to wraparound student services and supports that, again, will connect these facilities to the success of our students and lead to socioeconomic opportunities into the future. Thank you again for your time and attention and happy to answer any questions.

Okay, I have two issues I want to focus on. One, there's a finite amount that we have available on the table for community colleges through Prop . 98, and whether we do it with the 8% COLA and take some back from the current year or do the 5% like you're suggesting, it's all the same amount of money. So it's like we're giving the check to the districts, but we're just labeling it differently.

So walk me through what the difference is based upon the choices that you lay out. That's for Lao.

Sure. For the 8.22%. Cost of living adjustment that would be given to the districts in the budget year but it would be paid for by cutting funding for what they've already received. So the concern is that in the following year there won't be enough money within Proposition 98 to sustain that cost of living adjustment. So the colleges would not be able to sustain those operations at that level they had with the pay levels that they have. So that's the concern that we have.

Sustain it even if it's a 0% coal the next year. Because the coal just for that one year. You're saying based upon the budgeting with the 8% and new because it's an.

8% increase to their budgets. In a lot of cases that amount has been budgeted and would be spent and bargained away. And then the following year there could be a real risk that districts that the state can't afford to sustain that COLA and then you're going to have.

To have so by swapping them you have less of a COLA amount and more of kind of flexible one time ish resources.

That's right.

Yeah. Okay, that's an option. I also wanted to note that we've always noted this discrepancy that some of your programs have a COLA and some don't. And I guess the COLA is because things cost more wages, food, energy, what have you. So your faculty has the same costs as the program that's literally in the same building. Sometimes they're paid by the same people. So just don't think that makes sense. So I know there's roughly $678,000,000 to pay for this 8.22% COLA.

What would you all think if we shaved off 35 million and gave a COLA to those other half a dozen or so student based programs and your COLA was roughly 8%? Would that cause alarm?

Are you expecting an answer from the community college?

No, the community colleges.

One concern is that we like to have a COLA that's equal with the statutory commitment. So our goal would be that you identify resources, other resources to provide the cost of living adjustment to additional programs that are priced.

What if that wasn't an option here? That's not an option. It's the take it or leave it. Because right now if you're a campus you're like hey Department, you get 8% and you over here do the same exact thing. We're giving you zero. It just doesn't seem equitable. So all things being equal, I think you could shave off like the 0.0 pretty much. I don't have the calculator up here to do the math and 8% COLA is pretty darn good.

Talk to the community college programs across the street. I'm sorry, the childcare programs across the street from your campuses who get a COLA of zero. So I think that having a slightly less COLA while not passing the purity test which you mentioned Ms. Navarrett, that we should honor that statutory COLA.

I think all things being equal is something that we want to consider, knowing that we hear from so many of the programs, especially the student centered programs, who say, hey, we want to do more in basic needs in Emoja and puente and mental health and this and that, which don't have a COLA, which their costs go up too. So I think we should have a true community college cost of living even if we don't pass the 8.22 purity test. What does Finance think about that?

It's not going to cost you any more money. Just spreading it out a little bit more equitably. I know the Governor loves equity.

Yes, we hear your concerns. We continue to support what's in the Governor's Budget.

Okay. Mr. LAO.

I just want to reiterate that the issue is under the May revise revenues that there is not enough money within Proposition 98 to Fund an 8% or 8.22% COLA. And the situation is even more is even larger on the K 12 side which you'll hear about more tomorrow.

Yeah. And I think whatever it is so if it's that number, any number, my scenario would still be the same. Like squeeze a little bit off to help these other areas in the community colleges which don't receive a COLA. So.

Okay, thank you. Seeing no questions for this panel, we'll hold these issues open and come back with our actions next week. Thank you. Next, the Student Aid Commission. Hi. Finance, LAO, Student Aid Commission. Yes, it is.

Hello? Good afternoon, Chair McCarty and Assembly Members. Devin Mitchell with the Department of Finance. Today I'll discuss the new items for the Student Aid Commission. The May Revision proposes using a reversion item to wind down the Golden State Education and Training Grant Program at the end of the 2022-23 fiscal year and record approximately 480,000,000 one-time General Fund in savings.

