Assembly Budget Subcommittee No. 3 on Education Finance

Good afternoon everybody. Thank you for your patience as that time of the year has begun where we are in multiple places at once. So I apologize for the slight delay, but I am nonetheless really excited to be here.

For our Assembly Budget Subcommitee Number three on Education Finance, I am Chair Assemblymember Alvarez and I welcome you all to our hearing which will be focused on community college issues.

Today, our community colleges are critical to providing open and easy access to higher education for Californians throughout the entire state, offering non credit and job training programs and bringing programs to places like high schools with dual enrollment or to prisons.

As we had a hearing last fall, all around to individuals who have not had higher education opportunities in the past. The California Community College System is now back to more than 2 million students, making it the largest education system in the country. We know how important these campuses are to the communities.

Almost 30% of UC graduates and about half of CSU graduates started their educational career at a community College. And about 35% of community college students are first generation, the first in their family to have a higher education opportunity. More than 70% are people of diverse ethnic backgrounds. We also know that some of the things need improving.

A 2024 audit found that only about 21% of community college students who began college through from 2017 to 2019 and intended and they went to community college intending to transfer to a four year institution did so within four years. And an LAO report from last year also showed that three year graduation rates were only at about 18%.

The same LAO report found that about one third of community college students did not persist from their first term through their second term. So today we have many issues and budget proposals to discuss is a lengthy agenda.

The good news is that Proposition 98, which funds our community colleges, is in a much healthier position than our General Fund and allows us to talk about some augmentations, some new proposals and more that we can do in the space of community colleges.

Compare that to the unfortunate conversations we're having around CSU and UC and the financial aid system. But as we discuss the governor's proposals and other issues, I'm going to be asking about how each proposal addresses our current problems. How do these proposals improve graduation rates? How do they provide more access to higher education for the state?

And how do we support students needs. A key issue to discuss is enrollment. You've heard me say it before, I've said it at least twice this year. We talked about it last year in this hearing, particularly today. I think we want to really focus in on this.

I'm happy to see growth in many districts and I'm interested in talking about how we can support that growth so that more students can continue to have access and how we can make sure that colleges continue to be incentivized to grow into the future so that we continue to have that workforce that we need.

So with that, that ends my comments. Do our colleagues have any comments? Mr. Muratsuchi?

Yes, I just wanted to quickly mention that I had my first opportunity to teach as a adjunct faculty Member at my local community college, El Camino College in Torrance, California. And so I have a deeper appreciation for all the important work being done at our community colleges. And so I look forward to today's hearing and bring my experience from last fall to inform our work today. Thank you.

Okay, as we've done before, if anybody like to make comments now, we'd like we'd allow you to come forward for a briefer comment than the 1 minute we allow at the end. Keep it to 30 seconds, get your thoughts in. Maybe we can ask some of your questions to some of our panelists. But I will be keeping you to 30 seconds. So welcome. And you will only be able to make a comment now or at the end.

Thank you. Chair Alvarez, Mark Mcdonald, on behalf of a number of community college districts, Southwestern San Diego, Los Rios, Los Angeles. Just really want to focus on access and success. So echo your comments on growth and funding unfunded students.

And then the other thing we would support would be a student support block grant that would go towards students that are neediest on our campuses, particularly given what's going on at the Federal Government and the uncertainty that we're facing. So thank you.

Good afternoon. Andrew Martinez, Community College League of California. I want to thank the governor's office, governor's proposal for COLA that's consistent with K12. We're appreciative of that. We also appreciate encourage you to consider growth as a priority as well.

Because some of our colleges are growing quickly and that's that need those funds to support those students for one time expenditures. We would encourage you to think about deferred maintenance and instructional equipment as an investment that is not in the governor's proposal. And I think that's important for us to do our work.

And then also we would also encourage support for a block grant because of what's happening since January and also because of the natural disasters which from others. Thank you.

Good afternoon, Chairmembers. Kyle Hyland. On behalf of the Association of California Community College Administrators, I'd like to echo most of the comments that are said. Very appreciative of the COLA that the Governor has proposed proposing for the Student Centered Funding formula and categorical programs. We would love to see more categorical programs funded with the COLA as well.

Also would like to see an emphasis on enrollment growth and funding. The actual growth and what it is, it's above the 0.5%.

And as our previous colleagues have said, I'd love to see some the funding for deferred maintenance restored that was taken about $500 million for the budget a few years ago and then would love to see a discretionary block grant for the community colleges.

Thank you. Appreciate it. Thank you. If any others have public comment, you're welcome to come up at the end of today's hearing. So with that, we will begin with our first panel. If I could ask the panelists for issue number one to come forward. This is on the Student Centered Funding formula and enrollment review appropriate of apportionments.

Excuse me. And enrollment proposals. I'd ask the Department of Finance to kick us off with their comments first, then the Legislative Analyst Office, and then we have the Chancellor's Office here as well. So with that, I'll turn it over to the Department of Finance. Welcome.

Good morning, Chair and Members of the Subcommitee. My name is Justin Hurst with the Department of Finance. I'll be covering the California community College's Proposition 98 investments included in the Governor's Budget today.

For this panel, I will cover the Governor's Budget proposals for the Student Centered Funding Formula, otherwise known as the scff, which includes both enrollment growth and COLA, or cost of living adjustment. So first I wanted to provide a little bit of background on the scff.

As you may recall, the SCFF was enacted as part of the 2018 Budget act to allocate apportionments to the community college system. The SCFF is composed of three main components. A base allocation accounting for about 70% of the formula based on full time equivalent students, or FTEs.

A supplemental allocation accounting for 20% based on the enrollment of certain student populations, such as Pell Grant recipients, and finally, a student success allocation that accounts for 10% based on student outcomes.

The SCFF also features a hold harmless provision that is meant to provide a baseline level of funding for college districts as they navigated the transition to a new funding formula as agreed to between the Legislature and Administration in the 2018 Budget Act.

The hold harmless level for each district was pegged to their 2017-2018 funding plus cost of living adjustment for that given year. Subsequent budget acts had the hold harmless sun setting at the end of the 24-25 current year fiscal year.

The 2022 Budget Act Agreement established a new funding floor starting in this budget year 2025-26 as the baseline level of funding for districts going forward. This was done to provide districts with a softer landing as they continue to work towards being on the funding formula and then therefore regaining their enrollment to pre pandemic levels.

Now onto the Governor's Budget Proposals One of the largest proposed investments for the Proposition 98 side of the budget for the community colleges concerns their SCFF apportionments.

The Governor's Budget proposes a cost of living adjustment at the rate of 2.43% in the amount of 230.4 million Proposition 98 General Fund for Apportionments finally, the Governor's Budget also proposes to Fund enrollment growth at a level of 0.5% and a corresponding amount of 30.4 million in Proposition 98 General Fund.

That concludes my overview of the Proposition 98 Cost of Living adjustments and proposed growth funding for the California community Colleges. I'll be happy to answer any questions at the appropriate time. Thank you. Welcome.

Good afternoon, Chair and Members Lisa King with the Legislative Analyst's Office. I'll start by briefly commenting on the proposed apportionment's cost of living adjustment or COLA, and then I'll turn to enrollment growth. Regarding the COLA for apportionments, we think the Governor's proposal is reasonable.

This proposal would help community college districts address some key operating cost increases they face in 2025-26 including continued salary pressures, rising pension costs, and increased healthcare premiums. As usual, the data that's used to calculate the COLA rate will be finalized in late April, so you will receive an updated number at the May revision. Regarding enrollment growth.

As you know, following steep decreases during the pandemic, community college enrollment has been recovering over the past three years. We are seeing significant variation in enrollment trends among districts.

In the current year, about 40% of districts are estimated to be at or above their pre pandemic, that is 2018-19 levels, with other districts still working their way back up.

There are also some notable regional trends, so when we look at enrollment by region, we see that it's up compared to pre pandemic levels in the Central Valley in the Inland Empire, generally down in other regions. But in every region there are some examples of districts that are growing.

Looking ahead to 2025-26 there are a few factors that the Legislature could consider in deciding on an appropriate funding level for growth. One factor is demographics. Statewide, the adult population is projected to be about flat next year, but we are still continuing to see some regional demographic growth, particularly in inland areas.

A second factor is unemployment rates. These currently remain elevated above pre pandemic levels and historically there have been times where we've seen more students return to school when there's heightened unemployment.

A third factor is that some districts are on track to exceed their growth targets in 2025, 2024-25 of providing additional growth funding in 25-26 may allow these districts to sustain those growth trajectories rather than having to pull back to contain their costs. A final factor is looking across higher education.

As the Chair mentioned in his opening comments, there are constraints on the non Proposition 98 side of your budget this year that could make it difficult to support enrollment growth at CSU and UC and in that event, supporting work growth at the colleges could be a strategy to maintain overall student access.

Taking these various factors into consideration, we recommend funding at least the 0.5% enrollment growth included in the Governor's Budget. Now, this issue in your agenda also includes a number of related items related to the Student Centered funding formula and enrollment. I'd be happy to take questions on any of those items at the appropriate time. Thank you.

Thank you. Good afternoon Chair Alvarez and Members of the Subcommitee Chris Ferguson, Executive Vice Chancellor of Finance and Strategic Initiatives at the California Community College Chancellor's Office.

Before I get into growth and COLA for the seff, just wanted to make a few overarching comments on behalf of the system that we're doing globally to help districts respond to what's happening to in today's world. The Chancellor has been in regular communication with our district CEOs.

Our message has been a commitment to all Californians and all students that we are there for them. Every student is welcome at a California community college, including our transgender and non binary students, our undocumented students, our Black and Brown students, our English learner students, our veterans, and any number of student populations that attend a California community college.

We have worked to highlight the state's statutes, regulations, our Vision 2030 goals, the California budget investments, the potential budget investments that will come this June, and we have reminded districts to continue moving forward with their important work relative to those laws and regulations. I just want to highlight a couple of those examples.

Under current Education Code, the Legislature has told our institutions that they expect campuses to provide educationally equitable environments so that every student can reach their full potential and Education Code also prohibits discrimination on the basis of disability, gender, race, ethnicity, sexual orientation and other characteristics.

