Assembly Budget Subcommittee No. 3 on Education Finance

We all know how critical higher education is to the states it economy and to the well being of families throughout the state. California needs more workers.

That means we need more degrees to be issued. In areas such as health care and education, we see that demand continues to increase. And workers with bachelor's degrees, as we know, still earn more money than those who do not have a bachelor's degree, 62% more than those with the highest level of education as compared to a high school diploma. While we have pushed for more access, I believe the state has had some gains.

Enrollment trends have varied across the systems, and that's what we'll be discussing today. At UC, most of its campuses are rejecting more than half of their applicants. This is frustrating for a lot of Californians, and we must continue to look for ways to increase that capacity.

While it's good to see that California enrollment increases and nonresident decreases, we really need to talk about, and you've heard me talk about this in the past, the cost of that proposal and that program.

At the CSU, it's alarming to see that enrollment declines across numerous institutions throughout the state, majority of campuses. CSU must work harder to recruit and retain our students, particularly at the campuses that are 20% or more below the enrollment targets. We also have data before us that demonstrates the severe decline in double digits at many of these campuses.

I also want to talk about nonresident enrollment at CSU, with two campuses in particular that are reaching UC levels of non-residents that could potentially have an impact to Californians, and that's San Diego and Cal Poly campuses. And at the community college level, college enrollment seems to be trending upward, but most colleges remain under their pre COVID enrollment levels.

And we will be discussing how colleges can grow to provide more access of higher education for more people in our community through the programs such as dual enrollment. So with that, I'd ask our first panel to please come forward. For this panel, we have Lisa Qing and Jennifer Pacella from the Legislative Analyst Office to share their report. Welcome and please begin.

Good afternoon, Chair Alvarez. Lisa Qing with the Legislative Analyst's Office. You have before you a report titled 'Trends in Higher Education: Student Access'. We've been asked to present some highlights from this recent LAO report to kick off the hearing today.

I'll begin by walking through some of the key drivers that influence higher education enrollment. If you turn to page five of the report, you'll see a line chart tracking the college age population, so those age 18 to 24.

The college age population has peaked both nationally and in California, and in California. It's been declining for several years now, and this trend is projected to continue. Turning to the bottom chart on that same page, you'll see that California high school graduates are also projected to decline over the next decade.

In addition to these demographic factors, there are some economic factors that impact higher education enrollment. Turning to page six, the chart on the bottom shows that these economic factors have a bigger impact on community college enrollment trends than four year University enrollment trends.

In particular, during recessions, more people tend to return to community colleges, driving enrollment up while the job market is weak. And on the other hand, when the job market improves, community college enrollment tends to go down. The figure at the top of page seven shows total undergraduate enrollment in California, broken out by segment.

You'll see that total enrollment peaked in 2009 during the Great Recession and is down somewhat since then. The blue section of this chart shows that those enrollment declines over the past decade have really been concentrated at the community colleges.

During the same time period, CSU and UC saw increases in enrollment, meaning that we now have a greater share of students at the four year segments, today. Beginning on page nine of the report, we cover some key changes in the student body over a similar time frame.

One of these changes is that a growing share of California's undergraduates are Latino students. That said, when we compare California's college age population to the undergraduate student body at UC, the state's most selective segment, we are still seeing that Latino students as well as black students are underrepresented.

Beginning on page 11 of the report, we have a series of charts that cover admissions. The chart at the top of page 11 focuses on UC admissions over the past two decades. During this time frame, the number of California residents applying to UC as freshmen has increased significantly, more than doubling over 22 years.

This reflects that more high schools are offering College Preparatory or a through G courses, and more students are taking them. It also reflects that there have been certain changes to UC's admission practices that have made more students eligible to apply as freshmen.

During the same time frame, the number of California residents admitted to UC has also increased, but not at the same rate as applications, resulting in that decrease in admission rates that you referenced in your opening comments. Nonetheless, the number of California residents who ultimately enroll at UC has steadily increased over the past two decades.

If you turn the page, you'll see similar charts for CSU, the trend here is somewhat different. Over the past two decades, the number of California residents applying to CSU as freshmen has also increased for much of that period, though it peaked in 2016 and is down somewhat in recent years.

With applications down, admission rates have increased. As of fall 2022, CSU was admitting the vast majority of freshman applicants. I believe it was 94% in the system, though there is still variation from campus to campus. The next couple of pages show similar data for transfer students.

Transfer applications are down somewhat these past few years at both CSU and UC as a result of Community College Enrollment declines during the pandemic. Nonetheless, as you referenced Charles Rez in your opening comments, there are signs that those Community College Enrollment declines are reversing, and that's a topic that will be discussed later in today's hearing.

There are several factors contributing to the Community College Enrollment recovery, and one of them is increased enrollment among certain nontraditional populations. On page 15, we cover increases in enrollment at the community colleges among high school dual enrollment students, incarcerated students, and also students in bachelor's degree programs at the community colleges.

This last group in particular is one of several signs we're seeing of growing competition between the segments for enrollment over the next decade. Given projected demographic declines, you could see that kind of enrollment competition among the segments intensifying.

At the same time, the Legislature is going to face some key decisions around how much enrollment to fund at each of the segments, and those decisions will have implications for student access as well as for state costs.

I'll end by noting that if state budget deficits were to persist, the Legislature could find it challenging to provide funding for enrollment growth in any of the segments. Now, later in your hearing, you'll have an opportunity to delve into these various trends as it impacts the individual segments.

But if you have any overarching questions, my colleague Jennifer Pacella and I would be happy to take questions at this time. Thank you.

Thank you. Mr. Fong, do you have some questions for the LAO on this item? I can get started and maybe let you see if you can't. Sorry, everybody, my notes I left them in the office. I'm getting them. I have questions on my notes. I'll be getting them in a second.

But I think one of the things from this presentation anyway, and for folks in the audience who aren't familiar with what was referenced in the testimony, is the trends in higher education report put together for student access put together by the Legislative Analyst Office.

I think this was produced within the last month, if I'm correct. So referencing those statistics and really wonderful statistics, and even better, pictorial descriptions of what's happening as it relates to enrollment and highly recommended for anyone interested in higher education.

But I am interested in the issue of admitted to the UC NCSU system versus applied, and just to, I think, fully understand exactly what the data is showing. These are freshman only applications that you've identified here. It's not all applicants to the two systems.

For the charts on pages 11 and 12 that we walk through. That's correct. It's California residents who are applying to UC and CSU as freshman applicants. We do have charts on transfer applicants beginning on page 13. Separate data.

So on 13 that one for the transfers. It seems like it's been a lot more. What's the word? Is not consistent. It's not aligned. But the gap anyway, between those who have applied and those who first were admitted and then ultimately enrolled, seems to be much more narrow. It's interesting.

Is there anything you've identified as to the CSU? I was surprised they're admitted. Maybe not they're enrolled, but that's a decision that gets made as a result of other factors.

But at least being admitted into the University system is fairly high. I think you said 94% of those who apply are admitted into the CSU. Is that accepted into any one of the institutions or institution of first choice? What are you tracking here?

In that chart you're referencing it refers to accepted to at least one of the CSU campuses. So system acceptance. The chart beneath that, attempts to break down trends by campus, though, because there are 23 campuses, we've collapsed some of the data.

We are seeing that as of fall 2022, about half of CSU's campuses, 12 out of the 23, had admission rates of 90% or higher. But there are also campuses that have lower admission rates, including some campuses where programs are impacted, meaning they are turning away students who meet system wide eligibility criteria.

Okay, the other thing that I see an increase in that you didn't really focus on, but it's the large share of undergraduates from the higher economic impact Stratas that you've outlined on page 10. Households with incomes of 185,000 or more growing since 2006, which is a data point that you identified.

We also acknowledge there's been a growth for those under 31,000, but certainly now it seems like a larger gap exists between the lower income household versus a higher income household.

That gap continues to grow, and then the middle income, I'll call the middle income as depicted here, seem to actually be dropping the percentage of this is now actual enrolled undergraduates at the campuses. Okay, I think I'll have other questions more specific on all the other panels, but I'll see Mr. Fong has some questions.

Thank you so much, Mr. Chair and thank you for the presentation here today. A couple of quick questions on Community College Enrollment. I saw that on one of the charts that on page 18 that online instruction is still very high above pre pandemic levels. Do we have an accurate number? Is that 50% or what is that status right now across the community college system.

As of the most recent year shown in this figure? Yes, that does look like about 50% of instruction is being delivered through distance education at the community colleges.

And that's for 2021, or is that up until this last academic year?

Yeah.

Jennifer Pacella, Legislative Analyst's Office I think it's extending all the way through 22-23. I don't need to punt, but that might be something you want to revisit when you get to the college folks, our community college colleague is in the room, so you could get an update in fall of 23 the percentage of courses that are still being offered online.

You can see this, that the colleges of all three segments, even before the pandemic, were doing the largest share of their instruction online. But you can obviously see it increased steeply during the pandemic years and remained there for a couple of years before starting to fall.

Now, as you talk to all of the segments, they are suggesting they're not going to fall back to where they used to be because we sort of live in a new normal. Well, online instruction will remain more common, and the colleges are trying a variety of strategies between hybrid and high flex that incorporate online components.

So it's still a high level historically well above the pre pandemic level, whether we're talking fall 22 or fall 23.

Thank you.

Thank you very much. We'll move on to our next panel. Issue number two is the UC enrollment update and proposal. We will discuss, obviously, UC enrollment issues at greater length here and more details. We have Gabriela Chavez, Department of Finance, Ian Klein from Legislative Analyst Office, and Seija Virtanen at the UC Office of the President will be our panelists today. So if we can start in that order, with Department of Finance. Thank you.

Thank you. Good afternoon, Chair Alvarez and members Gabriela Chavez with the Department of Finance. The Governor's Budget reflects the third year of the multi-year comeback with the University of California. And despite the state's current fiscal condition, the administration remains committed to the shared goals of increasing access to the University of California and improving student access.

To address the projected budget shortfall, the Governor's Budget proposes a onetime deferral for the plan 227.8 million ongoing general fund increase in 2024-25 as part of the multiyear compact investment and the planned investment of 31 million ongoing general fund in 2024-25 to offset revenue reductions associated with the replacement of 902 nonresident undergraduate students. The administration expects the University of California to continue making progress towards the compact goals, including growing enrollment by 1% each year during the duration of the compact.

Happy to answer any questions you may have.