Additionally, the May Revision includes an increase of four positions and 397,000 ongoing General Fund inadvertently included in the Governor's Budget for state operations to be utilized to provide administrative support for the continued implementation of recently enacted financial aid programs and program revisions.

Additionally, an increase of 103,000 ongoing General Fund, also inadvertently included in GB for state operations, is proposed to be utilized to assist local education agencies with meeting the requirement to support high school seniors applying for financial aid through the Cash for College program.

The May Revision also includes an increase of 6,000,000 one-time federal funds to be used for the Golden State Teacher Grant Program to support grants to students enrolled in special education teacher preparation programs for high-need school sites. The California Department of Education is providing CSAC with an additional round of Individuals with Disabilities Education Act funding for the Golden State Teacher Grant Program.

I or someone from the Commission can answer questions about any of the caseflow-driven budget adjustments in the mail letter, but just in the interest of time, I'll focus on the Cal Grant and the Middle Class Scholarship programs. The proposal reflects updated projected expenditures in the Cal Grant Program based on latest enrollment estimates among students eligible for the program, including the volume of financial aid applications received by the March 2nd deadline.

Estimated program expenditures increased by 51.4 million in the budget year and decreased by 1.2 million in the current year relative to Governor's Budget. The May Revision also assumes incremental savings of 37.2 million General Fund in 2022-23 to reflect revised Middle Class Scholarship program expenditure estimates. Updated projections shifted estimated program expenditures from 630.4 million at Governor's Budget to 593.2 million at May Revision.

Additionally, the Administration has determined that a good faith effort was made by independent institutions for higher education toward meeting the statutory associate degree for transfer commitment required to maintain the maximum Cal Grant award amount for students attending independent institutions of higher ed at 9,358 for the 2023-24 award year.

Additionally, it is requested that statutory changes transmitted with the Governor's Budget be altered to maintain the requirement that the Golden State Teacher Grant Program awardees reserve in priority schools. Additionally, it is requested that statutory changes be added to the Golden State Teacher Grant Program to enable students attending certain online providers of higher ed that meet other program requirements become eligible to receive awards.

Finally, consistent with what the Administration has done in previous years, it has requested that statutory changes be added to require Cal Grant participating institutions to use the three-year cohort default rates on student loan repayment certified in 2020 to determine an institution's eligibility to participate in the Cal Grant program for the 2024-25 academic year.

The Federal Government's extended student loan pause has caused the underlying data needed to compute that three-year cohort default rate to be unavailable. I'm going to turn it over to my colleague Jack Zwald to discuss one final item: the Public Interest Attorney Loan Program item. Thank you.

Good afternoon. Jack Zwald, Department of Finance. Excited to talk about this program. The Public Interest Attorney Loan Repayment Program was created in statute about 20 years ago. At the time, given the state's tight fiscal situation, no funding was authorized for that program. It remained unfunded until about 2015 when a bill was passed that would allow interest on lawyers' trust accounts that are sheet to the state, which happens in cases where the client is deceased and there is no place to pass on that money to.

Upon working with the State Controller's Office following the passage of that bill, we determined there weren't sufficient resources to start a program of any size in subsequent years. We received word, I think this year, from the State Controller's Office that a somewhat sizable amount of money had been deposited into this account.

So what we are doing is we're spending about 667,000 dollars, enough grant money, 455--51,000 dollars to support 41 public interest attorneys for the entire four-year loan repayment period as per the program, and then enough money to provide an AGPA and some marketing administration standard complement type funding for the Commission to administer the program. So it's been a long time coming, and the law has worked.

We now have this funding, and the way it's being structured is, in the future, if we continue to see the sort of zero trend in revenue, the amount of money that has been determined that we have on hand, the way we structured this program is that it would continue to be able to operate for about four or five years without any new inflows from IOLTA accounts, so we think that this is a cautious but effective way to do this program, and we're excited to finally get it done. So that's the end of the Administration's presentation, and I'll defer to others on the panel.

Lisa Qing, LAO. There are a number of proposals for the Commission at the May Revision, but we'll just comment on a few of them. Happy to take questions in any of the others. First, regarding the caseload adjustments for Cal Grants, Middle Class Scholarship, and the various other smaller financial aid programs, we think these are reasonable based on the most recent data, and we recommend approving them.