In addition to these policies and these regulations, the State has existing programs to support our Dreamer resource liaisons on campuses as well as there was a recent LGBTQ+ pilot program to equip this student population with supports including mental health services. We want to thank the Legislature and the Administration for their leadership on these issues.

We maintain our focus on our diversity, equity, inclusion and accessibility work as well as achieving the goals of Vision 2030.

So with that, let's keep moving forward to Enrollment and the cost of living Adjustment for the Student Centered Funding formula following the COVID 19 pandemic declines in Enrollment, California community colleges have seen significant increases in student Enrollments and full time equivalent student counts.

Those include increases in subgroup populations such as we've seen a 10% increase in our veteran student population since that point in time. We've seen a 24% increase in the number of dual enrollment students from the beginning of the pandemic to 23-24.

And we just note that from fall of 22 to fall of 24, California community college enrollment has increased by roughly 10%, representing around 37% of the national gain in community college student enrollment.

Overall, our community colleges serve over 2.1 million students, although we would note that growth has been a bit uneven across the system with certain community college districts experiencing significant significant growth while others continue to recover from those pandemic declines or declines prior to the pandemic.

In terms of what we're seeing for unfunded enrollment growth right now, we projected as of the 2425 first principal apportionment a need of around 126 million to Fund a little over 2.0 or a little under 2.2% of student enrollment.

That enrollment growth unfunded enrollment growth is largely across 26 districts, with six of those districts being in the position of being over 10% above where they're at today. So from our perspective we would, you know, certainly encourage and support consideration for funding that full time equivalent student need or enrollment need.

We are requesting two policy changes relative to the student centered funding formula to help support colleges serving our students. One is to use the greater of the current year or three year average when computing apportionments for districts. We think doing so would cost around $20 million a year.

Additionally, we do have a 10% enrollment cap at the local level, meaning that a district can't grow more than 10% per year. Lifting that cap of the 126 million that I mentioned, roughly 15.6 million, is attributable to those six districts that are seeing growth above that 10% cap.

So for, from our perspective, fully funding enrollment growth will enable our system to bring colleges directly to our future learners, increasing their economic income and income potential.

If we were unable to support that enrollment growth, what would happen, likely happen in the future is colleges would have to make decisions around the number of course sections they're able to offer on their campuses, which could impact the number of students they're able to serve across their districts at any given time.

So the student centered funding floor or funding formula and the COLA and growth are both strong supports from our office and from our system. And with that, I would just note, for the recent Southern California wildfires, we are working with the 10 impacted districts. We have available what's called the Emergency Conditions Allowance.

And to the extent that those districts are experiencing material impacts to their full time equivalent student populations, we are working with them to, to file the paperwork necessary to receive consideration for that allowance. We generally are very supportive of districts.

The forms are usually relatively small to fill out, but we're providing them with time, knowing that they are still continuing to deal with other impacts at the local level related to the fires. So with that, I would just be available for any questions that the Committee may have.

Thank you. Thank you all for your presentation. Why don't we start with that final point on. I'm trying to keep track of the, the costs for the proposal. So the, the proposal of the 10 lifting of the cap for six districts which seem to be your six most impacted, would cost 15.6 million. That'd be the annual ongoing.

Well, for this year. If they, if they weren't to reach the cap next year, then they wouldn't have that extension, obviously.

Yeah, that's correct. So, and that 15.6 million is within the 126. So if that policy to lift the 10% cap or not move forward, you would reduce the 126 million by 15.6 million.

The 126 million you're referring to is unfunded growth on the unfunded COLA, which is what we received also in the communications from Kern, Los Rios Mountain, Jacinto, San Diego, Southwestern State center and Victor Valley. That's correct. Okay. Okay.

And then the average attendance issue, I'm trying to understand how how this is a benefit to the campuses, is it mainly for the folks who are declining in Enrollment?

It's actually for districts that are growing in enrollment. So the way the formula works, it's using prior year average, it's a rolling average that includes three total years. So because it has a lagging indicator in terms of growth as a growing district, we. You get slightly less in the budget year because of those three years. So what we would be saying is if your district is serving those students.

It'S the opposite of what we've often done, which is use a three year average to sort of help you stay afloat.

Right. It helps when times are tough and you're declining, but when you're growing, it does have the impact of slowing it down.

Why would those two, why would you need to do those two separate actions or those two new policies? I guess wouldn't some of the same districts that are experiencing one or the other fall under the same. I would assume the six you're referring to probably also benefit from an average attendance policy change.

They do.

So why would we need them both?

So I think what the dynamic that we have is, the student centered funding formula limits the number of FTEs that a district can be funded for based upon the growth projections included in the. In the annual budget.

Additionally, if you are growing, the way the funding formula integrates that growth, it integrates it over a three year, that three year average, which has the effect of then taking that growth and also somewhat reducing the computation for your district.

So they're two separate issues, both in law and both in statute today that are certainly commingled to your point. Okay.

I think maybe I'd be interested going forward what the bottom line impacts would be if we did both or if we just did one or the other.

I'm trying to be fair here as well, but acknowledging that there is growth and that in order for them to provide the access they need to have the resources for those more students that are attending. So interested in that.

And then I'll stop with that because that's where I'm most interested in trying to identify ways for this access to increase among our.

Our growth opportunities for the community college. I'll turn it over to my colleagues. Ms. Patel

I have a technical question. With lifting of the 10% enrollment cap, are you proposing a new cap that's at a different level, or you're suggesting just removing it completely?

We'd suggest removing it completely because ultimately the decision to fund growth at the state level would be the true control in any given year, as opposed. So there's really, at the moment, two caps. There's a cap based on statewide growth, and there's a cap at the local level of 10%.

So as long as the cap at the state level is still in place, the state has assurances as to what its fiscal liability would be from one year to the next.

Yeah. So I could see removing that cap would allow the community colleges to actually address the needs in their communities and be able to be flexible within those that enrollment growth.

Yep.

Thank you,

Mr. Muratsuchi.

Thank you. Am I correct in understanding what percentage of. Actually, maybe this is a question for LAO. What percentage of community college districts are under the hold harmless formula as opposed to the SCFF formula?

As of 23-24, there were 11 districts out of 72 that were on hold harmless.

11 out of 72.

That's correct. Of the remaining districts, some of them were on SCFF and others were on a separate funding protection called stability, through which their funding level is based on their previous year's funding adjusted for COLA.

Okay. But the overwhelming majority are one of those two alternatives to the hold harmless that you just described.

That's right. I think less than half of districts were on SCFF and the rest were between either stability or whole time list. With 11 in whole time list.

Okay. I mean, is there any, you know, evidence to indicate that the student centered funding formula is improving outcomes?

Yeah, certainly. Our outcome metric data that we have seen from the start of the student centered funding formula to today has shown increases in all of those success metrics. There are some nuances within the transfer metric because of ADTs. We're seeing more ADTs increase and fewer traditional students.

But overall, if you add those two together, we are seeing more students complete more transfers. We're seeing more students achieve a living wage. So we have seen those gains in those success metrics that are part of that 10%.

The one piece that we have not seen at the moment is just the traditional enrollment because of the pandemic has been somewhat inconsistent.

But is there any evidence to indicate that the outcomes from the student centered the SCFF districts are better than those that are on the hold harmless funding formula.

Yeah, I think we would have to look at it district by district. I don't have that in front of me today. But we can say system wide, you know, with certainty. We do see that relationship right now. So on average, we would say the metrics are improving for districts in the state. It just depends.

To your point, there will be some districts that may not have seen that, but I don't have that in front of me today.

But, but you're saying that system wide, the SCFF districts are showing better outcomes than the non SCFF districts.

If I may, my clarity would be we consider all districts to be on the SCFF, irrespective of whether they're on the core base supplemental or success metrics, whether they're on the stability protection for one year, or whether they're on the whole term list.

So, you know, my intent is just to say that in total, the 73 districts that we've seen from the start of the SCFF to today, we've seen on average increases in those success metrics.

System wide.

System wide.

Okay. All right.

But it's not within the categories.

So speak to that.

Okay.

So, so is it safe to say that we, we can't, we don't have enough evidence to draw conclusions as to whether the SCFF is, is improving student outcomes? I mean, like it's, I mean, different districts are, are being funded differently. Right.

And, and so I, my question, I, I'm not sure if I'm asking my question very clearly, but you know, for the districts that are getting the SCFF funding, you know, are they showing better outcomes than those that are not?

Yeah, I don't have that information available to make that type of, you know, determination today. But we continue to go back to, from a system perspective. From a system.

Yes. Yeah. Which includes SCFF as well as non SCFF districts.

Yeah. Irrespective of whether they're on one of those three categories, we consider them all SCFF. But irrespective of whether you're on stability hold harmless or the base supplemental and success metrics across the board, we see on average improvements.

Okay. The staff report indicates that that enrollment is, is growing, I think, in the Inland Empire and the Central Valley and declining in the Bay Area. Can you explain why the enrollment decreases are still being reported in the Bay Area?

Yeah, I couldn't speak to what's happening in specific districts. Some of that is demographic, some of that is birth rate related. It just depends on unique local circumstances. So I can't speak to each district in the Bay versus the Central Valley versus Southern California.

Each district's going to have unique situations driving whether they're seeing increases, decreases in what's occurring in that district.

Okay, so in regards to the enrollment growth funding, is that additional funding limited to the growing districts?

Yes, the growth funding would only be for those districts that are growing in enrollments from one year to the next over time. Yes.

All right, thank you.

Yeah, thank you. I want to get to that point to close up.

But I also just want to acknowledge in the report, since we have had a conversation about regional costs of living, we have A, on page 13, we do have a short summary of what that could mean for if we took the MIT living wage calculator, which has been referenced at other education related hearings as a potential tool to utilize for COLAs and for trying to more accurately reflect the cost of California.

And the calculations using that particular calculator are between 200 and 400 million over the next few years. So regionalization of costs has an impact as well. I just want to note that. And then to end, I think I'd be interested in the.