Thank you very much. Ian Klein with the LAO. Members, we would like to discuss three issues with respect to UC's enrollment. First, the 22-23 budget act set an undergraduate resident enrollment target for UC of 203,661 full-time equivalent students by 23-24. UC currently estimates that they will fall short of meeting this goal. While the enrollment numbers won't be finalized until later this year, we recommend scooping any unearned funds as part of the 25-26 budget cycle once those numbers are finalized.

Second, we recommend holding the enrollment target flat at the 22-23 Budget Act level for 2024-25 and 25-26. Both the administration and UC expect enrollment growth for the budget year. Despite no base augmentation being provided as part of the Governor's Budget, it is expected that UC will cover the cost of enrolling these additional students for that year. We acknowledge that there is strong demand to attend UC in General and at several campuses in particular.

However, there are a few factors that have impacted UC meeting their enrollment targets. Several campuses needed to go further into their waitlist later in the application cycle, which resulted in some campuses missing their enrollment targets.

As you heard earlier, with respect to demographic changes, both the number of California high school graduates and the California college-age population are declining and are expected to continue to decline moving into the future, which, all things considered, which would result in a smaller pool of applicants that would go to UC. Additionally, first-year retention rates recently declined for three consecutive years from 2019 through 2021, which also impacts total enrollment levels.

Given these factors, and in light of the state's budget outlook, we recommend holding the undergraduate enrollment target flat. Lastly, UC continues to implement the nonresident reduction plan at the Berkeley, Los Angeles, and San Diego campuses. Maintaining the nonresident reduction plan would come at a cost of 31 million. The administration did not provide funds for this purpose in the Governor's Budget.

Given that student demand is so strong at these three campuses, the legislature may request UC use a portion of their uncommitted reserves, which currently totals roughly $238,000,000, to continue implementing this plan. While using reserves for ongoing enrollment costs is not sustainable over many years, this action could be considered on a temporary basis given that the nonresident reduction plan had been such a high legislative priority. I'll conclude my remarks there, but I'm happy to provide additional input where needed.

Thank you.

Thank you Chair Alvarez and members of the committee for having me here today. I'm Seija Virtanen for the University of California. I'm very happy to share with you that for fall of 2023, the University of California enrolled our largest-ever entering class of California undergraduates. In the fall, UC campuses enrolled 59,810 first-time entering California undergraduates. For the 2023-24 year, the university estimates that we will have an enrollment of over 202,000 California undergraduates.

This increase in access for California students has been due to the deliberate investments made by the legislature and the Governor in the university. In the last decade, the state has provided annual funding for increasing access for California's undergraduates and during this time, UC campuses grew California undergraduates enrollment by over 29,000 students. This includes growth at UC Merced, but it also far surpasses a single campus and reflects real expansion of opportunity for California's undergraduates. With the legislature's future investments in the university, we can continue to grow.

The university appreciates the strong partnership with the Governor and we request the legislature support the proposed deferral of the compact funding to continue offer access to quality education. The proposed deferred funding would support an additional 1% growth in California undergraduates and the replacement of 902 nonresident students with California undergraduates. In addition, the deferred funding will support necessarily existing core operating costs for our campuses, including instruction and student services.

For the 2024-25 year, we intend to continue to grow California undergraduate enrollment at all of our undergraduate campuses to meet the compact growth and will continue to replace nonresident enrollment at Berkeley, Los Angeles, and San Diego campuses. The university continues to decrease the number of nonresident students. This fall, we enrolled the smallest number of nonresident students since the fall of 2017, with a three-year decline leading to a systemwide nonresident share of 16.6%, all thanks to state support.

The compact enrollment growth of 202425 will be 2927 FDE California undergraduates. In addition to that enrollment growth, the university intends to grow enrollment to ensure that any shortfall to the 2023-24 funded target is made up next year. However, we might still meet the 2023-24 target without the additional enrollment next year. This is because the legislature funds the University's enrollment growth on an annual full-time equivalent, or FTE, student basis.

The FTE is based on the number of student course credit hours taken and continues to change through the spring term so far this year. The preliminary numbers of course taking for the current academic year are encouraging in that the student course credit hours taken have increased from the last year. We request that no reversion option be exercised on the UC enrollment growth funds this spring because the full-year FTE will not be final.

I also want to mention that the university has aspirations to grow our graduate health sciences programs to address current inequities in the state, the university is requesting 3.5 million in ongoing funds to establish and support enrollment growth of two new health sciences programs modeled after the UC Programs in Medical Education, or PRIME. These new programs would expand an innovative training curriculum focusing on addressing healthcare workforce shortages and meeting the needs of California's underserved populations in dentistry and pharmaceutical care.

We're also requesting $800,000 for the DVM serve, which will prepare highly motivated, socially conscious leaders to expand access to veterinary care in underserved areas. The University of California's goal continues to be to offer additional opportunities to California's future college students. As part of our 2030 capacity plan, we intend to grow enrollment by at least 23,000 students between 2020 and 2030 in order to help California meet the needs for a highly skilled workforce and to provide our students with the opportunity to reach their aspirations.

Thank you for your time today.

Thank you. Thank you all three for your presentations. Appreciate that. I think I'll start and then certainly let my colleagues jump in here. Certainly the numbers presented by UC for fall enrollment appear to be an improvement from previous years. However, the data that LAO has presented us with and that is in the staff report for this agenda. I was just looking at one table in particular. If you don't look at UC Merced, because that was not a campus that was online in 2002.

In the last 20 years, roughly almost every campus, Los Angeles, Berkeley, Irvine, San Diego, Santa Barbara, almost Davis and Santa Cruz, have all cut California resident freshman enrollments by more than 50%. I think you've heard about this multiple times from the legislature, that this is a concern, that continues to be a concern.

And so then you couple with that, that at least currently the data available to us, the estimate is that there'll be about 1400 under-enrollment of California residents undergraduates in the UC compared to what was budgeted in the 23-24 budget. I heard you state that there might be additional FTEs counted at some point, but those two continue to be really concerning. You've probably heard me state that to President Drake at our first hearing about this.

And so I still haven't really heard a response as to how we're going to outside of requesting more money in a year where we don't have the money to provide. And we'll talk about money and the cost of doing this program in a second. What are the other commitments to ensure that more Californians that we revert to the positive trend of everybody was at least 25% from LA on to every campus were California residents only 20 years ago.

LA is now at 9%, or was a couple of years ago, I think it's growing. Berkeley 14%. We know about those two in San Diego. There's this agreement to try to reach a certain level, but we have the same concern with all the other campus throughout the state. So I'd like to hear what the conversations are about making sure that more Californians are actually attending our UC system schools.

Thank you for that question, Chair Alvarez. We have found that during the last two decades, far more California high school students have become eligible through the A through G requirements to apply to UC and CSU, which is why we've seen, in part, that rapid increase in the number of applications to the UC system. It used to be that not that many high schoolers actually completed all of those A through G criteria. Now there are far more high schoolers who are eligible to apply to UC.

In terms of trying to offer more access without a great deal of increasing cost. It does cost money to educate more students. We have to hire the instructors. We need student services.

I'm going to interrupt you. It's not about more students, about more California students.

Oh, that's right.

Which does not require more instructors.

We still want to hire instructors for the California students as well. We are looking at expanding online programs. So that is a serious discussion. While we saw a brief decline of those online courses after the pandemic, they are being reviewed by our Academic Senate in order to increase the number of online courses that are available permanently.

If we can offer more online courses during the summer especially, and we can increase throughput of students so that more students are graduating in four years, we can then admit another student to replace that student.

Right now we have a lot of students that are graduating in four and a half years or five years, and we are trying to shorten that time to graduation because once the student graduates, we can then admit a new student to replace them, and that will increase the number of students who have an opportunity to attend the university. We're also looking at, oh, go ahead.

The question that comes to mind when you respond with that is that all the campuses have grown in terms of enrollment. There's been more slots, if you will, for students over the last two decades. But the share, the proportionate share from California students has not at all kept up with that. So there has been more slots available, and they have not gone to Californians. They've gone to out-of-state students. That's what I'm trying to get to with this question.

All right. So during the Great Recession, the state lost a tremendous amount of money, and the state cut the university's budget by over $1.0 billion because that was a tremendous loss of funding, in order to continue to be able to support our base budget, the university increased nonresident enrollment. As you all know, nonresidents pay the university tuition, but they also pay an additional fee called nonresident supplemental tuition that supports the university's base budget.

Today, our nonresident population pays the university about $1.1 billion in nonresident supplemental tuition alone that goes to support our core campus operations. Those funds, we are looking for ways to replace them so that we would no longer have that necessary dependence on nonresident supplemental tuition. That is the conversation we have started, and the legislature has been willing to fund the replacement of those nonresident students. So in order for us to continue on that route.

Of replacing the nonresident students, we would need money to do so. Currently, each nonresident student that is enrolled supports themselves and 1.8 California resident students through all those fees that they pay that $1.1 billion in the campus based budgets.

If we were to remove those funds, it would be catastrophic for our campuses. It would mean massive layoffs. It would mean ends to student service.

And I don't think there's any interest in you removing those funds. In fact, I think there's interest in you achieving more revenue through those funds so that more Californians can actually participate in the youth system. But I appreciate your honest response to why this is a fiscal decision you made.

You needed more money and you could charge out of state students more money, and that's how you're making the revenue in order to be able to sustain your operations. That's a very honest response.

And so going forward, that's probably the model that you need to look at. If there's going to be demand for increased expenses of any kind, that's likely where you'll have to find that in a year like this one, where we do not have the type of revenue that we've had, particularly over the last several years in order to accomplish that.

And that takes me to the. I have to express my opinion on this now on the cost of roughly. Let me ask first clarifying question.

The 902 roughly slots which we, California's General Fund supplants for what otherwise would have been transfer students that you would have been getting revenue for to help with your operations, is now coming out of the General Fund to the tune of $31 million a year. Is a 900 number an FTE number, or is that a headcount number? Are we having 902 more students or are we just having 902 more FTE equivalent students?

You're having actually more than 902 headcount students because we are replacing more than the required amount. We do have a general FTE conversion ratio for our campuses based on the average amount of student credit hours students take that we then use to convert the headcount to FTE to make certain that both numbers are at least above 902. But we have been replacing more than 902 students a year.

Okay, thank you. So that brings me to the last set of questions here on this, and it has to do with the cost. And again, I was earlier saying, my thoughts on this is at a cost of $31 million per year, over the course of five years, we will be paying 155 million. That's the math, 31 times 5, in order to get roughly 5,000 more students into the UC system?

That's correct, sir.