We also recommend approving the proposal to discontinue the Golden State Education and Training Grant Program at the end of the year. This program serves workers displaced by the COVID-19 Pandemic, and as we discussed in an earlier subcommittee hearing this spring, we think the underlying need for this program has diminished. There is one proposal that we wanted to raise some concerns with, and it's one of the trailer bill proposals related to the other Golden State program, Golden State Teacher Grants.

In particular, this language would expand eligibility in the Teacher Grants Program to students who are enrolled at certain online providers, subject to the determination of the Labor Secretary. Here we would note that demand for the Teacher Grants Program under the current eligibility rules is already high, and the Commission is projected to spend those funds ahead of schedule.

The proposed eligibility expansion could add some complexity to program administration in part because it would involve an agency that's not currently involved in administering this program, and third, the proposal appears to expand eligibility to providers who are based outside California, which raises some policy considerations that might warrant some more thorough discussion. Thank you. I'm happy to take questions on these or any other items in the Commission's budget at the May Revision.

Okay, thank you. Student Aid Commission.

Well, good evening, Chair McCarty and Assembly Member Muratsuchi. I think we're at that time of year--that time of day where it's now good evening, so I will try to keep my comments brief in recognition that it's already been a long day and you've got another very meaty discussion tomorrow for the K12 portion of your agenda.

Jake Brymner, Deputy Director for Policy and Public Affairs at the Student Aid Commission, and would like to begin my comments by expressing our gratitude to the Governor and his administration for including key investments that will help California in building on our and maintaining our momentum in promoting college affordability through new programs and increased support in applying for financial aid for our students.

And to the comments that you started the hearing with, Chair McCarty, also want to particularly express our appreciation for those new staff positions that were included in the Governor's May Revision in recognition that that's not felt across all budget areas, and while it hadn't been everything that we requested, these positions do reflect where we at the Student Aid Commission have identified some of our most urgent capacity constraints.

As I shared at an earlier hearing, the Student Aid Commission has seen its responsibilities grow significantly over the past several years as a Legislature and Governor have enacted or expanded programs or established new policies like universal financial aid applications for high school seniors--and I'll come back to that in just a moment--and as reflected in one of the positions that's been included here, there are several one-time programs that have significantly lengthy runways.

In the case of the Learning-Aligned Employment Program running until 2031, hiring limited-term staff to support that kind of lengthy program is inefficient, it creates risks in our administrative processes as you churn through those limited-term staff. These positions are really critical to ensuring the Student Aid Commission is able to successfully administer and to promote these programs. Additionally, this is a big year in financial aid that we're coming up on.

As you've probably heard--and I think I spoke to at the prior hearing--there is a new Free Application for Federal Student Aid, FAFSA, that will be released later this year. Federal Student Aid, the portion of U.S. Department of Education that oversees that, has been responsible for redesigning that new application in time for distribution by no later than January 1st, 2024.

A couple of months ago, they did announce that there's going to be a delayed launch of that new application which will be available likely sometime in December when--it's usually available on October 1st of the year prior to the student enrolling. So there's a lot for the Student Aid Commission and our partners to implement to prepare for as it relates to this new application and making sure that our counselors, educators, and other partners are apprised of those changes.

So in that regard, we're also very grateful that the May Revision does include about 100,000 dollars towards the Cash for College program through which we provide free assistance to students and their families in applying for financial aid. Last year, you might recall that program received 500,000 in a one-time increase that has allowed us to expand those workshops into regions that were not previously served by a granted organization. So we're very grateful for that 100,000 dollar increase for the program on an ongoing basis.

It's not the full 500,000 that we had this prior year, so that will put the Student Aid Commission in a place where we'll need to determine how we potentially reduce the support for some grantee organizations that host those financial aid workshops, which, in light of that financial aid universal approach for our high school seniors, really, there's been renewed focus on these workshops.

This year, we hosted a record number of workshops, and again, we're able to not only deepen support for existing partners, but go into those regions we had not previously served through that program. Now, one other related issue to this delay of the FAFSA that I do want to flag for consideration by the Governor and Legislature is around the priority application deadline for Cal Grant.

Community college students can apply until September 2nd, so there's actually still time for our students to apply now if they're planning to go to a community college. However, if you're going to a four-year institution, the deadline is typically March 2nd.