I know that we've talked about a 2% growth versus the 0.5% growth and there's a differential in cost of that. I'd be interested if you could work with staff on identifying those differences. But then Also just to Mr.

Muratsuchi's point, the differences, if we just do the, the elimination of the cap of the 10% and what that would mean, do the districts with the. That are beyond the 10% growth, how do they benefit from a 2% versus being more specific and targeted?

I think we'd like to know more specifics around that to see which policy would be better addressing. I think the concerns, which is to those districts that have opportunity for growth, that we're providing them with the resources to do that.

Yeah, happy to work with staff. I would add 1 more component that we did see at 24:25 that's related to the student centered funding. We do see a deficit of around 1.5 to 2% in overall funding need to fully fund the SCFF.

And you know, we will work with your staff to try and address opportunities to resolve that. Okay, appreciate that. Ms. Patel had one more question for you.

Yeah. As a new Member of this Committee, I am learning more about the online Calbright Community College and I just have some questions about that program. I'm not sure whether you're prepared to answer some really basic top level questions and if not, we can have an offline follow up conversation. The questions are around.

Now that we're past Covid and a lot of our community colleges can deliver online instruction, is there any redundancy or efficiency that we can create by sending those students back to their home districts and having enrollment embedded within the standard Community College programs? Or does the Calbright Community College offer something really, truly uniquely different?

Yeah, I think, you know, certainly we can have an additional conversation. We would say that Calbright's model is different than what other community colleges are offering right now. It was intended and structured to be focused on very short term opportunities to allow for economic mobility for students that were opting to attend Calbright.

We have seen increases in enrollment in Calbright as well. I don't have those numbers in front of me. And you know, ultimately we would note that those are students that are opting to attend Calbright as opposed to another institution. I can't speak to why the student behavior is making the. Is leading to the choices that they're making.

However, we can say they are serving more students. They are seeing outcomes with those students and, and happy to connect with you as well.

Thank you very much. Thank you. Appreciate the panel. We are going to move on to issue number two, which is the categorical programs proposal in the Governor's budget. I think we have the same panel for this. So we'll start off with the Department of Finance.

Justin Hurst with the Department of Finance. Similar to the cost of living adjustment that is provided for the overall SCFF apportionments, there's also a cost of living adjustment that is proposed for select categorical programs as a part of the Governor's budget.

This is also set at the rate of 2.43% and the proposed increase is in the amount of 31.9 million of ongoing Proposition 98 General Fund.

And this is to support specific categorical programs including the Mandate Block Grant, the Disabled Students Programs and Services or DSPS, CalWORKS Student Services, Extended Opportunity Programs and Services or EOPS Campus Child Care Tax bailout funding for related and supplemental instruction rates for apprenticeships and the Adult Education program.

I'm happy to answer any questions that you have on this item.

Lisa King with the LAO so in addition to the General purpose funds that we discussed in the previous issue, the state has more than 40 categorical programs through which it provides funding to community college districts for targeted purposes. Each year. The State provides a COLA to a subset of these categorical programs. The seven programs that Mr.

Hurst just mentioned have received a COLA in nearly every year since 2019-20. Given that the governor's proposal includes many of the programs the Legislature has prioritized for COLA in recent years, we think it's a reasonable starting point.

That said, the Legislature could choose to provide a COLA for a different set of programs based on its priorities this year.

We would just note that given the limited room for ongoing Proposition 98 spending increases within the community college budget, there will likely be a trade off between providing more funding for categorical programs and reserving those funds for other ongoing spending priorities, such as the enrollment growth we just discussed in the previous issue. Thank you.

Thank you. And Mr. Ferguson.

Yeah. We're strong supporters of the proposed categorical adjust increases for the specified categorical programs. That helps districts maintain the level of service that they're offering as well as helps them in the event that COLA is not applied to a categorical program.

Districts are often faced with difficult budgetary decisions in terms of trying to provide that same level of service to students from one year to the next. As a result, we'd be strong supporters of.

Of also applying a cost of living adjustment to all of our categorical programs, including our technology programs that help with, you know, cybersecurity incidents or avoiding cybersecurity incidents, including AI bot students.

Thank you for that. Any questions, Mr. Muratsuchi? All right. I know that in past years In K through 12 education, we try to reduce the number of categorical programs, but it does give our institutions the flexibility to direct funds to the actual programs that need to get funded.

So thank you for this presentation and I have no further questions at this time so we can move on to issue three, Rising school proposals. And we have the same panel. Once again, Mr. Hurst.

Thank you. Once again, Justin Hurst with the Department of Finance. So included with the Governor's budget is a proposal of an ongoing augmentation for the Rising Scholars Network. This proposed augmentation is in the amount of 30 million of ongoing Proposition 98 General Fund, which would bring the total of the program's funding up to 55 million.

There's an associated trailer bill for this proposal which. Which would also remove the cap on colleges within the system that would be able to participate in the program. For context, the statute currently lists up to 65 colleges as participants in the Rising Scholars Network.

That is the only proposal we have on this issue, and I'm happy to take any questions.

Lisa King with the LAO so, while we do see benefits to improving support for currently and formerly incarcerated students. Students, we also have some concerns with the governor's proposal.

The proposed increase for Rising Scholars would more than double the current funding level for this program at a time before the state has information on the outcomes of the program to date.

While state law directs the Chancellor's office to report every two years and its efforts to serve this population, the most recent report covers a period that predates state funding for Rising Scholars. The state also funded an evaluation of this program in the 22-23 Budget Act, but this evaluation has not yet begun.

We think the Legislature will be in a better position to revisit funding for Rising Scholars after it receives information on the program outcomes to date. Having said that, given the Legislature's demonstrated interest in improving support for this student group, we did also want to mention a couple of other options for doing so.

And these options come from a report that our office released last summer focused on community college programs in state prisons. First, in that report, we recommended modifying the student centered funding formula to include a performance component for incarcerated students, as it does for most other students.

We think this approach would create better incentives for districts to support this population. A second related recommendation in our report was to leverage federal Pell Grant funding to cover certain education costs for incarcerated students at the community colleges. This is similar to the approach the state is already taking for incarcerated students at the universities.

The benefit here is that it would free up state funding that could in turn be used for other purposes, potentially including increasing support for currently informally incarcerated students. Thank you. Happy to take any questions.

Thank you. Please proceed.

Certainly, the Rising Scholars Network provides degree granting programs and correctional facilities on campus support for students who have experience in the or who have experienced the criminal justice system. We'd note that the Rising Scholars Network is currently comprised of around 93 community California community colleges serving 126 correctional institutions.

Within that, we've seen strong increases in the number of students since the program's inception in 2021. In terms of the number of students enrolled and being served through the program through the spring of 2024, we've seen that increase by roughly 28.4% to just shy of 20,000 students. So we've seen significant benefit to those students.

We would note that expanding the Rising Scholars Network will contribute to a more equitable, inclusive higher education landscape, with the majority of program participants coming from underrepresented groups that have been historically historically experienced, that have historically experienced disproportionate impact, in particular in law.

Right now there is a cap on the number of community colleges that can be funded through the program. The trailer bill language associated with this investment would lift that cap and enable additional colleges to be funded through the program and therefore use the be able to use those resources to support the students through the program.

So we see a lot of benefit. Additionally, we would likely distribute the. We would see additional funds going to our colleges to be able to support the students they are serving, serving and potentially serve additional students. So we do see a lot of value here. We see a lot of value for this student population.

We're very, very thankful to be able to support these students and would appreciate the Legislature's support on this proposal.

So I do have a few questions for this program as I'm catching up and getting up to speed. I don't know the full history of this program. What specifically, what is the demand for these programs?

Sure. So we know that Today there are 93, of the 93 colleges. We know that 80 are receiving some version of grant funds, 65 through the current program and 13 are non grant funded today. So we know that they serve. I believe it's.

Of the numbers that I mentioned, there are about 13,000 that are incarcerated as well as provide supports to 20,000 justice impacted students. So we know that there's significant numbers of students being served by these programs. We also know that there are some that do not have an ongoing grant funding source to support their program.

So with that cap of 65, there are those additional colleges that if there aren't additional grant resources, may not be able to support the program. As well as we know there are 13 that are using Non State general fund or non grant program resources to support their program.

So they would be able to free up those resources to either further support this student population or to support other students on their campuses. So we can't say, I can't say today how many more students we may be able to serve. That that would be very difficult for us to estimate.

But what we can say is there is demand in the programs today. There are successful outcomes for our students and this is a population that has seen some historic challenges in being served through our system and seeing successful outcomes.

Yeah, I'm certainly supportive of giving people second chances and making sure they can go on to become productive citizens in our society. I am curious though when the data will become available to how successful programs are before adding more investment into the programs.

Do we have a good estimate about when we're going to see a program evaluation on outcomes?

Yeah, I'd have to get back to you.

Okay, no problem.

I do believe that is available. I just don't have it on me today.

Okay.

And If I may, I'll work through staff to get that to you.

Wonderful. Regarding the evaluation that was funded in the 2022-23 Budget Act, the Chancellor's office has indicated that a request for proposals is underway for that, so it hasn't yet begun.

The one note of caution there is that it is intended to cover a five year period, and so it's will likely be several years before those outcomes are available.

Okay, so the proposal here on the table is to support additional funding before we have all of our understanding of how well the program's performing or where funding should be targeted. How it should be targeted.

Correct. That's our main concern with the proposal. Okay, thank you. Do you have any questions? Yes.

So I'm catching up to the Chair here and reading the staff report. And it talks about. The staff report talks about how the governor's proposed 30 million increase for the Rising Scholars Network would more than double the ongoing program funding level.

It's also three times the increase requested by the Chancellor's office in the 2025-26 budget request, which was $10 million. And that. So my question to Department of Finance is, you know, what evidence is there of demand to justify a doubling of the program for this program?

Justin Hurst with the Department of Finance. We thought that it made sense to Fund this request at an amount that was above what the system request listed because our associated trailer bill lifted the cap on the amount colleges that would be able to participate in the program.