So I think that's just an important fact for our committee to understand. That's what that cost, reminding you that things like Cal Grant Reform is roughly in that ballpark, and we're talking about well over 100,000 students as opposed to 5,000 students here. So about the choices we need to make, and we need to understand what that all means.

What would happen if you were not to, I asked this question to the President Drake, so I'm sure you're prepared to answer this today if you did not receive the $31 million augmentation for this particular program in the next three years.

If we did not receive augmentation, we'd have a conversation with the Legislature about next steps. We might have to go back and readmit 902 nonresidents. Other options that remain available to the regents are increasing nonresident supplemental tuition on the existing students so as not to readmit any nonresidents, but to continue higher revenues.

Other options are budget cuts to the University as well. There can be a conversation about the level of services being provided on our campuses and the future cost we might be thinking about taking on or which cuts need to be made.

Okay. Thank you very much for answering those questions, Mr. Fong.

Thank you so much, Mr. Chair. And just to follow up on the Chairman's comments as well, when we look at page five of the report, it says for UC Berkeley, 22.1% nonresident, UC Los Angeles, 20.4%. And I know the goal is to get to 18% out of undergraduates. San Diego is 19.8. With the additional enrollment of 902 nonresident students. I mean, 902 Californians each year above and beyond that.

But I think we still need to continue to move the needle to emit more Californians into the most selective campuses.

And with the funds at the Legislature, the $31 million each year from the General Fund, how do you see the progress happening if the Fund of the $31 million is to be allocated to continue to meet the goal to get to 18%, because it seems that especially for UC Berkeley and UCLA, to get to that 18% is going to require the admission of a much higher percentage of Californians.

We do intend to continue to grow the enrollment of California students, hopefully above just the replacement of the nonresident students. Some factors that can influence the campus's ability to take on new enrollment are things like their classroom capacity for example, UC San Diego is currently getting very close.

They're now at their regular classrooms at over 100% utilization, which means that they have to build new classroom buildings or slow down overall enrollment increases. Santa Cruz is in the same position as well.

We have some majors as well that are impacted by the classroom utilization. Our instructional laboratories at several of our campuses are now at over 100% utilization, which means that STEM fields at those campuses will have trouble growing.

So we need to focus on building new classroom and research capacity at our most in demand campuses to make certain that we can offer students spaces. We will also want to focus on innovative programs that provide new room on the campuses.

For example, UC Berkeley is now offering the StartAbroad, which is a way to have freshmen students do an education abroad year as a start and then arrive at the campus for their sophomore year, which then allows the campus to enroll a bit more students while simultaneously having more room.

Like I said before, we're looking at increasing the throughput of students by getting graduation rates down to that four year mark, utilizing summer session and online courses as well. So those are some ways that we can increase the number of enrollment at our most in demand campuses. But construction of new facilities, unfortunately, does have to be in there somewhere.

Thank you. Please.

Ian Klein with the LAO I just wanted to provide some context to that last remark. There, every two years, UC completes a facility utilization report that documents how each campus's classroom and lab space measures up when compared to legislative utilization standards.

My colleague at UC is correct to identify that at San Diego they are currently above utilization capacity with respect to classroom and teaching lab space.

However, at some of the other high demand campuses, namely Berkeley and Los Angeles, they are substantially below that amount, with Berkeley being at only 78% and LA at 67% of legislative capacity for classroom space. And with respect to lab space, Berkeley is at 68% while Los Angeles is at 77%. So while it may be true that the San Diego campus may be experiencing some space pressures, this is not universal for each campus.

Thank you so much for that context. And as a follow up on that question, and this is in the Mercedes district, but the Marymount California University, is that going to add additional capacity for UCLA? Is that part of the facilities calculation here?

Yes. Thank you for that question, Assemblymember Fong. The new satellite campuses will add additional enrollment capacity. There is currently discussion about placing some academic programs at that satellite campus and through that, increasing the capacity of UCLA to enroll new students.

Thank you. And my final question on this panel is I was reading the report and it says that low income. Student enrollment has dropped significantly from 41% in 2014% to 33% in 2023. And Charles Aubrey has highlighted the families earning $185,000 or more.

And in terms of first generation students, the numbers of 42% in 2013 to now 37% in 2022. Why has the UC experienced a loss in low income students? And what can we do to ensure that more low income students and first generation students are admitted and enrolled?

So the University of California takes several steps to ensure that low income and first generation students have an opportunity to attend our campuses. The primary of these is offering admission to the top 9% of each high school that each high school eligible in the local context that participates in a program of those students in the top 9% who apply to UC.

And that way we get high schoolers from all around the state, from various neighborhoods, and everyone has an opportunity to attend UC, even if they are currently attending an LCFF plus high school. The top 9% of those students in that high school have an opportunity to attend UC. So that is one way that we try to get students from all income classes.

In 2022, the Legislature gave us $22 million to expand the safe app programs, which are preparation programs for high schoolers and community college students to attend UC. We are now also including advice on financial aid to all the students who are participating in those safe app programs.

And the funds in 2022 allowed us to double the size of those programs, which has been great. So those are some ways that we are trying actively to recruit low income and underserved students to UC.

One note about the definition of low income here is Pell eligible students, and that is a definition the income level there is set by the Federal Government and it has not really kept pace with inflation and with California's cost of living. So currently, a family with two income earners has to make less than 66,000 a year to be Pell eligible for that student to be Pell eligible.

In California, the median income right now, according to the US Census in 2022 was about 91,000 for a family with two income earners. So the definition of the low income student there is not quite keeping up pace with California's cost of living and salaries being earned here. Another point to make there is that the Pell 0 Expected Family Contribution limit is $29,000 parental income for a single year.

And in California, with our minimum wage, if an individual is working full time, they have one parent working full time for minimum wage. They would not qualify for that. So it's set quite low and it's perhaps not reflective of how the students might feel about their own income level and the family's ability to afford the University's fees and cost of attendance.

We do encourage all of our students to fill out the FAFSA because it is necessary to get the Cal grant and to get the University's own institutional aid and scholarships. And the income limits for those are much higher than the Pell eligible.

Thank you. And just emphasize anything that we can do to continue to emit more in state California, especially at the most impacted campuses, demand is super, super high. We hear from our constituents each and every day about this critical issue to expand access for in state residents. Thank you, Mr. Chair.

Thank you. I want to ask clarifying question on the 9%. Is that a guarantee that if you are in the top 9% of every single California public high schooler, you're guaranteed admission into a UC school, not the UC school of your choice?

Yes. With the caveat that if you apply to certain majors, they may already be full. Right. If somebody's applying to the engineering major at UCLA or Berkeley, which are extremely selective and high demand, they might not get in even if they're in the top 9% of their class.

So definitely a caveat of perhaps why some students are not from certain backgrounds, not getting into our schools. The other thing I'd just like to note that we need to be cognizant of is that a kid in San Diego who comes from a lower income family such as myself may not want to or believe you can afford to leave your own hometown to attend a school.

And therefore, because I know that the admissions policies is not admitted into any campus or your home campus, but it's to a campus, whatever is available. And so you might be losing some kids if that's the way that those decisions are made. Something just to note from students that my wife works on a daily basis with first generation kids and this is the challenges that they face.

I just wanted to also note for you to bring back to the office of the President in terms of UC San Diego with the capacity issues we have over many years in San Diego, attempted to interest UCSD into our Chula Vista expansion opportunities.

Your chancellor down in San Diego, Chancellor Casla, knows pretty well about this. We've talked to him. And so there's opportunities for growth in San Diego. It doesn't have to be on main campus.

As you stated earlier, you're looking for online programs in different ways. I'm telling you here and now, there's opportunities in Chula Vista to do that. And so hopefully that's something that you take advantage of, but I'll turn it over to Mr. Muratsuchi.

Thank you very much, Mr. Chair. So, Ms. Burton, I've been on this Committee for a number of years, and I've been beating on this drum of admitting more California residents ever since I've been on this committee.

And I appreciate the chair, both chairs the chair of this budget subcommittee and the chair of our Higher Education Committee, highlighting this important priority for California students. So I recently met a constituent who graduated with a 4.67 GPA. She took 12 AP courses. She was the varsity captain of.

I forget which activity it was, but I know she was a varsity captain. And she applied for political science at the four most competitive UC campuses, and she got rejected at every single one of those four campuses. We heard you basically say that. we are setting aside at least about one out of five of every seat at those campuses for non California residents. What would you tell the student in terms of why she can't know the University of California campus of her dreams?

That sounds like a really awful thing for her to go through. And I don't know why exactly her application was not accepted. The, in terms of the number of seats available, nonresident supplemental tuition is now necessary to allow us to pay for campus staff and faculty who teach our resident students as well.

The amount of money that we're getting, over $1.0 billion, is used as part of the base budget of the campuses and helps to cover, essentially the state chair for 1.8 California students.

I understand you previously explained why, coming out of the Great Recession, the University of California, the Legislature had to dramatically cut the University of California funding during the Great Recession. In my opinion, the Legislature should be funding more to support our public higher education system, the world's best public higher education system. But I just want to bring home to you, we're not just talking about budget numbers, we're talking about people with.

As a parent of a high school student, just a freshman at this point, just starting off, but I can appreciate how hard that young woman had to work to get the 4.67 GPA with the 12 AP courses and all of the activities that she had to do. She did everything that she possibly, that she knew she had to do, and still yet her dream of attending University of California, I forgot to add, she's now attending a out of state public university.

So I just wanted to humanize, get beyond just the budget numbers to remind ourselves that we're not just talking about dollars and budgets, but we're talking about our California kids that are dreaming to go to a University of California of their campus, of their dream. My next question is, if it is about the dollars and budgets, then what about the option of increasing, further increasing out of state tuition?

That option remains on the table. To increase non resident tuition is a choice by the UC regents, and it has come up. Currently, the regions are operating with the tuition stability plan, which is increasing tuition, student services fee, and nonresident supplemental tuition by 5% per year. For the tuition and student services fee.

It's only increased when the student first enrolls at UC and then kept flat for six years so that California resident students would have that stability in their fees and not see big increases just because the University's financial situation might change. But for the non resident supplemental tuition, that is a choice by the UC region state could make.

If I may return to the original point, I do want to highlight that President Drake is very aware of these opportunities and personal stories of students, and because of that, really wants to continue to increase enrollment this coming year.

And also beyond that, the intent of the 2030 capacity plan, which would increase our enrollment between 23,000 students and 33,000 students, is intended to start providing additional opportunities so that we don't turn away highly qualified, aspiring California students.

All right. Last for this panel, the less set of analysts raised the option of tapping into the Unrestricted Reserve of, I think I heard, $238 million.