With the delay of the FAFSA now pushing that back by two, potentially almost three months, we do think it's prudent to consider utilizing trailer bill language such that we establish an April 2nd deadline for next year so that we can offset that to some degree, provide more time to our students to apply for aid, and of course, just in closing, I'd be remiss if I did not comment on our collective work ahead on Cal Grant Reform.

Cal Grant continues to leave out--our most recent estimate was over 150,000 students due to eligibility barriers that we would be eliminating under Cal Grant Reform which will also help us simplify the way that we explain the availability of state aid to our students and families. So as I shared at our prior hearing, we are working with our campus and segment partners to prepare for that implementation, pending the revenue determination that was included in last year's budget agreement.

So we look forward to that discussion ahead and would just urge our policymakers to hold this in mind, this urgent priority for our students next year, as you make any decisions about investments in college affordability and financial aid this year. So in closing, just express our gratitude again for the additional support reflected in May Revision, and look forward to any other questions you might have.

Is the money--this is for the Student Aid Commission--is the money for the four positions focused on implementing the Cal Grant Reform and Middle Class Scholarship that's been done to date or their further expansion?

Those are positions that help us catch up with where we've seen some of our capacity constraints. Really, since I would say probably prior to 2021 but certainly in that 2021 budget agreement that created the new Community College Entitlement Program, the much more expansive and more complicated Middle Class Scholarship Program, as well as a number of other one-time programs like Learning-Aligned Employment Program, Golden State Teacher Grant Program, and several of these positions do work across program areas to help promote those programs, help bring information to students and families and other partners so that we can get the message out about these major opportunities for students and families.

So it's really work that's already been underway. This helps us make sure we have those resources on an ongoing, sustainable basis.

Gotcha, and then for the Department of Finance, I know we agreed upon this Cal Grant / Middle Class change last year, supposed to be funded in an outgoing year when the budget has a scenario that warrants that. What does that look like that needs to happen for that implementation to start?

Implementation of which program?

The Cal Grant Reform.

So the May Revision maintains the position from January in which a decision is going to be made about whether those changes are going to be implemented May of next year.

Yeah, so what needs to happen? Is there like a trigger? Is there--obviously wasn't the best news last week from the Governor's May Revise, so is there a number, a threshold that needs to happen before we see this begin?

So it's based on the availability of state revenues over a multiyear period. I don't believe there's a specific number. I'll defer to my colleague.

Jack Zwald, Department of Finance. In state law, I believe it specifies that in the picture that we're talking about, there would be indeed no additional action to achieve a balanced budget. So essentially, what we'd be looking at is, are revenues sufficient to maintain a base budget, and if so, then the Director will be making a determination one way or the other if that's the case.

So we will have a fuller discussion of this in probably next fall and next May, but for now, we're committed to the trailer bill, negotiate between the Legislature and the Administration in last year's Budget Act, so we maintain our strategic patience on that course.

Yeah, great. So as you know, we were excited to embrace this past year and thanks to the Governor for doing that. We had a more comprehensive and a broader financial aid reform quest: debt-free college, basically, expanding Middle Class and Cal Grant programs to fund more of the non-tuition costs. I guess my question is for Department of Finance. I know that the University of California has talked about they'd like to have a debt-free college for their students by--I forget which year.

I think Mr. Drake points out, and then the Governor several times too has talked about that, so my question is--we obviously don't have the budget for it this year--but is that something that Department of Finance thinks needs to happen in order for the UC to meet their understanding of what debt-free college is or with the Governor's understanding of debt-free college is?

It's unclear. I mean, there are, I'm sure, many paths to getting to that point. At this juncture, the Administration is maintaining its unprecedented support for higher education and student aid, focusing on equity access and student success. We're going to continue down that course. As revenues--the economic situation continues to become more apparent, further discussions along that vein could be positive, but at this point, we've got to maintain the course, and this Administration is very unusually and highly committed to investing in higher education.

Yeah. Concur 100 percent. I'm just trying to understand if you all think that eventually one day if we want to--and I asked this to Mr. Drake at his overview hearing three months ago; I'm not sure if you were here, Mr. Zwald--is what are you counting on for your debt-free college? Is this UC money? Is this the Blue and Gold? You know, he's like, 'no, no. We're counting on increased financial aid from California.'