While we understand that this is an opt in program, so not all colleges are necessarily going to enroll in does change the number of eligible colleges from 65 to well over 100. So if we're doubling the amount of colleges that are eligible, we felt it made sense to also increase that appropriation.

Okay, thank you.

Nothing further?

No.

All right, well, thank you very much. We'll move on to the next issue is issue number four, Career Education proposals. And look at that. We have the same panelists. Justin, would you like to proceed?

Absolutely. I don't feel the need to introduce myself again, but Justin Hurst with the Department of Finance. So I'll briefly go over the California Community College's Governor's budget proposals as relating to the Career Education Master Plan. These proposals Fund the expansion of credit for prior learning policies at the community colleges and for the development of a Career Passport resource.

The first investment in the Governor's Budget is 50 million Proposition 98 General Fund 43 million of which is one time and 7 million of which is ongoing for an investment in expanding credit for prior learning policies. This investment is intended to build upon, expand and embed processes for awarding credit for prior learning across the community college system.

The trailer bill language requires more systematically establishing and maintaining a process across the colleges to identify students who may qualify for credit for prior learning with a focus on certain groups such as students with prior military service and working learners.

The language also requires more systematic communication with students regarding the credit opportunities that are available to them as well as supporting faculty groups to build upon existing credit for prior learning work. The second investment is $50 million in one time Proposition 98 General Fund for the development of the Career Passport.

The administration's goals for this investment as described in the trailer bill are to develop a secure digital tool that displays an individual's validated skills, credentials and academic achievements which could then be shared with employers to present a skills based portrait of a student's education and experience.

This is with the end goal of making it easier for people to seek better paid work. The trailer bill language states that the Career Passport will leverage data from two existing sources to populate an individual's Career Passport.

These sources are the electronic transcript information from E-Transcript California and information on validated skills from Credit For Prior Learning initiatives. This tool is intended to be provided at low or no cost to the individual and that's a point that we would like to highlight. I'm happy to take any questions on these proposals.

Lisa King with the LAO so I'll start by walking through our comments on the Credit For Prior Learning proposal and then turn to Career Passports. Regarding Credit For Prior Learning, we are aware of research suggesting that expanding this could have state benefits, potentially including increasing completion rates and allowing for a faster time to degree. Our main concern with this proposal, however, is that existing funding is already available to expand Credit For Prior Learning.

Last year's budget act included 6 million one time for many of the same system wide activities around Credit For Prior Learning that the 7 million ongoing included in the Governor's budget is intended to support, such as faculty work groups around this proposed proposal, as well as a related technology platform. That 6 million provided last year has not yet been spent and remains available for use in 2025-26. In addition, at the local level, districts have some funding that they could be using to implement Credit For Prior Learning, including through categorical programs such as the Strong Workforce Program.

And moreover, to the extent that credit for prior learning improves student outcomes, districts we think have incentives to expand it already under the Student Centered Funding Formula.

Rather than providing additional funding for Credit For Prior Learning at this time, our recommendation is to instead require the Chancellor's Office to report on these existing efforts to expand Credit for Prior Learning; their outcomes, and any remaining barriers and associated costs to expanding this approach.

We think this information would help the Legislature decide whether additional funding and how much additional funding is needed for this purpose in the future. Turning next to the 50 million one time for Career Passports, we have a number of concerns with this proposal.

First, in our view, we don't think it addresses a clearly defined problem, so there are many existing tools for job seekers to communicate their skills and credentials with employers, tools including resumes, interviews, and professional networking platforms such as LinkedIn.

In our view, the Administration hasn't identified clearly what's lacking in these existing tools and how Career Passports would improve upon them. We also think there's a risk that employers won't value a new and unfamiliar tool for this purpose relative to these existing ones.

Our second concern here is that while we are aware of some pilot projects to develop similar tools in other states, we aren't aware of any projects that are far along enough to have demonstrated outcomes such as reductions in the length of a job search or in the improvement of a job match, and that just makes it difficult for us to determine whether these Career Passports are likely to have a positive impact.

Our third main concern is that we are at this time missing some key details on this proposal. Under the proposed trailer bill language, the Legislature wouldn't receive a timeline of key deliverables until March of 2026.

We also at this stage don't have information on the out year costs of this project, including any ongoing funding that may be needed to keep this tool available to users at low or no cost as envisioned. Given these concerns, we recommend rejecting the proposed funding for Career Passports. Thank you.

Sure, I'll start with Credit for Prior Learning and then turn to Career Passports. So with Credit for Prior Learning Credit for Prior Learning gives students a jump start on completing their degree and entering the workforce by partnering with industry and identifying transferable skills that can be counted towards a college degree or certificate.

Parents Credit for Prior Learning is a powerful economic tool to make educational opportunities more accessible and provide equitable career and completion outcomes for all Californians, especially for apprentices, veterans, and working adults.

Credit for Prior Learning sets students on a structured and rewarding learning journey by honoring their documented lived experiences and earned skills based certificates that match their level of knowledge developed in a professional working environment.

We would note that research shows that students who receive just 15 units of credit for Prior Learning are nearly twice as likely to complete their educational goals. Completing in nine to 14 months less time than their peers.

By bridging the divide between industry skills and college credit, Credit for Prior Learning directly supports California's vision to prepare all learners for high skill, high wage employment. And we would also note that Credit for Priority the Credit for Prior Learning budget proposal would ensure seamless integration into college outreach and enrollment practices.

Additional funding for Credit for Prior Learning will support the critical infrastructure to integrate this practice within faculty, discipline groups, statewide articulation development and technology, among other things. I would then shift, I'll now shift to Career Passports. We're supporters of Career Passport investments as well.

The Career Passport would assist students in sharing validated academic and non academic skills when they apply for a job. A Career Passport would assist individuals with no college, some college and certificates apply for a job because it will showcase the skills that align with employer requirements so it's very student focused.

It will be useful for people to document post college career learning over the course of their careers; such as when they upscale or return back to a community college or in non academic venues, including for students who have earned bachelor's degrees and apprenticeship journey status through our system.

Career Passports will also help employers engage in skills and foreign practices in alignment with their ultimate economic demands and workforce needs.

Career Passports would be a student controlled electronic record that's intended to make it easier for people to seek better paid work because employers will be able to evaluate the potential hires based on validated skills from our system in addition to their academic credentials.

Lastly, we would note that the Career Passport recognizes the collaboration among educators, business and policymakers is essential to expanding jobs and workforce opportunities.

Thank you very much. Let me start with some questions on the Credit for Prior Learning initiative. As noted by the LAO's comments and by our agenda $6 million was appropriated for this same topic in the current budget, of which some of that funding has not. A majority of that funding has not been spent yet.

So I'm curious as to why the need to move forward with more funding at this time when 4.3 million of the previously allocated 6 million will be spent in 25-26. This is to the Chancellor's office.

Yeah, certainly if I could ask my colleague Samuel Lee to join me at the table too, help respond to questions around credit for prior learning. From our perspective, these resources would enable all colleges across the system to join in this work. We have been working through the Chancellor's Office Mapping Articulated Pathways project to assist today.

We know that there are many colleges that are already starting some of this work. So these resources would allow them to more proactively know who the students are, work with those students to get them credit today and as the research shows, see that they're more likely to achieve successful outcomes through our system.

If I could turn to my colleague Samuel if he would like to also add any additional background.

Thank you so much. My name is Samuel Lee, Senior Advisor to the Chancellor on Credit for Prior Learning. Today we do have an opportunity to invest in an ongoing effort that's been underway for the last seven years as we've been learning how to scale up credit for prior learning in the State of California.

By working with our colleges throughout the state, we are working to braid together four different funding sources. We have FIPC grant funding from the federal, Federal Government, we have Chancellor's office funding, and we have funding that was allocated from Prop 98 and the proposed $7 million funding.

So we're working to spread that across a seven year horizon to give us about seven and a half $1.0 million per year if we spread it out correctly to be able to support a scaled up strategic approach to supporting.

So it's really, It's a almost 50 $1.0 million request, but it's a seven year expenditure of the request. That's right. If you look at it in a. 7 year, 7 million per year in addition to the 6 million that is going to be spent this year and next year that's already anticipated. Yes, that's right. Okay.

How many, how many credits do you anticipate will be. What's the word? Maybe increased as a result? Yeah, or not allocated but approved maybe as a result of this. How did you calculate the $7 million per year cost?

The $7 million per year cost is really broken up. About 44% is for compensation for a team. We currently have about nine FTE staff who are supporting the state in this, and we are looking to bump that up to about 15.0 FTE over the course of the next. And these would all be at the Chancellor's office?

These would be at the Chancellor's office and run through the MAP initiative, which is administratively housed in the Riverside Community College District.

So if I'm a student who's looking to receive credit for prior learning, I'll be submitting my request through whom and who's gonna be responding to my request.

So if I could jump in real quick, what we envision with this investment is not that those students would come through the Chancellor's office.

Rather, we would be identifying students, such as our veteran students, for each campus to then work with their students and know who those students are to issue credit and be able to allow them to be issued credit for prior learning.

How are you identifying students this year?

We have a veteran sprint, we call it, where we know that we have about 30,000 plus veterans who are enrolled in the community college system statewide.

And the Chancellor's made it a priority to reach out to our 116 colleges to ask them to obtain all joint services transcripts for those veterans and upload those and offer them credit for their military training.

So we do know we have a fixed number of students that are qualified for credit for prior learning that we're not currently offering to the maximum that we could right now.

We also have veterans apprentices statewide that we know can qualify now, journey workers in a variety of the trades that can qualify now for up to a year of credit if they want to pursue an associate's degree leading to a baccalaureate degree.

And we also know that there are first responders throughout the state, including our law enforcement officers and firefighters, paramedics, cybersecurity professionals, who all qualify for significant credit if we can offer it to them through the colleges.

I'm certainly much more interested in this proposal than the passport proposal, just to be very honest. But I still am not seeing very clearly what the pathway is for a student to actually accomplish what you're intending to accomplish. I think that needs to be more fully vetted.