The UC campuses currently, as of June 30, had unrestricted reserves of $238 million. That equates to about nine days of cash on hand for our campuses in unrestricted funds. The amount of money varies by campus, so some campuses have more available than others.

We would prefer not to use one time reserves for the purpose of enrollment growth because that's an ongoing cost and the money is only there on a one time basis, but it is technically an option.

Okay. I should have raised the example of my constituent with President Drake as a member of the regions, but I would just ask that you convey, hopefully some regents are watching this hearing, listening to this hearing, to remind them of the real stories that we hear from our constituents. California kids wanting to go to the University of California. Thank you.

Thank you. Mr. Muratsuchi. I'm going to ask you to go back and get us more information. I did some very rough math. Get used to it. I do this a lot when I'm at committees, and there was 20,000. This is roughly numbers Mr. Muratsuchi you can check my math. 20,000 nonresidents in the 2324 current school year at a cost of 31 million, divided into which is the cost of accepting more Californians that we are paying out of our budget. 31 million.

That would be a $1,500 tuition increase to nonresidents on an annual basis. For a $1,500 increase to nonresidents, we can guarantee 1000 more Californians every single year without General Fund supplanting them. That is less than a 5% increase of what your tuition fees are now.

I would ask that you go back and come back and be prepared at a future hearing to more thoroughly address question Mr. Muratsuchi asked about why not that being the option in order to increase more Californians.

And if we can't get that in the series of budget hearings, then perhaps we should consider having a special hearing specifically on this issue of out of state resident tuition fees and what can be done to ensure that more Californians have access and certainly other ways that we can be supportive to your mission of serving as many Californians as possible.

So I'd ask that we do that and we'll hold this issue open and we'll further discuss that in the future. Thank you all. I appreciate your time and your responses to the questions. We will now move on to the CSU enrollment update. We have Department of Finance, Legislative Analyst Office, and the California State University system here.

So we will start with the Department of Finance. First we'll hear your report on the proposal for this budget year, and then we'll continue with the Lao and then CSU. Thank you. Go ahead.

Good afternoon. Is this on? Good afternoon, Mr. Chair and Assemblymember Muratsuchi. Devin Mitchell with the Department of Finance. I'll keep this relatively brief given that the Governor's Budget proposal for the California State University will be discussed at a future subcommittee hearing, as I understand it.

The Administration expects the CSU to continue making progress towards the system's goal of 1% annual enrollment growth during each year of the multiyear compact agreement.

The compact also specifies this enrollment increase must maintain, at a minimum, a share of new undergraduate transfer student enrollments that is consistent with existing admissions practices for new undergraduate enrollments.

Enrollment growth, among other shared priorities, is supported by annual 5% General Fund base increases, with the caveat that due to the budget shortfall this year, the 2024-25 base increase has been deferred to 2025-26. Thank you, and I'll let others on the panel speak and can answer questions at the appropriate time.

Thank you.

Thank you.

Thank you. Lisa Qing with the LAO. I'll comment on two aspects of CSU's enrollment first, its current year enrollment growth, and then next, how its actual enrollment level compares to its historical funded level.

Regarding current year enrollment growth, the 2023 Budget Act set forth an expectation for CSU to add 4057 resident full time equivalent undergraduate students this year compared to the actual enrollment level last year. CSU estimates it is on track to meet and perhaps somewhat exceed this target.

The increase, however, is largely attributable to a change in the summer term. Historically, many of CSU's summer courses were self supported, meaning that the instructional costs were covered through course fees and not state General Fund, and students enrolled in these courses did not count toward the state's enrollment targets.

Last summer, CSU converted a number of its self supported courses to state supported, meaning that the students in those courses newly count toward the state enrollment targets.

We don't think that this approach to enrollment growth likely aligns with the Legislature's intent because it doesn't add new students, it really just reclassifies the courses they're enrolled in. For another way to look at current year enrollment growth, you could look at fall trends in 2023 compared to last year, and when we looked at those numbers, we saw that full time equivalent students were roughly flat and headcount was down slightly.

Next, I wanted to turn to looking at CSU's actual enrollment level compared to its funded level. In your agenda, on page 13, there's a chart that shows this comparison over the past decade. The bars in this chart show CSU's actual enrollment level, while the line shows its target enrollment, also sometimes known as its funded level.

This funded target is a number that CSU has tracked for many years, reflecting the students for which it's received state funding to add over those years.

For much of the past decade, CSU's actual enrollment level exceeded its target enrollment. But that story changed in the last few years as a result of the enrollment declines it's experienced since the start of the pandemic. And as of the current year 2023-24 CSU's actual enrollment level is estimated to be about 19,000 full time equivalent students below its target level, or about 5% below.

So, as you've heard from the Department of Finance, the governor's expectation is that CSU's funded target grow by another 1% in 2024-25 with the funds coming from whatever means CSU chooses to address the deferred base increase. We don't think that this approach is warranted, given that CSU is below its existing enrollment target.

We don't think that there is a need for further grow that target for 2024-25 and we recommend instead holding the target flat. In the coming months where the state budget condition to continue to deteriorate and the Legislature finds itself in need of additional budget solution. It could also consider lowering CSU's funded target to better align with its actual enrollment level. Thank you.

Happy to take questions.

Thank you.

Good afternoon. My name is Nathan Evans. I serve as deputy vice chancellor and chief academic officer for the California State University. Chair Alvarez and Subcommittee Members, thank you for the opportunity to speak with you today. I am pleased to report that the CSU is incrementally closing the gap toward the state's enrollment target.

Contrary to some recent stories which focused on CSU enrollment outcomes during the pandemic, enrollment for the current college year 23-24 has increased by 2%, more than 7,500 FTS students over last college year.

This was achieved through intentional work to retain and support continuing students, returning to higher unit loads, retaining students during summer sessions, and reengaging students who stopped out for a term. And proudly, the CSU enrolled the largest freshman class of California residents in the CSU's history, more than 64,000 Californians last fall.

That class mirrors the diversity of California today. 56% of those new students identify as Latino, and half of those students will be the first in their family to earn a college degree.

I would share that after enrolling more California residents than funded by the state for a decade between 2011 and 2022, between 3 to 6% above the system target during that period, and you can see that enrollment trend on page 14 of the agenda.

However, the impacts of the pandemic disrupted that over enrollment trajectory, but the CSU system and campuses have responded intentionally for both the short term and long term undergraduate applications for fall 2024 have increased over the prior year. First time freshman applications are up by 5% and transfer applications, despite, as we've heard, sustained declines in community college enrollment, are now up by 1%.

We looked forward to sustaining this positive momentum by yielding and welcoming those admitted students this fall, in consultation with our University presidents, we recently laid the groundwork for implementing a multi year enrollment and budget reallocation plan that will better align CSU resources with current student demand by campus. We've augmented statewide recruitment through a targeted enrollment marketing contract in digital advertising.

We've partnered with the LA Unified School District to better support schools with low college going rates, and we're exploring opportunities for similar partnerships across the state. Earlier this month, the Lumina foundation awarded the CSU one of eight awards in the nation as part of the grade admissions redesign.

The CSU will be redesigning the online application to allow campuses, using the state's new cradle to career data system and in partnership with local school districts, to directly admit all CSU eligible applicants in a school or a district without students initiating an application.

This strategy is particularly of interest to a number of our campuses in Northern California, which have seen multiyear declines in enrollment tied to population changes in their region.

And to bolster transfer enrollment, last summer, the CSU launched our transfer Success pathway, building on 2021 legislation offering students dual admission to a community college in the CSU simultaneously. This gives us the opportunity to reach out and engage students earlier in their journey to a four year degree.

I share these examples as a way to show our system and our universities are continuing to place strong focus on strategic enrollment planning well into the future. I thank you again for the opportunity to speak.

I welcome any questions at the close of this panel. I also want to acknowledge my colleague, assistant vice chancellor for budget Ryan Storm, for any questions that are budget specific. Thank you.

Thank you very much to all three of you. I'd like to start with trying to maybe get on the same page as it relates to target enrollment and how we count students, because I think that's a little bit of a there's maybe a disconnect.

The LAO talks about the meeting or maybe the growth, if you will, of FTEs as a result of the state support becoming state supported versus self supported coursework in the summer, maybe to the system. Is that in fact what happened during the summer of I guess this would have been last summer you began to offer more state supported is it coursework to students or why?

That you can see for yourself figure nine there, the tremendous shift in complete, almost flip for more state supported FTE students to self supported. What change occurred in the system?

So each individual campus actually determines how they handle summer enrollment during periods at which, as I described the decade before in which the CSU as a whole was exceeding its enrollment target, the state's funded enrollment target between 2011 and 2022, campuses basically spread that FTE predominantly across the academic year, which would be fall and spring. So the finite amount of a target has been spread across those two terms.

Some campuses, including San Diego, San Francisco, and most recently San Luis Obispo, had begun using summer as a state regular state supported term or offering state supported courses so that they could help students stay on a trajectory to a faster time to degree. A difference between summer state support and self support are it's a different typically cadre of students.

Students that are paying and attending in self support courses are paying the full cost of that attendance, that registration, versus when a section or a course section can be offered through state support. Students have access to financial aid, institutional and federal to often pay for that.

So it was an intentional choice by some of our campuses. Beginning in summer 23, some that, as we've described, and you see in the data, have now seen sustained decline.

So some of it was a more strategic decision to try to provide opportunities throughout the year to attract enrollment on other campuses that are at their targets and in many cases still exceeding. It was a way for them to help students continue to accelerate to time to degree. So we still have about half campuses that are currently operating in self support, but it has been a campus by campus.

But just to be really clear, so some did switch to more of the state support.

Yes.

Got it. Okay. And then when it comes to the actual number and how you count, maybe LAO can jump in here first. In your opening comments, you mentioned, or the comments just now, you mentioned that the targets might not align to legislative targets. But I'm trying to understand, and I asked this question in the previous panel, are we counting headcount or we're using FTE as a way to measure, and I think we just have to be consistent.

And so I'd like to get maybe some historical perspective on how that's been measured.

Sure. So both the budget act targets and the historical funded targets are in full time equivalent student counts. So FTE counts. There is also data available on a headcount basis by term.

Okay. But then in terms of hitting, now that we've established that it's measuring this on FTE basis, in terms of hitting the target, I kind of heard two different things CSU said. You're either really close or you are hitting the target.

I think I heard. But the data that we have here from figure eight shows the target enrollment by at least 10-15 thousand here was not hit or is not being currently hit in the 23-24 year.