I said, 'oh, okay. So you're counting on the Medina, McCarty, Leyva, and then we came up with this year proposal,' and so I guess what I'm trying to understand is, does the Department of Finance and the Governor concur with that statement that if you are going to have debt-free college one day in California, one: you need to have a budget situation to basically make that conversation realistic, but two: we would need to expand Cal Grant and Middle Class Scholarship to pay for non-tuition costs.

As it stands, I mean, there's a very interconnected interplay between institutional aid, state aid programs, continued sort of gaps in funding to essentially create essentially a free college situation. So whether that means that UC dedicates additional resources or CSU--in CSU's case, dedicates additional resources on their side or whether the state increases its commitment on our side, there are any sort of combinations of those two actions that could get you there.

So while that may be President Drake's preferred course, that's certainly something that we've been talking about in committee and we have a proposal that we agreed to last year. I think we'll have a fuller discussion about that as we get a better picture of revenues, but in terms of just the sheer question of would it require more resources to achieve a situation in which the vast majority, if not all students had a debt-free path to college, it's likely that additional resources would be required to do so.

Yeah, fair question. Good enough, and you did at the end clarify debt-free, but a minute ago you said free, and so I just want to make sure for the millions watching us today, we're not proposing free college. It's debt-free. So parents still would pay based upon their estimated family contribution, EFC--got that right--then they'd have to work part time, fill up the gap there. So it's not a total free lunch, not free college, but debt-free, but we appreciate your response, and again, this is a quest going forward and a top priority for the Assembly. Mr. Muratsuchi.

Thank you. I heard that--I didn't read any language specific to this, but there were some changes to the Golden State Teacher Grant Program. Could you elaborate on that and the reasons why the proposed change was made?

There's two trailer bills that are to this effect. One was just to--it was requested that statutory changes be transmitted with Governor's Budget be changed. So it's changing a trailer bill from January to maintain the requirement that the Golden State Teacher Program awardees serve in priority schools, high-need schools. This was covered in Subcommittee, and sort of responding to feedback just after conversation within the Administration--sort of restoring that requirement for Golden State. The trailer bill is public.

Okay. So basically it's to maintain the requirement that Golden State Teacher Grant recipients continue to teach in high-needs schools?

Yes, and it does clarify a sort of administrative matter that CSAC have been doing, which is in a case where a teacher is beginning service at a school that was considered high priority, high-need, and then in later iterations of data, turns out that kind of falls below that threshold, that if you were at that school and you began teaching there and it was on the list, you're not going to be penalized if you continue to teach at that school site. So I think that's another significant change you'll see in that language.

There's also just one more thing: we're expanding eligibility to allow grant recipients to fulfill the service obligation at a preschool program, so there's an early ed component to the trailer bill as well.

Okay, thank you.

And if I may, there are some additional trailer bill changes proposed to this program, just to build on what the Department of Finance has shared. There is a proposal that would expand eligibility to students who are enrolled at certain online providers as determined by the Labor Secretary.

Okay, thank you. That's it for us up here. We will hold this issue open as well. That concludes the higher ed portion, and we will hear the Prop 98 piece with TK through 12 and child care tomorrow. With that, we can hear now public comment. Anybody in the audience? Higher ed public comment? Seeing none, we have two people on the phone. Oh, one in person. Yes. Sorry. Missed you. Yeah.

Quickly enough.

Yes.

Kathy Van Osten, and on behalf of John Burton Advocates for Youth, just wanted to state, we're hoping for some continuity between the Assembly and the Senate on language to fully fund the cost of attendance for foster youth. With the Governor's increase of Middle Class Scholarship that helps at CSU and UC, we still have community colleges that we care deeply about. That's where we're going to have most of our foster youth.

So really, with only 10 percent of our foster youth attaining a two or four-year degree, this funding will really help advance their lives and help them lead really successful lives, obviously for our most vulnerable students. So thank you very much.

Thank you. Okay, we have callers on the phone. Please proceed. You have one minute, 60 seconds or less. Thank you.

Thank you, Mr. Chair. We'll now go to line 16.