I'm concerned that we've got funding allocated to continue this initiative already for 2526 and we're committing additional resources to this. And I'm not entirely clear what what that additional resource will accomplish. So I do question that.

I would also just add, if it's not already part of the work plan, there are individuals in the state who received education in other countries that have difficulty identifying pathway forward here. I don't know whether or not you're including that in this credit for prior learning, but I know that that has been a barrier for people.

And so if it's not, I'd ask you to certainly revisit that and make that a stronger component of credit for prior learning, just as importantly as it is for veterans and all the other subgroups that you mentioned that I think are also merit of that kind of support.

The last question I'll ask on this component is this work group that you intend to create with 40 faculty work groups that would then develop, have a goal which helpful here, 1,000 system wide credit recommendations.

Now, how up to date is that going to be and how often do you anticipate us needing to revisit a work group like this in order to maintain whatever changes happen in the field, we can continue to apply some of those changes to credit for prior learning.

We currently have seven of those work groups underway and one of them has been highly effective, the fire workgroup. And we found, we thought we had an initial time where we would convene them, they would work for a month or two and complete all the different certifications and the credit.

But it turns out it was a longer endeavor because we've now approved over 40 different certifications in fire and they continue to do the work opening doors for firefighters to get their credit. So we see that actually continuing on until they exhaust all those certifications and all those opportunities.

That reminds me of another question which we often forget, but really important that you pointed out. A lot of this is for certificated programs, right? So that people can get back into the workforce.

And I think sometimes we just think of this from a transferability and whether that'll count towards an ADT or an associate's degree that then gets people on a pathway to a four year education.

What is the rough estimated breakdown of how many of these credits would go towards a certificated program versus what do we call what we call it traditional college coursework?

Yeah, yeah. We see that about 80% of the students have CTE related credit for prior learning that can be applied to both a certificate or an associate's degree in their discipline in a career technical education area.

So it's very highly aligned with industry and workforce needs and with existing certifications that people have that we're just not giving them credit for.

And the other 20% would be specific for traditional?

Yeah, traditional we have military students coming in with credit recommendations and communications in foreign languages and a variety of other areas.

Well, again, you've heard my feedback. I appreciate learning more about this and I think we need to revisit this on the Career Passport. That one's a little bit even more challenging for me. I.

I'm not fully comprehending exactly what we're looking to accomplish with that, but since I've already asked quite a few questions, I think I'll turn it over to my colleagues, see if anybody has questions. Mr. Fong, you'll go first.

Thank you so much, Mr. Chair, and thank you for the presentation. I'm sorry if this was asked earlier, but to follow on the Chair's comments in regards to the Career Passport proposal, also have concerns about that as well. This is something that we're not clear as to the intention of.

Why in terms of helping job seekers to communicate with prospective employers, know that there's a big price tag on this and not clear what the ultimate cost would be on this. Is there a projected cost for the Career Passport project for the full implementation of it?

Justin Hurst, Department of Finance. This proposal is 50 million in one time for the development of the Career Passport tool, which is then intended to be available for students.

Okay, thank you. And then secondly, you might have addressed this already too, but how would the 50 million for credit for prior learning be used? Are there what other one time versus ongoing expenditures for the credit for prior learning program?

Yeah, absolutely. The one time component is associated with developing the pathways for which to embed credit for prior learning within existing enrollment systems. I'm not as articulate as my colleague over here is, but the ongoing funding would also be associated with basically supporting those pathways once they're already developed.

Okay, thank you. Thank you, Mr. Chair. Thank you. My suggestion, I think that's why we have these hearings is given the, the even the LAOs concerns about not clearly defined problem with the Passport is rather than use the one time passport money on that 50 million gets the same amount here. Using that for.

I think it'd be appropriate to use one time funds for the credit for prior learning, which is the same amount, and then leaving 50 million in ongoing Prop 98 General Fund for enrollment growth, which is the topics we've discussed earlier. I think that might be a better approach.

So providing my feedback for you all as we come back in here, back at the May revision on this topic. Thank you. With that, we'll move on to issue number five, the IT proposals. And we have the same group of panelists.

All right, we'll start with the Department of Finance. Justin Hurst, once again with the Department of Finance. The Governor's budget includes two significant technology investments to support the community College system. These two Proposition 98 funded investments are as follows. The first investment is for a system wide common cloud data platform.

The Governor's budget proposes 162.5 million Proposition 98 General Fund which is comprised of 133.5 million in one time funding and 29 million in ongoing funding. This cloud based platform would be focused on leveraging existing local districts student data systems to provide near real time data reporting, develop uniform data governance policies system wide efficiencies.

As a result, the primary expected benefit of this proposal would be improved and more timely data reporting available for students, colleges and policymakers mitigation in financial mitigation in financial aid systems, real time student data showing if a student is disengaging or struggling in a class both to help counselors and faculty and more up to date reporting on the colleges available for policymakers to better understand the landscape of the community colleges.

The second investment that I referenced is the Common Enterprise Resource Planning or ERP for short platform and the Governor's Budget proposes 168 million in one time Proposition 98 General Fund for this proposal. These funds are intended for the procurement of a standardized ERP across community colleges that would help standardize student and staff experience throughout the system.

Our understanding is that there are a number of colleges with old outdated systems that are difficult to operate and these could pose significant security challenges, especially given the rapid rise and pace of technology we expect.

Benefits of this investment may include improved data security, economies of scale for system procurement, and the establishment of consistent user experience across the system on both the front end and the back end for students and staff. I'm happy to take any questions on this proposal.

Lisa King, once again with the LAO so I'll start with our comments on the common cloud data platform and then turn to our comments on the Common Enterprise Resource Planning or ERP system. Regarding the Common Cloud data platform, our basic concern with this proposal is that we think it's premature.

The Chancellor's Office recently launched a demonstration project around creating a common cloud data platform which it's currently piloting with an initial cohort of six districts. This demonstration provides an opportunity to develop and test this platform, assess the outcomes and use the associated findings and lessons learned to make a decision about whether to expand the platform system wide.

The demonstration is not expected to be complete until June of 2026 and so we think that funding system wide expansion now, as the Governor proposes, would be premature. Our recommendation is to instead require the Chancellor's office to report on the demonstration project upon its completion.

At that time, it could also provide more information on the projected benefits and costs of scaling this platform system wide, and that in turn could allow the Legislature to make a more informed decision about whether to Fund system wide expansion in a future budget.

Turning next to the Common ERP platform, we have several notable concerns with this proposal. First, for additional context, an Enterprise Resource Planning or ERP system is the system that districts use to manage many of their core business functions. So this is not only their student information, but also functions related to finance, human resources and various other activities.

With a project of this size, we would normally expect to see a lot of planning up front. One of our major concerns with this proposal is that we don't have that right now.

So as you may know, most state IT projects undergo a planning process managed by the California Department of Technology, and this process requires departments to identify project objectives, to analyze alternatives to meeting those objectives, and to prepare detailed fiscal analysis, all before the state begins to provide funding for project development and implementation.

The Chancellor's Office is not subject to this process managed by cdt, but more importantly, it hasn't gone through something similar for the common ERP project related to that.

Right now we don't have much detail on the project scope, schedule or cost, and under the proposed trailer bill language, the Chancellor's Office would not provide this information to the Legislature until January of 2027.

7 We're particularly concerned about the lack of information on project costs because we think this project is likely to have large out year costs. The Chancellor's Office has indicated to us that the 168 million one time included in the Governor's budget would likely be enough to Fund the project for the first wave of districts.

But its intent is to eventually implement this project system wide. It indicates that this system wide expansion would likely require additional funding in future years, easily in the hundreds of millions of dollars. In addition to these high out year costs, there are some other key risks with a project of this size. 1.

As I mentioned, districts use their ERP systems for many aspects of their operations from accounting to payroll. Having these 72 districts move to a common system would require them to revisit many of these local processes, creating significant costs and risks related to change management.

We also think that there are potentially some risks associated with relying on one vendor for a system wide project of this scale. For all these reasons, we recommend rejecting the proposed funding for the common ERP project. Thank you.

Sure. I'll start with the Common Cloud and then shift to Collaborative ERP. The Common Cloud will greatly accelerate our system's ability to analyze, understand and make system wide student outcomes available more urgently.

In our current environment, ah you know, an example of what the Common Cloud could help support is if we know that there's certain underserved, student groups that maybe not continuing from one semester to the next, we would be more able to convey that to state policy makers rapidly so that we can understand the trends as they're happening. Right now a lot of the data that we're able to provide to the Legislature and other state policymakers has lagged in terms of when it would be received.

So the Common Cloud includes a dashboard that will provide a real time enrollment environment and success trends. It will allow for improved tracking of student course taking, units, and progress across the system; and enable real time student analytics that enhance degree and certificate mapping and student pathways, facilitating program completion.

Under the Common Cloud, each institution will continue to have control over their own data, but will allow for unified access, allowing system level operations and tools to seamlessly find, access and use data without altering it. So this will definitely benefit students who are attending or enrolling in more than one institution or community college campus at a time.

The Common Cloud will better serve all students and especially adult and working learners and equip them with the personalized support services for them to thrive. The Common Cloud data system will also help achieve system wide efficiencies that can be redirected towards students.

The platform will allow will transform how community college data is collected, organized and analyzed across the system. Currently, different district data systems make it hard to manage and report data, causing extra work for staff.

The Common Cloud would also address this concern by connecting different data sources and different programs that we use today, showing all the data together within the cloud based approach as it relates to the collaborative enterprise resource program or project. The Collaborative ERP will provide an integrated and holistic technology foundation for managing district data, resources and operations.

The Collaborative ERP would develop an integrated technology foundation that includes student finance and human resource information Systems across the 116 colleges.

There's largely three major ERP systems to manage these processes and data with a wide variety and diverse array of customizations, integrations and accessibility or knowledge at the local level of how to utilize those systems or implement new systems as they age.

It definitely varies depending upon where your district is located, the size of your district, the number of staff your district may have. We would note that outdated piecemeal information technology hinders system performance and integration with newer tools including machine learning and AI enhanced student support services.