Yes, I think I understand the question now. So the figure that's on page 13 of your agenda, that line tracks the target enrollment as the historical number of students that the state has funded over time. So in most years in the budget, the state will add a certain number of students, and that line is essentially a running total of those growth targets. Separate from that line, last year in the 2023 Budget act, the state set an expectation that CSU add 4,057 resident undergraduate students.

Those 4,000 students were added not to this line in the chart, but rather to CSU's actual enrollment level in 2022-23 which was a lower number. Moreover, those 4,000 students and the baseline they were added to, that's specific to undergraduates, so it doesn't capture CSU's graduate students.

So all that's to say the target that was set in the 2023 Budget Act is not directly connected to the line that you're seeing in this figure. And to complicate this story, CSU does appear to be on track to meet the 2023 Budget Act expectation, but remains well below the line in the figure.

Okay, so it's meeting the budgeted. I want to again compare the previous panel we talked about what was budgeted for UC and the FTEs. What you're telling me now here for the CSU system, budgeted and actual FTEs are aligning.

The actual FTEs are estimated to meet the target that was set in the 2023 Budget act, but not the historical funded level that is shown in this figure. So there are two different ways to look at budgeted enrollment at CSU. Unfortunately.

Maybe someone else can help me on that question. Unless you have anything else to add.

Maybe to add to Ms. Qing's point. Yeah. So the CSU does anticipate, while we still are, as the UC described, getting our final spring numbers, we expect to meet the additional enrollment target that was built into the 23 budget.

To Ms. Qing's point as well. We will still be below that rising line, and that gap has narrowed as we've been able to grow, but we will be below that overarching line. But we've met the one year enrollment target.

Okay, let me, before I turn it over, ask about the very glaring issue of the vast majority of campuses declining in enrollment in, we're talking double digits in most instances.

I heard you mention, and I had heard this prior, that the system is going or has implemented or is implementing or somewhere a different funding mechanism to ensure that campuses that have that growth in enrollment have the resources to absorb that growth, while campuses that are seeing substantial decrease will see the, I don't know if it's the equivalent decrease, but certainly a decrease in their allocations from the system.

In one way, in my opinion, it's good to ensure that the campuses that are in high demand are receiving supports to accept those students, if students want to go there. If I'm being a good Californian, we want to make sure that throughout the state, we have a system that works for people who live in different parts of the state. So that's a little bit concerning to see, literally 20-32%, as you see here on the agenda, double digits up and down.

And I'm not so concerned with the single digits. I think that those will probably eventually balance out. But what specifically initiatives are being taken to ensure that these campuses throughout the state are becoming more, either more attractive or what's the research telling you as to why the numbers have decreased so significantly?

No, I appreciate the question, and it's certainly one that we're wrestling with and have been wrestling with at a system and an individual campus level. I think there are two ways that we are strategically addressing that.

One I spoke to and you referenced, which was, is the actual internal reallocation of enrollment targets from some of those campuses that have seen sustained declines that are largely predicated on population and enrollment declines in those regions. So, for example, many of them do track in Northern California, either rural areas or high cost areas like the Bay Area.

Particular areas of the Bay Area, not the Bay Area in its entirety, but the peninsula, for example, and San Francisco state has seen now a sustained decline over a period of years and are going through a process of really recognizing that given the changes in demography in their area, there are fewer households, family households with traditional college age children, given the high cost, and they're responding to that. And that's happening in other campuses as well.

So at the system level, what we have done is in working collectively. It's not just being imposed, but in association and engagement with those campus leaders looked at a multi year plan to remove those enrollment targets from some of those campuses and transition that to areas of the state and campuses that see continued sustained enrollment, because the reality is there is funding tied to FTEs at some of those campuses with significant declines for FTEs enrollments, real enrollments that they don't have.

And so it's to do it over a multi year period. That's why, while we understand the complexity of a multi year budget compact and the challenges that that presents, it does allow that to be built in over a multi year period. We're not going to pull the rug out from any institution. And so it was initially a three year, 5% step down for those campuses. There are eight campuses that are currently in that category.

And so what has happened is we've also recognized that even since initially developing that plan more than a year ago, that the fiscal pressures have continued to change at the state level and institutionally, as inflation has impacted cost. We have new bargaining agreements that campuses are trying to navigate, and so that's been reduced to a 3% enrollment target reduction in this first year.

As we go into next year, that will be redistributed to nine campuses that are continuing to see sustained demand.

So that's the internal mechanism that FTE target and associated per FTE funding is being moved on. Another way of addressing it is at the system level in terms of I mentioned aspects of marketing, recruitment, partnerships, new programs to engage and reengage students that left, particularly during the pandemic.

Programs like our Second Start program, which is bringing back students that have now been out for several terms to invite them back, no application fee to be reintegrated and be able to mitigate perhaps academic challenges that they face during the pandemic.

So those are the types of sort of system initiatives that we're employing on multiple campuses to also reengage returning students as well as invest in marketing and partnerships with our K -2 partners and others.

Well, I'll definitely follow up and would like to see more information specifically on, I believe it was Humboldt, where there's a substantial investment in those efforts, but just system wide. And then also, and maybe I'll get back to this after my colleagues ask some questions.

We've noted in the agenda, San Luis Obispo in San Diego and the growth of out of state students definitely don't want to be having the same conversation we've had with UC with you on an ongoing basis. And so I think we might ask more questions about that. But I'll turn it over first to Mr. Fong.

Thank you so much, Mr. Chair. And on that note, actually, that leads up to my question. It was on the non resident international student enrollment for Cal Poly San Luis Obispo and San Diego. I read in a report, too, that there was a policy that said 15% cap on nonresident students, but now Cal Poly slow, according to the stats, is 17% and as high as 17.4% in 2021-2022.

I've heard from my colleagues who represent there, and I speak for them, but that area is very impacted in terms of student enrollment and students Californians that want to go to those respective campuses, but especially Cal Poly SLO, what is the plan there to really make sure that we're expanding opportunity at Cal Poly SLO?

Is there going to be a plan to really try to limit non resident enrollment or international student enrollment at those two particular campuses?

No. I appreciate the question and can certainly spend more time on this, either today or in future opportunities with Cal Poly San Luis Obispo.

Specifically, as it references in the document, in addition to base resident enrollment, tuition and non resident tuition that those students from out of state or internationally would pay, Cal Poly San Luis Obispo undertook a pilot project, a campus based student opportunity fee, non residents opportunity fee, where those students, in addition to the base tuition and non resident tuition, also pay a campus based fee as a non resident student that has been invested into their campus based financial aid for California residents.

As part of that, as was detailed in here, there was an agreement to sustain enrollment, nonresident enrollment, at a 15% cap. As you noted during the pandemic, it did exceed that which, as we've talked about in a variety of spaces, predicting enrollment patterns during the pandemic became very difficult. The campus has self regulated with our engagement and is beginning to bring that back down.

One of the other things that they have laid out is a multi year growth plan for California residents while they are able and planning to keep and sustain a consistent level of non resident enrollment.

And so, while again acknowledging the complexities of a multi year budget compact, part of that has allowed us to plan what we would be able to incrementally invest in them in resident enrollment growth over the balance of the compact.

So that has been an ongoing conversation and engagement with Cal Poly San Luis Obispo. And as I said, they have recognized and are working to self regulate that back down to that internal agreed point.

Thank you. And then, in terms of the chart that really showed a number of campuses in double digit decline, is the opportunity to offer UC, I mean, not UC, doctoral degrees, an opportunity to maybe grow back some of that enrollment. And then secondly, the campuses that are losing their funds, how would they readjust their operations?

No, I appreciate the question. With regard to doctoral programs, those programs will be very small. I mean, our focus is on growth and undergraduate enrollment. And to the point, our conversation earlier about last year's budget that did point specifically to undergraduate student enrollment growth, not graduate.

We do see some opportunities, certainly in doctoral programs, and are pleased to be able to expand those opportunities. We're working through internally right now, what that process will look like and how we provide the appropriate justification and background to launch those programs. But they will be very small.

Our focus will continue to be really on growing our undergraduate programs, both at the freshman and transfer level. With regard to the second portion of your question, each of the campuses, and as I mentioned, there are eight, that are planning for reductions in their enrollment targets.

We have been closely involved in all aspects of their planning, be it enrollment, be it academic program planning, academic offerings. And actually, during the upcoming board of trustees meeting, there'll be a presentation on multicampus efforts to address administrative services where our campuses can more actively share administrative services to address overhead costs.

We're already doing that, for example, in some areas around it, in parking enforcement and dispatch for campus police.

But there are other areas that we're looking at, including a greater use of shared academic programs across campuses. We, for example, right now an undergraduate student on any CSU campus can enroll in an online course at another campus without any additional fees or tuition collected. We currently only have anywhere from 1000 to 1200 students per term availing themselves to that.

So how to more strategically use that to ensure course availability, but also to build a foundation for multicampus programs so that we don't have duplication to the extent possible.

Okay. Thank you so much.

Thank you, Mr. Muratsuchi.

Thank you. So, following on the chair's line of questioning, it's my understanding that the Legislative Analyst is saying that the enrollment growth of CSU statewide is being overstated because basically the students attending summer courses are being reclassified for being self supported to state supported.

But the intent of the Legislature fund enrollment growth was to get more Californians attending the Cal State University. And so would you agree, sir, that contrary to the legislative intent, in fact, we're not seeing more California students attending the California State University statewide?

I would not agree with that contention. With self support programs, there is no differentiation in resident or non resident fees or identifying students when we're looking at state support enrollment in the only, we're only reporting California residents.

And as I mentioned, really, that is a different population of students that are able to access enrollment when it is state supported in the summer, primarily because of financial aid.

So we do not differentiate when enrollment is self support, the type of student or the type of enrollment versus state support enrollment in the summer. Our degree seeking students being able to, in this case, California residents being able to continue their education, where in many cases they would not, because they would not be financially able to individually pay for self support enrollment.

But I'm not making the distinction between California residents and non state residents. I'm going to turn to the last set of analysts in a minute. But again, according to the staff analysis, which is not making that distinction between California residents and non residents, but rather that the majority of the increase in FTE students that Cal State University is reporting is unrelated to adding more students and instead stems from shifting summer courses from self supported to state supported.

So as you indicated, it's just covering the summer enrollment with state dollars instead of the self supported dollars, but it's not actually adding more students, less that of analysts. Am I correct? In my understanding?