Good afternoon, Mr. Chair and Members. Silvia Solis Shaw here on behalf of the California Faculty Association. We ask that the Legislature address the accelerating underfunding of the CSU by providing additional resources above the level specified in the compact. We believe that the current funding levels are inadequate for a sustainable and effective educational system. Secondly, we ask that legislators reconsider the practice of providing undesignated funding increases to the CSU and instead provide more direction as to the intent of the state in allocating those resources.

Finally, we urge policymakers to require the CSU to devote additional resources to direct instruction supporting the instructors and staff who give students education and collegiate experience they deserve. Thank you for your consideration.

Thank you. Next speaker, please.

Line 20. Your line is now open.

Good evening, Chair and Members. Shannon Swanson on behalf of the Cal State Student Association, also part of the Californians for College Affordability Coalition. We thank the Governor for his commitment to the compact, and overall, are grateful for the Legislature's sustained commitment to higher education access, affordability, equity, and success. We also respectfully ask that the Legislature remain committed to California's college students by prioritizing Cal Grant Reform in 2024 so that 150,000 additional low income students can receive aid.

We also ask that you continue to help students across our state by prioritizing student housing. Any potential delays to student housing funds could further exacerbate affordability and success gaps for our most vulnerable students. Thank you for your time and continued partnership.

Thank you. Next speaker, please.

Line 21, your line is now open.

Samantha Seng with NextGen California. We thank the Legislature for passing a state mandate around FAFSA CADAA application completions a couple of budget cycles ago, and appreciate the funding efforts or funding towards these efforts in the May Revise, especially given the current budget landscape. Just want to emphasize the need to continue providing further funding for CSAC to ensure successful implementation of these efforts, including staffing positions and the Cash for College workshops.

Additionally, to ensure that California students are not hindered by the December FAFSA delay and have the ability to apply for financial aid, we strongly recommend the extension of the statewide financial aid application deadline, including CADAA past the March 2nd deadline, and finally, to echo CSSA, we also stand in continued strong support and respectfully request the Legislature prioritize Cal Grant Reform next year. Thank you.

Thank you.

Line 23, your line is now open.

Good evening, Chair and Members. This is Zachariah Wooden, Vice President of Legislative Affairs for the Student Senate for California Community Colleges. We want to say that we appreciate the 8.22 percent COLA and support the student housing funding for community colleges in the budget, especially since the system serves the students with most needs, and given the concerns surrounding the enrollment decline, it's important to remember that serving students basic needs is one of the biggest incentives for getting students to enter and stay enrolled at our colleges.

We urge you to include these in the final budget agreement. We do have some concerns about the statutory flexibility--the proposed statutory flexibility for Student Equity and Achievement Program and student mental health resources, as well as for the significant reduction in deferred maintenance funding, and while the May 2024 trigger date isn't up for considerations here, we continue to emphasize the need for full Cal Grant Reform implementation in line with the commitment made to make financial aid for California's college students more equitable. Thank you.

Thank you.

Line 17.

Good afternoon, Mr. Chair and Members. Parshan with uAspire. We wanted to just appreciate the Governor and for the May Revision proposals and for the Legislature for the work that you have done for expanding accessibility and affordability for students in California.

With that, we'd like to respectfully ask for the approval of the May Revision proposals for the ongoing funding for Cash for College and would kindly like to request the amount to be increased to the full 500,000 dollars for Cash for College workshops that have been super helpful in increasing and expanding access to financial aid applications for students.

We would also like to echo what the CSAC folks have shared in that we would need to push the priority deadline from March 2nd to April 2nd for next year that was not reflected in the May Revision. We'd love to add that in there, and lastly, echoing what many partners have already shared in our support for Cal Grant, and we look forward to working with the Legislature next year to see them implemented. Thank you very much.

Line 28, your line is now open.

Good afternoon, Chair and Members. Anna Alvarado on behalf of the California EDGE Coalition in support of various budget proposals, including the COLA increases for the community colleges and the categorical programs and the funding for student retention rates and enrollment strategies. We'd also like to uplift the importance of Cal Grant Reform as budget discussions continue that could impact next year's fiscal outlook.

We respectfully urge our state leaders to prioritize Cal Grant Reform so that more low income students, particularly adult learners and opportunity youth, obtain critical financial aid assistance. Thank you for your time.

Thank you. Next speaker, please.

Mr. Chair, there is no one else who signaled that they wish to speak.

Okay, thank you. With that, we will adjourn. Thank you.