IT also greatly impacts IT staff in that when these systems are bogged down or IT can cause unnecessary workload with routine hardware maintenance and software patching, the current landscape inhibits the system's capacity to function cohesively and securely.

We would also note that the collaborative ERP will reduce manual processes, protect against cybersecurity vulnerabilities, and create equitable student, faculty and staff experiences across the system. We would note that IT leverages economies of scale across the system as well, and we would.

From our perspective, we've term IT collaborative ERP because our intent is for districts to opt into this approach. We know there are a number of districts today that would support opting in, and then we would get additional districts to opt in over time as they see the benefit and value of the system as it's moving forward.

So again, we're strong supporters of this proposed investment.

Thank you. Appreciate all of you for your presentation. I would say on the at the onset of this, I am very biased against government getting into the IT contracting world. I have only had negative experiences in my roles at the local government level.

We have very, very difficult time as government getting, doing the right thing when it comes to technology and the use of platforms, and so I'm very concerned about both of these.

I am particularly concerned about the ERP not undergoing what has been identified in our report as a typical planning process, and I question why that has not occurred for this particular project. I'd ask Finance if you can provide a response to that.

Justin Hurst with the Department of Finance. I'll start by noting that as the LAO mentioned, the Chancellor's Office was not required to undergo the statewide technology IT review process that you mentioned.

We introduced this as a part of the Governor's budget because we believed that this funding was important for the mission that I described at the beginning of the panel presentation.

And ultimately we chose not to fully fund the system request because we felt it was important to invest in a subset of colleges getting onto the system as they chose to opt into it.

So even though the Department of Finance always is consulted with Department of Technology on these types of IT projects, in most other circumstances, in this case, just because it's not required, you thought it was okay to proceed without this PAL process?

Michelle Nguyen, Department of Finance Yes, I think in this case we are comfortable. With the Chancellor's office kind of and. The community colleges system pursuing their kind of normal processes at the local level.

What are the safeguards that are either similar to or maybe different to the process, the typical planning process that occurs that are built into this proposal.

I think in terms of the overlap. Between some of the state and local. Safeguards, we'd have to get back to. You on the specifics of that question.

Appreciate that. I'm very concerned about that because ultimately this would then be the Legislature approving this expenditure, knowing that there's a process that was created for us to avoid potential. Potential pitfalls when it comes to technology. So I just want to put that out there. That's a concern of mine.

On the Common Cloud data platform, why can't we wait until the demonstration project is completed next year to have more information on how to move forward?

Yeah, from our perspective, we're seeing some early returns from that investment and from the early work around the Common Cloud data platform. And we see the need to help our students now to have that information available to better advise our students as to, you know, the educational programming, educational pathways.

We also know, just given the uncertainty that many of our institutions are facing, having real time data available today is very important to know exactly what trends we are seeing on our campuses. And that goes both for our student trends, our enrollment trends, our course taking trends, are they switching majors?

We will be able to see that in more real time and know and be able to respond, provide additional student supports more rapidly.

Additionally, we would say that for the state, because you can look at those trends, you would also have better information to know how or to be able to consider how to respond to a given event as it's occurring.

You know, one of the big challenges that many may recall is during the pandemic, it was very difficult for us to convey what we were seeing in terms of student enrollment declines by district, what we were seeing in terms of growth after the pandemic and this type of system.

And this investment now would allow for that information to be available so that you would be able to make more qualified decisions.

So from our perspective, we've seen some of the initial success with, I believe there's six in the initial cohort, five or six districts, and we're seeing the value to our students, to our system, and ultimately to the Legislature. So while the pilot has not. But while the demonstration project has not been complete, we haven't reviewed it.

We see the need and we see the problem today and we see the value in what this system could do.

Is it accurate that the common. Sorry, yeah. The Common Cloud data platform component of this request is 96 million. As was presented at a January Board of Governors meeting. This component is just 96 million.

That's certainly one of the potential cost estimates. I Think what it depends on is the level of dashboards, the amount of customization that can be made and integrated, the level of support over multiple years.

So to your, to your point, we think that these resources would be used with Fidelity, but if there are a lesser amount, you know, certainly we would convey that to the Legislature.

And what's the annual cost of operating the Common Cloud once it's implemented?

Certainly. So there, there's been. And really I would say it also applies to the Data governance workgroup.

There's 29 million ongoing that has been proposed by the Administration to support the ongoing work and ongoing functionality of the Common Cloud data platform, allow for maintenance operations to continue moving forward so that we have better data available to advise our students and to provide to statewide policymakers.

So you would be utilizing the vendor that is being utilized in the pilot demonstration projects?

I don't know that we can say we would use that particular vendor at this moment. It is highly likely that we will go through a competitive bidding process to determine who the vendors, what the requirements and underlying requirements of that vendor would be.

And we would also do so as we work toward the overall software package that would be needed to integrate. So it's, you know, highly likely that it will go through a competitive bidding process, it'll go through an RFP process that will all be public.

Again, you know, our office is intending to use these resources with Fidelity to see significant outcomes for our students for our state. It is not our intent to take significant risk.

So I would assume that at minimum some of your requirements for the bidders would be to be able to integrate into the ever growing and still waiting on Cradle to Career platform.

So our information could be fed from Common Cloud data platform into the Cradle to Career data system. We would just note that what we're focused on is real time information to advise students.

The Cradle to Career data system is, while it has multiple layers to it is not necessarily focused on having our real time data readily accessible and uploaded consistently. It may be more point in time data that is being submitted through that system. So we're really focused on our students, on our trends, trying to understand what is happening.

The Cradle to Career data system may not be in that same real time vein in terms of the data that it has available.

That's really concerning not from what you're hoping to do, but from what you just explained that they are working on. Because this Cradle to Career concept has been around now for several years with a lot of investment from the state. Millions.

Again, another data platform with millions of dollars and we still don't have, and to know that that won't be able to produce real time information is certainly concerning. Even when we have real time information data inputs. That's again, that's not your project. So not speaking specifically to you, but that's concerning to hear. I'll turn it over.

I think you hear my concerns on both of these. I'll turn it over to my colleagues. Ms. Patel, then. Mr. Fong

Thank you for the presentation on this. I'm going to focus my comments on the ERP system. I am fully engaged and supportive of leveraging economies of scale. I think that's great when we can create efficiencies, but in this situation you're talking about scaling up and starting with a few campuses first.

So we're not going to be able to leverage those economies of scale right from the beginning. Is that my understanding?

I think, you know, from our perspective, we would be able to begin leveraging almost immediately. I believe. If I, if I recall, there's roughly 15 districts that would like to participate on the front end, so we can start getting an economy of scale across those 15 districts.

Okay. And have we done a budget realization with how much training, extra training is going to be required for our staff that are going to be accessing this new platform and their release time for that training? Is that in that calculation as well?

Yeah. Within the resources that would be provided, the 168 million would be able to support the development of the collaborative ERP as well as provide support to districts to help train them as they transition onto the collaborative erp.

I don't think we would deny that any time you're shifting ERP systems or updating ERP systems, there is a lot of workload at the local level associated with that. Our goal is to make this smooth and to then subsequently be able to provide enhanced assistance to districts as they move forward.

You know, I believe in the 15 districts, it's a lot of our more rural small colleges that experience difficulties implementing and updating ERP systems just given their size and scope. So it does allow for a lot of enhanced benefits in terms of our ability to help with training to help with districts as they transition.

And you know, also those districts would then be able to help each other as well as they would be learning similar approaches at the same time. So it does allow for us to operate much more as a system as well.

And it's those, those rural and smaller districts that are asking to be part of the initial pilot.

That's my understanding that there are a number of rural and smaller districts as well as a couple of other larger districts that have recently undergone ERP updates, but are also supportive of shifting to this type of approach. They.

They also see the value and in terms of being able to rely upon other districts to reply, rely upon the economy of scale. And ultimately, if we are taking a system wide approach and covering the cost for the district, it would enable those districts to free up local resources to further support their students in their programming.

Okay, so I understand that the goal and the scope. I still do have some concerns regarding it not going through the standard process, but thank you. I echo some of the concerns of my chair.

So if I could be helpful on, on that. We have worked with our districts for about a year to develop the conversation, to develop the approach, to look at the approach. One of the things that did change over time was initially we.

We started with a focus of saying it's going to be a common ERP system and everyone must be on it. And over time we shifted to that collaborative approach as well. We have technology experts from the field involved in that work. So we have been doing that type of work internally with our system and our system partners.

While it might not be the project approval life cycle process, we have been working with our system to do this. You know, one example of another technology project that we've recently implemented, Program Pathways Mapper. We've seen success there.

It's a much smaller scale project in terms of cost and risk, but we think that, you know, we're prepared to implement this with Fidelity.

Thank you. Mr. Fong.

Thank you so much, Mr. Chair. And thank you everyone for the robust presentation on this. Just to echo the Chair's concerns. I have concerns as well. I served on the local community college board and I know that before when we went through massive changes in terms of software implementation, we were delayed by a year, six months.

It's a very bumpy process. And so my concern is that this has not gone through the, I guess, the typical IT evaluation. Is there any thoughts about maybe trying to go through the evaluation process or. You mentioned that you been working with 15 districts so far.

I think there's 15. My understanding is there's 15 that would like to participate. It's been more of a system wide approach in terms of our work group. So it's not necessarily just limited to those 15 that we had been working with.

There is information about that process, including, you know, meeting notes on our website, you know, indicating how we were working across the system to do this certainly respect where you're coming from in terms of it did not go through the state's traditional process, but we would, you know, again note we've done a lot of things at our system level where we think it, it shows that we will implement with Fidelity.

We will implement in a way that reduces risk. And you know, you know, examples include, you know, we have the Butte Technology center that helps evaluate, helps with technology projects across our system. There's a similar district in Southern California that does that also assists.

We have been assisting districts with preventing cybersecurity incidents and providing tools to help address fraud and fraudulent students. So we, we think, you know, we have a lot of expertise here that bodes well for this project and we, we think there's a lot of benefit for our system.

And thank you for that context. And I also understand that some community colleges may have just signed a new contract with different vendors. Are we going to make them whole or how does that process work from the Chancellor's office side? Yeah, from, from our scale up this ERP program?