Yes, that's a correct understanding of our point. I think it's clearest to see in the chart in your agenda on the top of page 14. This chart shows summer full time equivalent students, resident full time equivalent students split up by state supported in the top row versus self supported in the bottom row.

Between 22-23 and 23-24 there was an almost doubling of state supported summer FTE students, but that was largely offset by a decrease of a similar amount in self supported FTE students.

So that suggests to us that we are on net not seeing much of an increase in summer enrollment, and it has more to do with the reclassification of courses and how they're funded rather than the number of students.

And the lesson of analysts interpretation or position of the enrollment figure seems to be in line with what the staff analysis also points out that the majority of Cal State campuses are below their enrollment targets, several by more than 10%. And it just, I mean, I should have started my comments by saying, you know, first of all, that I'm, I'm a big supporter of Cal State University.

I just had a great visit this morning with the Sacramento State University School of Education, where they are truly leaders in the state and training the next generation of K-12 teachers. We know that Cal State is the backbone of our teacher training and so many of our future workforce education.

And yet it seems like such a stark contrast between our conversation, at least with the most impacted University of California campuses, where our California students can't get into the campuses that they want to attend.

And yet here at California State University, we're having dramatic declines in enrollment. And so I see my colleague from Sacramento walking at a perfect time because I know he's also a big champion of California State University. But it just seems to me know, should we be, I'm going to be a devil's advocate and throw this out there, but should we be meeting our state funding priorities to where the demand is the greatest?

That is that we have kids, California students that can get into the most impacted University of California campuses. And when we're having declining enrollment at California State University campuses, should we be moving away from the 5%, 5% formulas that we have traditionally pursued in terms of the equal treatment for the University of California and the California State University, and allocating more funding to where California students most want to attend? Last set of analysts, do you have any thoughts on that?

It's a reasonable question. If you're seeing different levels of student demand at different segments, there's rationale for potentially funding different levels of growth at the different segments. In addition to the trends you're seeing in student demand, one thing you consider is that instructional costs differ by segment. So the fiscal implications of funding growth at UC versus CSU versus the community colleges are somewhat different as well. And then finally, this is a point that you already understand well, but there is variation within the segments in demand.

And so while CSU on the whole is seeing less robust student demand than UC, there are also some campuses within the CSU system that remain impacted and others that are far below target. I think the reallocation plan that Dr. Evans spoke to addresses that question.

Yeah. Following the Chair of Higher Education's questions about, I believe California State, Cal Poly San Luis Obispo as well as Cal Poly Pomona are both STEM programs. But it seems, just as we heard from the University of California, that the greatest demand, in terms of the most impacted majors at the most impacted campuses of the University of California, are the engineering fields.

Why not devote more money for the engineering programs of the California State University to meet the demand not only of our California students but of our workforce? Any response?

Well, so I appreciate the question. Maybe building on Ms. Qing's comments, there'd be two points. I would start with one to her final point that, yes, while we look across the system, we have seen this decline again. After more than a decade of being serving more students than the state was funding between 2011 and 2022, we've now seen a two-year period where we are below that.

So that has been a recent change, and I have shared already in my opening comments that that trajectory has changed and we are now expecting year-over-year growth. We also see that variation across campuses and are working to address some of it that is driven by population and demographic change. That perhaps should have been addressed earlier but was not. And we're doing that now over a multi-year horizon. To the point regarding our programs with the greatest demand.

When we are working with campuses now, it is focused on, yes, this is an enrollment allocation and enrollment target, but also setting the expectation that growth is happening in those high-demand areas, be they STEM, nursing, teaching, and learning, as well as early childhood education, all areas that have been called out and are working collectively to prioritize growth in those areas.

I would also add, I would be remiss if I didn't mention we have three Cal Polys, which includes Cal Poly Humboldt, as well. As well as robust engineering programs at a number of the other CSU campuses.

Thank you. I think one thing that will be important going forward so that we're all on the same page, and I started with this line of question, is this idea of what we're counting as students for this fall time, sorry, for the summertime enrollment. If we're using FTEs, then that's what we're using when we set the budget. Then I guess we have to set the right expectations. We're expecting a growth in headcount, that's one thing. If we're expecting you to meet FTEs, that's another.

And so while it could be conceived that you've just flipped and now you're doing state-supported versus. Well, I mean, that is technically what was approved in the budget. And so I think as we set expectations for growth, we need to be more clear about what that really means for you so that that oversight can exist long-term. I don't know if Mr. McCarty has anything for this panel. Okay.

I would just end with the same way I ended with the UC. Specifically, as I see growth in San Diego, the demand growing anyway, that there are opportunities in the same way. And I would encourage the system to look at the potential for growth outside of main campus because the growth is already there. Just like with Chancellor, the President at SDSU knows about the opportunities for growth in Chula Vista.

And so I'd certainly request that the system as a whole support that as a mission going forward, but also focused on ensuring that Californians and local students get served, because that's one of the things that we're concerned with trends.

And then the same thing I told them and I asked them to return back to, is there at campuses like that where the demand is high from out of state students, give the campus the flexibility to potentially do like what you just explained to us you did at SLO with an additional non-Californian tuition fee to help support more Californians. I think you'd find a lot of support in the Legislature to move in that direction.

And so I'd ask that when you come back, you'll certainly be hearing questions around that from us.

I appreciate that.

Okay. Thank you all.

Thank you.

Appreciate your time. And then we'll go on to our next panel, our next segment, which is our community college system. I guess maybe we should have said from the beginning, and Mr. Muratsuchi sort of made mention of this. I think we ask these questions because we want to see all the systems succeed, and we want to make sure more students are served, and sometimes they may come across as harsher, perhaps, than they're intended.

But this is about how do we increase more access and opportunity. That's the focus of the hearing and the focus of today. So I hope that is the way you all take the questions as we ask them. So we will now hear from the California Community College on their enrollment update. Department of Finance, the Legislative Analyst, and the Chancellor's Office as well. So start with Finance.

Good afternoon, chair and Members Justin Hurst with the Department of Finance for the California Community Colleges. The Governor's Budget proposes $29.6 million ongoing Proposition 98 General Fund to support a 0.5% Enrollment growth within the student-centered funding formula for system-wide growth. The Governor's Budget has historically proposed investments for supporting system-wide Enrollment growth within the community college's funding formula.

These investments are crucial to support those community college districts that are experiencing increases in enrollment. But we tend to view this investment as fairly technical as districts are unable to grow their full-time equivalent students, or FTEs, without enrollment growth funding in the budget. That concludes my overview, and I'm happy to take any questions at the appropriate time.

Thank you. Let's do the Analyst Office.

Thank you. Good afternoon. Paul Steenhausen with the Analyst Office. I was reflecting this morning that it was on this day, four years ago, March 13, 2020 that many colleges announced that they were pausing or moving online their instruction Friday the 13th. It was back then, and since that time, enrollment has been among the top challenges, if not the top challenge, of the community colleges. And that's true not just for California Community Colleges, but nationally as well.

As your agenda notes, after three years of enrollment declines, though, California community college enrollment started to rebound in 2223. In addition, system wide fall 2023 enrollment was 7% higher than in fall 2022. So it suggests that the enrollment rebound is strengthening in the current year as well. And that fall to fall growth, by the way, is actually stronger than the national trend at public two year colleges.

As you heard in issue one, community college enrollment is influenced quite a bit by economic trends, and in the past year and a half, unemployment in California has gone from 3.8% to about 5.2% now. That's likely causing more residents in California to seek community college training or other education program. At the same time, colleges have implemented a number of strategies to try to bring back students, including intensifying outreach to local feeder high schools, providing emergency grants, and other assistance to needy students.

Many colleges have created phone banks, reached out to individuals who've dropped out or started an application even and didn't complete. I heard from a local district that was really successful approach reaching out to those who started an application but didn't complete and said, hey, what can we do to help you and get you enrolled. It's also much more of an emphasis now on nontraditional students, as you heard earlier. So the agenda on page 24 shows the growth in dual enrollment students as well as incarcerated students.

So there are several issues and considerations before the Legislature regarding community college enrollment. First is your agenda notes on page 25. The Legislature provided about $27 million in enrollment growth funding in 22-23. The chancellor's office has finalized enrollment data for that year and found that while there was some growth, just over $8 million. Of that $27 million was not earned by districts, and so that money is available to the state to sweep and then use for Proposition 98 budget savings or other purposes.

Based on the latest estimate from the chancellor's office just a few weeks ago, districts are on track in the current year to earn all $26 million in enrollment growth funding that the Legislature provided in the 23-24 budget. And as you just heard, for 2024-25 the budget year, the Governor's Budget proposes $30 million ongoing.

That's Proposition 98 General Fund for enrollment growth funding ordinarily, the kind of enrollment data that colleges currently are reporting would suggest a strong case for providing this proposed base augmentation to the colleges based on current revenue estimates. However, the state is facing a large budget deficit. As you all know, historically, the state has tried to contain spending during tight fiscal times rather than adding to the budget problem by providing new money on top of the existing.

So ultimately, the Legislature will want to weigh the benefits of providing more access to individuals seeking a community college education on the one hand, with the need on the other, to address this General Fund problem and look for General Fund savings. Assuming updated revenue estimates at the May revision continue to suggest that there's a significant budget problem, we recommend the Legislature not provide growth money for the colleges in 24-25. Thank you, and happy to take questions.

Thank you. Welcome.

Good afternoon, Chair Alvarez and Subcommittee Members. I'm Wrenna Finche, and I serve as the California Community College's Vice Chancellor for College Finance and Facilities. So let me start by thanking you for convening today's hearing on this critical topic. I have really exciting news to share. I guess we got a little teaser with our update from the LAO. For the record, California Community College enrollment is back up, and our colleges are rebounding from the pandemic as our system engages with our new strategic framework Vision 2030.

Our goals are focused on equity and success, equity and access, and equity and support for our students. We're tracking progress and breaking ground on new pathways to reach future learners, including veterans, justice involved students, dual enrollment students, foster youth, working adult learners, and underserved populations. California community colleges are committed to providing equitable access to higher education for everyone in California. As one of our former chancellors used to say, we serve the top 100% of California students.

So all community colleges are making progress toward reaching pre pandemic enrollment. With 58 districts reporting year over year increases in FTEs. Full time equivalent students in 23-24 of these 18 districts reported enrollment growth that exceeded recent year pandemic enrollment losses, and 14 districts reported ftes growth beyond their growth funding formula, target cap, which resulted in unfunded FTEs for the system, over 5000 FTs, or about $29 million of unfunded growth.