Yeah, certainly. So over time, you know, we would hope that more districts would opt in as they see the benefits and the value of the system for those 15 districts.

And I don't think we are intending to fund the costs for districts that have implemented an ERP system today or have already done so so much as we're intending to have that scaled process over time and allow for it over time as those contracts may expire.

And is it the estimates of nearly $300 million according to the Chancellor's office for the full scalability of this program.

I would have to get back to you, but certainly there are additional costs. 168 million is where we think we can move today, but there would be additional costs as more districts come on board. Thank you for that context.

I know on the Common Cloud platform we heard from the LAO that the demonstration project is still going on and anticipating that the project's completed in June of 2026. Why the rush now to instead of waiting for the demonstration project to be completed by October 202026?

Justin Hurst Department of Finance While the demonstration project for the Common Cloud has not concluded, it has completed the first phase of the project. And while we would defer to the Chancellor's office on more detail, we believe that this investment is both timely and important for some of the reasons that we've been discussing.

Like I mentioned before, some examples include better fraud monitoring and mitigation and financial systems, real time student data showing if a student is disengaged or struggling in their classes, more up to date reporting on the colleges at large to be available for policymakers.

And then during the pandemic there was a strong desire for more real time enrollment data that could have been helpful for the state to be able to respond to the enrollment crisis that was happening and all of that factored into the decision.

Thank you for that context. And I know the Chair mentioned this earlier, but $96 million over several years for the common Cloud platform and maybe up to 168 million or up to 300 million for the common ERP. So we're possibly talking close to 400 million, is that correct?

Yeah, yeah. Based on that math, yes. You know, there certainly as proposed in the Governor's budget, I think the total is 133 million in one time plus another 168 million one time. So around 300 million one time and around 29 million ongoing.

Thank you. And I appreciate the work of the CIOs and CTOs up and down the state and the community college districts, a lot of regionalized approaches as well.

I did hear that there's some concerns from the Community College League as well regarding the benefits of those proposals and possibly can suggest better use of the funds, including a flexible block grant program, student support programs.

We know that we're in very challenging times right now and I know on page 18 of the I know that's for a prior presentation, but there are requests for augmentation of other categoricals including a student support block grant, support for DREAM Resource centers, LGBTQ support centers, basic needs, mental health services, rapid rehousing, legal services for undocumented students.

CTA has a proposal for part time faculty. The Community College Association MESA Director is a cohort for the MESA program. So there's a lot of different needs out there and we're in very challenging budget times.

And I also just want to put out there, I did submit a budget letter request also for a one time student support block grant as well to be used a number of purposes that are listed in terms of the categoricals.

So I just want to put that out there and on the record, but appreciate the context on these two programs. Thank you Mr. Chair.

Thank you. The more I hear questions, the more questions I think of and I'm actually more concerned than even when this started to be, to be really honest with you, for a roughly $400 million expenditure, it seems to me, and I am not in it, but that these two systems should probably better integrated, should be working together.

And I think Only with the use of individuals with experience in the IT sector could we ever figure out whether or not that's the case.

And that's my concern with this not going through the lens of the Department of Technology, which was instituted to make sure that data systems, that IT systems that the state got involved with got us the biggest bang for our buck. So I'm really concerned about that.

I hear the 15 districts that may need some support and maybe it makes sense to do a system that's a smaller system available for them.

Maybe what we need to do is invest in time working with procurement people at each of the campuses, each of the districts, I should say, so that RFPs are written in a way that data could be shared and more easily accessible to the whole system.

Those are things that I think are pretty minimal questions we should be asking. Can we do this a different way? And I just don't see how in good conscience, without a scope, a schedule and a cost, as is noted in our in our report on page 37, we can just say this is ready to go.

So all those questions really still remain for me, if we're going to create a system of this much that's going to cost as much money, which we should be a little bit entrepreneurial and maybe create a system that we can create a widget out of and sell to somebody else or something, there's a lot of investment for us to have a system that's going to become likely antiquated in some years and we'll need to reinvest in.

So I think we need to still do more work on this before we're ready to move forward. I think I've made my concerns pretty clear and look forward to hearing response to all those going forward. We will hold the issue open and move on to issue number six, which is our student housing update.

Thank you all for being here and continuing to be here because this is you again, it looks like on this panel. This is an update on the student housing Grant program which Legislature approved over the course of a couple of years. In the last couple years. Turn it over to Department of Finance to kick us off.

Good afternoon, Chair and Members, Alex Anaya Velasquez with the Department of Finance.

As noted in the agenda for the Higher Education Student Housing Grant Program, the Governor's budget continues to provide general fund for debt service support for UC, CSU and California Community College projects that were approved in the 2022 and 2023 Budget Acts.

As you may recall, the 2024 Budget act reflected a shift from general fund support for California Community Colleges to instead be financed through a state wide lease revenue bond program. The Governor's budget reflects the ongoing general fund support for debt service for those projects that shifted to the statewide lease renew bond program.

Additionally, we would like to note that the Governor's budget provides 1.3 million general fund to support debt service for completed community college projects in 2025-26. We did want to note that though this amount should have been approximately 2.5 million for 2025-26 at the Governor's Budget, but we plan to fix this oversight at the May revision.

Lastly, the 2025-26 Governor's budget does not include any additional new proposals or new projects related to the Higher Education Student Housing Grant Program, but the Administration remains committed to providing support for projects that have already been approved. This concludes my remarks and I'm happy to take any questions at the appropriate time. Thank you.

Good afternoon, Chair and Members. Alexandra Waldman with the Department of Finance the budget act of 2024 included trailer bill language to establish a new lease revenue bond program to maintain funding for 13 affordable student housing projects at the California Community Colleges which were originally funded by the Higher Education Student Housing Grant Program.

Finance has been working with the Chancellor's Office to develop the lease revenue bond program structure that serves the needs of the districts and has also been working to develop the legal framework to facilitate the interim financing and the sale of the bonds.

Of the 13 projects eligible for this program, 11 are still actively involved with the program, with one campus having withdrawn and another yet to determine its status.

Of the 11 active projects, four are currently under construction, with five more due to begin construction in the budget year and the remaining two due to begin construction in fiscal year 26-27. Happy to take any comments or questions at the appropriate time. Thank you.

No comments from LAO on this proposal. But I am available for questions. Thank you.

From our perspective, community college students face tremendous obstacles in their quest to complete their educational goals, including homelessness and housing insecurity. According to a 2023 survey conducted by the CEO Affordability Food and Housing Access Task Force and the RP Group Familiar, 58% of survey respondents experienced some form of housing insecurity in the past year.

Homelessness affected 24% of California community college survey respondents during the previous year, and African American, Black, American Indian, Alaskan Native, and Hispanic Latinx students were more likely to report basic needs insecurities than students from other races or ethnicities.

So, from our perspective, affordable student housing is critical to the success of community college students and provides them with a holistic foundation to thrive. And we know that there is significant demand among our community colleges to construct affordable student housing. Yet the funding options are limited.

We certainly can request the Committee consider funding as many projects as we possibly can if resources become available under the statewide lease revenue bond process that has been approved. We know that roughly 35 projects.

We received 35 unfunded applications from districts, reflecting an unmet need of around 2.14 billion that had, I think, a total cost of roughly 2.45 billion. The difference being funded through other local funding sources. So many of those projects are likely shovel ready.

Should the Legislature be able to fund them or should the state be able to fund them? That is so certainly we see the benefit for our students. We see the benefit of it being affordable access to housing options and are very supportive of the investment.

Thank you. Just some clarifying questions. I see in the staff report on page 42. Two of the campuses or two of the colleges have withdrawn their application. College of the Canyons and San Diego City College. Do we have specific reasoning as to why?

Alexandra Wildman, the Department of Finance. Finance has been made aware that College of the Canyons withdrew due to a leadership change. And we have not received anything formal at this time from San Diego City College.

Okay. Okay. So that means that there's funding, more funding available than was already approved. What's the process for selecting applicants? Or what happens with the funding that was anticipated to be set aside for. For those two projects, which combined to about 136 million.

So the Governor's budget does not currently propose augmenting the original statute, which only provides authority for the 13 original. And we are still determining the legal disposition of the returned funding because it's not clear under statute if it would automatically be available for that purpose.

Do you anticipate that to be clear by the May revision?

I would have to get back to you on that.

Okay. How else can we get clarity on this by May revision? Does the LAO have any thoughts on that?

We don't have any additional information on this, unfortunately.

Okay.

Chancellor's Office.

So we wouldn't be able to speak to, you know, the decision making here, but what we can say is we have the list of scored projects that from previously submitted applications. We provided that to your staff that is readily available.

And our understanding of the program has been that the administration and Legislature have jointly determined which projects would ultimately be funded off of those applications that had been submitted and scored. Should the additional projects be funded.

The one thing that we would note is it is our understanding that part of the reason for maintaining those resources is to ensure that the 13 approved projects can be seen through through to.

Completion yeah because I I note that $80 million in additional cost from just like a year or two ago that's another reminder to all of us of how difficult and expensive it is to build housing in California. Okay, that's all my questions. Ms. Patel.

It's my. Understanding that for the San Diego city colleges that they pass their own local measure funding measure is can anyone verify.

That yeah they did I believe they have a multi $1.0 billion bond that was recently approved I don't have the specific rationale from the district nor have I heard but it is my understanding that it may be related to their use of a potential P3 project at the local level to move it forward.

Mr. Chair does that help you in your understanding?

Yeah, still state money that's not.

Yes.

75 million.

So that benefit of going, benefit of going the alternative route, I assume is worth $75 million or more.

Yeah. Maybe different strings or different decision processes.

Yeah. Thank you, Mr. Fong. Thank you so much, Mr. Chair, and thank you for the robust presentation. And we know that student housing, there's still a lot of need and a lot of projects in the works. More than 30 projects are not funded.

I know we just had our community college advocacy day and I met with a number of districts up and down the state and a lot of folks are ready to go and to shovel ready.