We are making progress thanks in no small part to many of the recent investments from the state and support for community college enrollment. I want to highlight the contribution of Committee Chair Alvarez, who sponsored AB 91 in 2023 to remove enrollment barriers for students living near the California-Mexico border. This recent legislation has been critical to the southern region, and our Board of Governors is currently working on finalizing all the agreements needed to move this forward.

We're seeing so much interest and students are ready to enroll, so striving for steady growth in student enrollment is a critical piece not just of our mission as open access institutions of higher education, but to how our colleges are funded.

As you know, thanks to the innovative student centered funding formula this Legislature and former Governor Jerry Brown enacted several years ago, it provides funding not just for the number of filled chairs in a classroom, but it also supports student equity by targeting funds to districts serving Low income students and student success by providing districts with additional resources for students successful outcomes.

This thorough agenda your staff has put together notes that community college enrollment did drop significantly in the first two academic years that were affected by the pandemic.

And because we disproportionately serve low-income students, students with children and dependent family members of their own, and students dependent on part-time work to meet their living expenses, a great number of our students felt they had to put their education on hold as our nation dealt with the effects of a hopefully once in a century pandemic that shut down most of our society, starting again almost four years ago today.

Thanks, however, to the strong support of this Legislature and Governor Newsom, we were able to utilize hundreds of millions of dollars in one time funds to recruit, enroll and retain students. And as your agenda also notes, our enrollment has been bouncing back consistently for several semesters in a row.

You met Chancellor Sonia Christian, who provided breaking news in her testimony at the higher education overview hearing last month, when she reported 8% increase in headcount from fall 2022 to fall 2023, which followed on the heels of a similar 8% increase between spring of 22 and 23. So, due to our inherent data reporting limitations of our system, we're a decentralized system with 116 colleges governed by 73 independent districts.

We don't have real time enrollment data, but we can confidently report that we are on track for our 23-24 annual headcount to exceed 2 million students for the first time since the onset of the pandemic in 2020.

And even more encouraging is that as of the most recent annual update we received in September of 2023, we've seen disproportionately high enrollment growth among our most historically underrepresented and marginalized student groups, meaning enrollment of Black and Latino students, students with disabilities, and students over 35 years of age. Those are all growing at a higher rate than the general population. What we've learned about our students and our system in the past few years has really underscored the critical role that community colleges play in our society.

We know now that when we meet students where they are, when we bring education opportunities to them, when we take their basic needs like food and housing security into account and provide a robust suite of campus support services, that we can and will continue to grow not just the number of students enrolled in our colleges, but the number who complete a workforce program or transfer to a four year university, and who move on to high paying, skilled jobs in our rapidly changing economy.

I'm happy to answer any questions about our enrollment trends that the Subcommittee may have, but let me once again thank the Legislature for investing in our students. In recent years, you have not only provided funding for enrollment and retention, but to establish and expand basic needs centers, establish affordable student housing to support students taking online classes through subsidized Internet and laptops, addressing mental health needs, and so much more. Thank you.

Thank you to all three of you for your opening comments. Appreciate it. Let me first ask just to clarify. I think the first thing I think I should say is we got in this presentation what I think we asked about in the previous two, which is FTEs and headcounts. That's how you know where the growth is going and if it's in the right direction.

So I appreciate you pointing those two specifically out as the statistics on both of those, as it relates to the number of colleges that have not come back in terms of enrollment and continue to see the decline, I want to make sure I got the right numbers. I heard you mention 58 have seen a year over year increase, but that would mean that roughly, I guess, 48 others have not had an increase year over year.

Would I then assume out of those 58 that have seen year over year increase? Or maybe just give me the raw number if you have it. Who's back to pre pandemic levels in terms of enrollment? How many colleges are back?

So I was talking about year over year, not necessarily comparing back to 1920. So if we want to look back to 1920, the figures are a little different. We have 13 districts that have reached or exceeded pre pandemic FTs. That's representing about 17% of our total FTs in the system. In fact, I'll highlight a couple. Southwestern CCD in your district is one that's grown. They're 2% above their pre pandemic enrollment.

Another one's Kern CCD, which community college district, which is 12% above pre pandemic, and then another in Member Kevin Mccarty's district, Sacramento City College. The Los Rios district is just about even. They're just about there at like a tiny percentage less.

That takes me to the question. It doesn't sound like too many have grown that much, but you did mention 14 are beyond their funded growth at the moment. So I'm curious, from a system wide level, how do you address the needs of those 14 campuses that have seen that growth? How do you support them to ensure that they have the offerings that are needed to meet that increased demand.

Right. So that's part of their strategic enrollment management activities. And we partner with our districts really closely to be able to help them understand what their multi year projections for revenue might be specifically around those target growth caps.

Right now, the growth formula that sets those caps, it's very long and complicated, but we work with individual districts when they see that they're going to be exceeding it, to make sure that they're aware of that and that they're able to then identify other funding that they can use for their students. But ultimately, it means they're spreading an amount of funding over more students than they would if they were able to be funded for their full growth.

Right. But there's no mid year action that the chancellor's office takes in order to potentially reallocate resources. When you recognize that that's happening, and there's other campuses that don't have the growth and don't really need that funding level.

We do have a very prescribed formula that allows us to do that. So as part of that growth formula, we first identify what the cap is, and usually it's a small percentage. If every district, once we've funded up to that cap, if there's remaining growth funds, we're able to reallocate it back to other districts with growth, but only up to 10% over their base FTEs from the prior year. So there's kind of like a second cap built in.

So if they grow more than that 10% base, they're not going to be funded for it.

Okay.

Let me ask you a question I didn't get to ask the other panels regarding the Cal Grant framework of the reform, as it was referred to. Have you had an opportunity to analyze what that would mean in terms of enrollment opportunities, maybe enrollment growth for you if reform was to be fully implemented?

Well, we don't have a specific quantitative analysis with empirical data on that, but I can tell you that our students, being from underrepresented groups, often from Low income backgrounds, would benefit greatly from Cal Grant reform. We feel that would be a huge boost to our system. We do think it would improve enrollments and make it possible for more students to attend community colleges.

Okay, thank you very much. I'll turn it over to Mr. Fong.

Thank you so much, Mr. Chair. And to echo the comments around Cal Grant reform, I think that could definitely impact six figure students in the chemical system. Is that an accurate statement?

I think we would have loved to have seen that. That's very possible.

It's over 100,000 students, possibly, right?

Yeah. Okay. In terms of dual enrollment opportunities, when I looked at the chart, is it accurate that there's 60,000 students, or what's ahead, 50,000? I couldn't see the number there, but it's continuing to grow exponentially since 2016. On page 24.

I'm sorry, 21.

Page 24. 24.

Yes. Our colleagues at the LAO have reached out, and on the CCAP up to date data, we're seeing an even greater increase in 23-24. As far as dual enrollment and increases in that category of dual enrollment students. It is inching up even a bit more. But I believe this is headcount as opposed to the FTE.

Okay, I'm sorry. It's headcount. And I know the chancellor with the Vision 2030 program. And how do you see that growing out in the next five years?

Well, we're really excited to be doubling down on our efforts. In that area. We're working on a number of pilot demonstration projects to improve our operations in all the areas identified in our new strategic vision. Dual enrollment is a huge piece of that.

So we're really working on convening groups to make sure that we're really implementing dual enrollment with equity in mind and really taking a look at where the opportunities are for districts to move into that space and provide a better pathway for students into college.

Thank you. I know the Legislature has been very focused on supporting those efforts at the community college level for the high school students and really amplifying those opportunities. So thank you for that update. In terms of the year over year enrollment, you mentioned 58 districts out of 73. So are there regional differences in enrollment patterns similar to the CSU, or where do you see the growth in the community college system, and where are the challenges with part of the state?

Right. So we do see some regional differences. I can tell you that when we're looking, I'm looking at headcount here and comparing between 201920 and 22-23 and we're definitely seeing more growth in the Central Valley, South Central regions, and the Inland Empire. They're rebounding a lot more quickly. The areas that are kind of lagging behind a little bit are the Bay Area, San Diego, and Los Angeles areas. They're a little slower to be returning in enrollment growth.

And again, I don't have a quantitative study on that, but I can tell you anec.ally what we hear is there's a lot of good jobs if you're in a region with a lot of, in a large city with a lot of employment opportunities, and you can make $20 at the Wiener schnitzel, going back to community college doesn't feel maybe as essential as it might in other regions.

So I'm sure that we'll be statewide making it back to pre pandemic levels, but those areas are growing a little more slowly.

Thank you. And then in terms of reaching students where they are, I think the pandemic really, truly changed everything. We know that community college classes, as you mentioned, on March 13, 2020 overnight, within the span of few weeks, went all online. And so we look at, we continue to grow community college enrollment. I know that there's different models that students are very much looking at.

So are we doing a statewide survey of our students, of our districts to really look at what our students are really looking for? Are they looking for flex scheduling, hybrid classes asynchronous in person?

Yeah, absolutely. What we've really been finding is that students are looking for more flexibility and more options. Right now in 2324 close to half of our courses have some component of online, but it's about 45% will have either they're either fully online, they're hybrid, asynchronous, or synchronous online. They may meet in person a couple of sessions and then have most of their work done online. Students tend to register for those classes more quickly, so we're definitely seeing there's a demand for that.

We're also really working on the working learner project where we're designing course scheduling to meet the needs of students so that we're doing Shorter term sequenced courses. So rather than signing up for one class that's going to last 18 weeks of your life, where there could be major disruptions, we're trying to block those into Shorter term, six to eight week course terms so that students have a better chance of completing that. So that's some of the work we're working on. We definitely see that students are looking for flexibility.

Thank you. And lastly, you mentioned earlier in your presentation that we don't have real time data as we're really waiting for data and enrollment data from each of the community college districts. What does that lag time look like, and how do we continue to make sure that we're getting as much accurate and timely information as possible?

Right. So for data on fall 2023, for example, we should have most of it by the end of March. We right now are just missing data from three colleges. So that's a good six month turnover for the FTEs that is reported to us for funding purposes. We get that a little bit sooner. Districts are giving us estimates throughout the year, but then that's trued up. Not until November is the final true up for that data from the prior year.

Okay. Thank you guys so much. Thank you, Mr. Chair.

Thank you, Mr. McCarty.

Thank you. I wanted to follow up on this question about here about the changing nature college, especially community college. Post the pandemic. Students and a lot of community college students have challenges in their lives with family and work. And so the whole notion of doing stuff hybrid is appealing and just kind of the different models. And so we've always kind of felt that there's competition for community colleges with some of these for profit schools, which obviously are not free and don't get financial aid.

And we let love our community colleges. But are you seeing kind of what he was asking Mr. Fong, Chairman Fong, that we're doing things differently to try to go after those students because we're seeing, one, people need to get more education to get a good job. Two, enrollment dropping at community colleges. So people are probably going, you know, are we not doing things that we need to be doing to create more effective ways to draw students back in their eyes?

Well, I'd like to share with you some of the retention enrollment activities that we're engaged in. And so, again, many of the state's recent investments have really been critical for our recovery, and we really express our gratitude to the Administration and the Legislature for providing funding for various programs. I want to talk to you a little bit about the COVID-19 recovery block grant that was provided for activities to directly support diverse student groups and mitigate pandemic related learning losses.

So districts used those funds to facilitate quality distance learning, to reengage students, to remove barriers to re enrollment, close the digital divide, and support provide also support for basic needs. We really strategically focused resources to reengage individuals who may have disengaged or dropped out in recent years, demonstrating our commitment to inclusivity and educational equity. So we also had retention and enrollment outreach funds. They were provided specifically for colleges to recruit, engage, enroll, re enroll students with a focus on culturally relevant strategies.

Districts will be reporting on their use of retention enrollment outreach funds in June of 2025, so we'll hear more stories about what they were using. But we also had statewide retention enrollment funds. So we launched the ICANN campaign, which was a really exciting enrollment blitz that spread our enrollment messages, including in language messages on campus TV, streaming radio, social media, online advertising, and, of course, if you fly in and out of any airport in California, you've probably seen our billboards, I can go to college.

And again, we haven't done a comprehensive analysis, but some of the activities that districts have reported back to us were reimagining how to maximize student support by packaging financial aid, emergency grants, and philanthropic dollars.

Let me ask a different question, because I support all those. We help craft these, I guess, with the question we've been asking the last few years, and I bring this up all the time, so maybe it's repetitive, is that community colleges? By and large, the barriers for entry are pretty Low. You have to be pretty much 18. Now, you can actually be a high school student, but you can only enter pretty much twice a year, in August for the fall, in January, for the spring.

I guess there's summer and winter, whereas the for profit schools, you can enroll every Monday morning. And so it's like one weekend, hey, I want to go to college, like Monday. You get to enroll. And you can sometimes take classes on Friday nights or on weekends or on Fridays. And so I think that, by and large, community colleges have been pretty much the same for decades, the same model. You enroll twice a year.

Most of your classes are Monday through Thursday, and mostly from nine to three on those days. And I think people in the real world are like, hey, we have other options. We're voting with our feet. So we keep coming back. Like, what are we doing differently to reach these? Because it seems like, oh, we're dropping. We're not following what customers out there, what they'd like.

I know some community colleges offer now shorter, like eight week courses and stuff, but are we doing things differently to thinking outside the box? Because if we're not, I think this is not a death spiral, but we'll keep hurting because students, even though they're more expensive. The other options, like we had a hearing a few years ago and one of the chancellor who moved on from San Diego, he was saying, we offer free colleges. We were giving people money to come to class.

You were paying people to go to class, giving bonuses. And some students are like, no, I'm going to go over here and pay money out of my pocket and go in debt because it works more for me. So that's kind of a wake up signal to us. It's like, maybe our product isn't quite what the people need. You know what I mean?

Yeah. Thank you for that question. Absolutely. We are changing the way we do things. How so? I'll highlight again some of the work we've done around course scheduling to really make it more attractive by doing the block scheduling, the Shorter term sequenced courses, by encouraging districts to schedule in the evenings and on weekends when students are available. And also, a lot of our districts have moved to, instead of having all classes start on the first day of the semester, there'll be staggered enrollment dates.

So they may have a suite of courses that starts later in the semester so you can catch these late enrollments. Now, again, these decisions are all made across 116 different colleges individually on how they're going to be doing their course scheduling. But these are practices and activities that we're highlighting, promoting and really encouraging. Thank you.

I'm sorry. One more question, Mr. Chair. As far as the notion that community colleges offer some four year degrees, I know that it's kind of consternation with the prior panel, but they left the room, so they're not even here now. So you can tell me what you really think. So how is the implementation of that going and do you anticipate any more changes in state law to do some four year degrees on community colleges where they don't compete, potentially with CSU?

Well, we're definitely working on approving programs that don't compete. That's one of the primary pieces of the law around community colleges. And I believe we've recently established a number of programs that we have agreement ahead of time where there isn't competition. So we can move forward more quickly on those.

I'll tell you, we have right now 39 programs at 32 colleges, a total enrollment of about a little over 2800 students in these four year degree programs. And we have several programs, though, that have recently been approved. We haven't really launched those yet.

Thank you, Mr. Muratsuchi

Thank you. Question for Department of Finance. So am I correct in understanding that any unearned enrollment growth funds, where would any unearned enrollment growth funds be going to under the governor's January budget proposal?

Hi, Michelle Nguyen with the Department of Finance. So there's statutory and provisional language that indicates that if there are any unused funds, well, the statutory language says it could be used to fund growth in the supplemental allocation part of the formula.

Which is for students receiving Pell grants, or it's for districts who would be doing better in that part of the formula or for districts that are doing better on the success outcomes part of the formula. But more broadly, the provisional language indicates that any unearned enrollment growth funds can be used for other shortfalls in the formula.

Less than a panelist, just to add that to that. That's correct. If enrollment growth funds are not earned by districts, they can be used to backfill any shortfalls if property taxes come in short or something like that. If that's not the case, then the state typically sweeps that money and reverts it into the Proposition 98 reversion account to use for other Proposition 98 purposes or just to achieve budget savings.

That's exactly what the Legislature did in last June's budget when it found that none of the $24 million that the Legislature had provided in 21-22 had been actually earned or needed for enrollment growth or backfill purposes. So Legislature just reverted that money and used it for something else. The Legislature will want to do that again with the 22-23 money that's unearned. The chancellor's office said it's about $8 million that's going to be unearned. So that can be swept as well.

And would that be swept for any shortfalls limited to community college shortfalls, or can it also go to K-12 schools.

It could go to K-12, certainly for any Proposition 98 purpose.

Is there any precedent for that happening?

I'm not aware. But typically the Legislature likes to stick to this historical practice of providing 10 point 93% of Proposition 98 money for community colleges. That's just based on how much the Legislature gave the colleges back in 1989. So it's not based on any external or programmatic reasons. The Legislature has been doing that, typically keeping it around 10.9%. But certainly the Legislature could use, it has that ability.

There's nothing in the constitution or statute that says you shall spend a certain amount or have to use unearned money from K-12 or community colleges on that segment. You have that ability to decide.

Okay. I wanted to follow up on Mr. Fong's focus on dual enrollment. I know that when I had a community workshop at El Camino College in my district, there was a huge turnout of families that want to take advantage of the dual enrollment program, and again, supporting programs where there is the greatest demand from California students. I think dual enrollment is definitely a very promising direction, and this chart seems to illustrate that clearly.

But I was wondering if the chancellor's office has any demographic data in terms of who's taking advantage of the dual enrollment programs. Do they tend to be reflective of the historic community college student population, or is it skewing more toward suburban school kids, middle class kids?

So I don't have that information right now, but we'll be glad to work with your staff to provide as much demographic information as we can give you on that. It's certainly our goal that dual enrollment is rolled out with equity at top of mind.

Yeah, I know that we just recently passed Mr. Holden's latest Bill on strengthening the equity provisions of the dual enrollment program, but I'd be interested in getting that data. Thank you.

Thank you. We'll have another agenda item on this, but to enrollment. And specifically, there's a proposal of $60 million that I just remembered in the governor's January budget related to nursing programs. And I, at least myself, have not seen anything more in terms of specific. Do you anticipate that to be for, that's going to be calculated into your enrollment growth? To what extent do you have information about that, or if the Department wants to talk about what that means for enrollment at community college?

Sure. Yeah. So the $60 million proposal that's being proposed, that was part of the 2023 budget act agreement. It would be considered separate from the funding formula, so it wouldn't be connected to enrollment growth. Specifically, as you noted, there isn't a lot of detail right now on that proposal. Certainly, as that gets flushed out, that could be something to be considered.

Okay. And as far as details, are you developing details for the May revision, or are you expecting the Legislature to help provide details on that?

Well, in last year's budget agreement, I believe that was a legislative ad. So I think our expectation is that we will work with the Legislature, with legislative staff on that specific proposal.

Thank you. I appreciate that. Okay, that's it. I don't think anybody else has any other questions. So that's the end of our panel here, like other items, will continue to be open for further discussion. Thank you all. Appreciate your time and your presence here and answering our questions. With that, we are adjourned. Oh, get that. We are not adjourned. We have public comment. What would have happened if I actually gave. You technically, have to stop ungavel.

Okay. I apologize. And what I started yesterday, colleagues weren't there, and I forgot to do that today. We're allowing, and we're going to try it again, is allowing some public testimony on the front end of the Committee to get some input on some of the panels that we later heard about. We'll probably continue that. And I forgot to do that today, but now it is appropriate for our public to come forward and provide some testimony. Please come forward.

Hello, Committee. My name is Keith Ellis. I'm the Vice President of the Alumni Associations of UC and AAUC Regents. So I just wanted to lend my support to the presentation that you received today and just validate that the regents do take seriously our admissions and enrollment, especially with regard to our 2030 plan and our 2050 plan. And I think it is worthy of us to look at the non resident tuition, as you have articulated today. So thank you so much and look forward to working in partnership with you. Thank you.

Good afternoon, Chair Alvarez and Members. I'm Melissa Bardo. On behalf of the Education Trust West, we appreciate the robust discussion today regarding access and enrollment at California's higher education systems. Regarding the governor's proposal to defer ongoing funding for UC undergrad resident enrollment.

We must express our concern that delays of this funding, alongside delays in base increase funding, could lead the UC to increase non-resident undergraduate enrollment to backfill operating cost increases. Ed Trust west has traditionally supported these investments as we know that low-income students and first-generation students can sometimes be placebound and put off college altogether if they cannot access seats at their local campuses.

Regarding the governor's proposal to allocate nearly $30 million ongoing funding for enrollment growth at the community colleges. We respectfully request the Legislature adopt this proposal. We support many of the local strategies that districts are employing to expand access, including expansion of dual enrollment programs and direct outreach to nontraditional students. And lastly, we continue to emphasize the importance of accountability, oversight, and raise conscious goals and metrics to ensure that campuses and districts are making progress.

Thank you. Thank you. Any other public comment? Okay, seeing done, we urge our now.