So as the chair mentioned, with the 136 million, hopefully we'll get some clarification by May in terms of how those funds can be distributed and how if there's other projects that are ready to go that we can make sure that these projects get funded. I think there's a lot of energy just up and down the state.

You mentioned 24% of students experience homelessness, housing security. And when I served on the Community College Board in Los Angeles, we did a study and mentioned one out of five. And so we know these numbers are just staggering and we need to do everything possible to continue to build housing and student housing going forward.

So thank you so much. Thank you, Mr. Chair.

Thank you. Yeah, I think we just want clarity by May revise. If, if the thinking is we're not going to identify more projects for building, then I think we need to know that. Or, or if we need to make changes to, in order for statute to allow for some of the next ranked projects to receive.

We're talking about housing that they're ready to build and we should, you know, already we're reducing affordable housing dollars in the state the way it is, so we need to find and utilize every dollar. I would hate to sit around any longer than we have to to say, zero, we can do this.

It just takes this act of the Legislature potentially. So hopefully we'll see that from you before the May revise. Thank you.

Zero, excuse me, Chair Alvarez. Thank you. Alexandra Waldman with the Department of Finance. Just to clarify, it would require a statutory change to include additional projects outside of the 13 originally approved in the lease revenue bond structure specifically.

Okay, thank you. I think that clarifies it. Your previous answer. That's not what it sounded like. Thank you. Did you want to add something?

Yes. Mike McGinnis, Department of Finance. One thing that I would add to this discussion is that the administration's priority is to complete the projects that are already identified for this program. So to the extent that the return funds are made available for other projects.

It would be the administration's priority to maintain flexibility with that funding at this time to ensure that those projects can successfully meet their targets.

Do we have any expectation that it's going to. The cost overrun is more than 80 million at this point.

It's difficult to say because some of these projects are not yet in construction. And so we're dealing with estimates that will turn into action.

We don't have deadlines for construction.

We do have estimates as to when construction will start, but some of them are ways out. So as we continue to move forward with these projects and learn more about these, the actual costs, I think we'll be in a better position to make a determination as to how those funds could best be used.

Did we not score these based on when they could be built and how quickly? And if people are delayed, then shouldn't we consider that as potential change in their agreement with us?

Well, these projects are in the design phase at this point, so they are already underway and making progress at this point.

So are. So are probably a bunch of other projects. And if one's ready to go sooner than later, the more you wait, the more expensive it gets and the less housing gets built. So I'm just trying to understand how we made the decision in the first place.

And if people aren't building the units, we have at least 10 others that seem to be ready to build.

Yeah, this is Michelle Nguyen, Department of Finance. I can maybe speak to some of the thought process for the original approvals in the 2020 Budget Act. So at the time of that Budget act, it was, you know, well, preceded the state lease revenue bond kind of structure and concept that, that we're in right now.

And actually at the time, the Department of Finance was administering the scoring of those proposals. We had scored those proposals at the time based on two main metrics. One was the number of affordable beds that the project offered, and then two was like a cost per bed.

So it was kind of balancing both, like the affordability and then the cost efficiency of the project. The in terms of the construction deadlines. Those were kind of considered as part of the overall review. But in terms of like the. How the. The projects that came to be approved were kind of ranked and scored at the time.

Those were the two main metrics, and those were the projects that kind of became part of the.

Thank you. That's. That's really helpful. But you know, from a housing perspective, in a housing crisis, if you under bid or you did not do all of Your homework to identify costs. You could have had projects here that now are way more costly than the projects the other projects that were listed because of their delays.

And so whether it's, I think knowing better, this is not on you, but knowing better what the delays are due to and understanding that if that's from a district level perspective, lack of focus and management, that's a serious concern.

If you're increasing the cost of your project as a result of that, you probably shouldn't be building projects and we probably shouldn't be funding you to build those projects. So I'm. I think we need to really maybe revisit this as well. Mr. Ferguson, I know you jumping to jump in here.

Yes. You know, on behalf of the system and the colleges that have approved projects, a lot of the delays were around the original structure was for the General Fund to support those projects. Then the state pulled back that General Fund and shifted toward a lease revenue debt service approach. That process took longer than anticipated.

So districts were very hesitant to move forward with the projects based on the timelines and the applications that they'd sent because they did not know if those resources would ultimately become available and materialized. So they were hesitant to take on that liability without knowing that particular structure. And that did delay it almost two years.

I'm not trying to be argumentative, but there's projects here from 2223 that are already under construction. So. And there's some here from the year after that that are still in working or preliminary plans. And so that demonstrates that we have districts that are ready to build.

And in a era where we need housing, especially for students, we need housing. So. Yeah, yeah. Ms. Patel, let you make the closing argument here.

Certainly we do need housing for students and it'll help towards the resiliency and the completion of students finishing their community college programs. Right. If they have stability in their housing, they'll get that. And the sooner we can get these online, the better.

My question is, do you know whether any of these proposals were best value or are they all lowest bidder? I am concerned about leaving the money that these two districts are now putting back into the pool for it to just be used to distribute across, perhaps to address cost overruns.

So I would like to know whether they were best value or lowest bidder and how are we going to track those cost overruns?

Yeah, I don't have that information readily available. But what we did do and advised our districts to do based on the statute is we have advised them to value engineer their projects to be within the Available resources that were originally allocated by the state.

If that still does not return a project that would be within that cost, there are provisions in the statute that allow for the number of beds that would be available to be adjusted to also allow for. And. But there's a cap on how many.

So to also be adjusted to allow for the projects to be constructed within the allocations that had been put forward. You know, from our perspective, I think it just came down to for some of those districts, risk tolerance as to, you know, whether they would start or move forward immediately. Several districts have taken that risk.

Several had been constructing before the program began and their project became eligible. Santa Rosa Junior College in particular had originally started through a revenue bond at csfa. So I don't have the contracting information readily available for you, but we can certainly work with the districts to get that.

And looking that some of these were started in 2022, I'm assuming they didn't take into account the impacts of tariffs on material and that is obviously going to significantly impact the cost of the projects.

Yeah. And Alex and I just to add for the requirement that's in statute, I believe it's around 10% of a project scope change that the community college district or project has. Yeah. Has to notify the Legislature, finance and the LAO as well.

10% would have totaled less than the 80 million already cost overrun. So I think my concern is now we're also signaling, hey, we don't. We are not only going to do the 80.5 million you've already gone over, but we've got another 50 continue going over. No rush here. You know, whatever it takes to build.

That's the wrong signal to send. That is completely the wrong signal to send. So I think we need to, we need to look at this and see what exactly we're going to get and how quickly we're going to get this housing built. All right, we'll leave the issue open. Thank you all.

Appreciate all the feedback and the responses. Very helpful. And we'll move on to issue number seven, the Chancellor's office reductions update and Department of Finance LAO and once again, the Chancellor's office. Go ahead. Welcome.

Thank you. Hello. Once again, Justin Hurst with the Department of Finance. As you May recall, the 2024 Budget act included targeted reductions across state agencies by eliminating approximately 10,000 vacant positions in 2526 and reductions in state operations by up to 7.95% beginning in 22. Sorry202425.

The work of allocating the agreed upon savings came in the form of control sections 4.05 and 4.12.

The Administration worked with departments, including the Chancellor's office, during the beginning of the fiscal year in order to allocate these reductions in such a way as to ensure the continuation of mission critical programs positions while minimizing public impact for the Chancellor's office. Reductions pursuant to both of these control sections.

There's a total of 2.2 million in Non Proposition 98 General Fund in the current year and ongoing reductions of 1.2 million Non Proposition 98 General Fund starting in the budget year for Control Section 4.12 specifically, which is associated with reductions resulting from positions.

I'd like to note that this reduction was made with no changes to overall position authority for the Chancellor's office. I'm happy to take any questions on this item.

No comments from us on this issue, but once again, available for questions.

Yes, certainly we, we'd ask the Legislature to consider exempting us from these reductions. It does make it more difficult for us to oversee projects, to oversee accountability. It does make it harder for us to deliver technical assistance to community college districts.

You know, ultimately we'll, we'll do what is needed based upon the budget that comes forward to live within the resources available to our office. But we would note it does make it much more difficult to meet the needs of the system. We are the smallest system office of the three systems.

We have the smallest legal team of the three systems. So as we see federal issues pop up, things like that do become more difficult for us to handle. In addition to the day to day workload of supporting our colleges, our students and our staff. And certainly we just ask for consideration to exempt us from that. Thank you.

Do you have questions, Ms.

Patel?

I have a General question for Justin, Department of Finance. How are all of the other departments and divisions doing with their force reduction.

Departments as in other agencies at the state level? Yes, yes, thank you. I'm the expert on the community colleges. I can't really speak to those other departments.

Okay, thank you, Mr.

Fong. Thank you so much, Mr. Chair. And thank you for all the presentations here. You mentioned the legal teams. How many lawyers are part of the legal team right now or how many would you need to do?

How many do you have and how many would you need to respond to all the technical assistance requests that you probably get from the 73 community college districts?

So I don't have the specific number in front of me. I believe it's five or six total lawyers that we have today. You know, certainly just having one additional lawyer Focus specifically on federal issues would be very helpful to our office and our system. We do get inquiries from districts.

Often we are working with them to understand the impacts of different changes. So would certainly say that that's, you know, something that would be very helpful to our system. It is not part of our official board request, but would just say absolutely, it could be helpful with our system.

And we would also note, I believe our current vacancy rate is around 5%. So we run a very lean operation.

And thank you for that context. And I believe in the budget sub through meeting a few meetings ago, there was context about the Chancellor's office request for IT personnel. Is that correct or is that a different meeting? There's a request for, I think one position, I think is that we're calling it zero, Student Case. I'm sorry. Sorry.

But thanks for that. Yeah. Yes.

What I would say is, you know, we just ask for consideration through the process as investments are made in our system. If they require additional workload out of our office, we would certainly ask for consideration for resources for office to help support that workload.

And then with the many initiatives that the Chancellor's office is carrying and the working efforts and providing technical assistance disseminated through different districts, the workhorse of higher education here, California. So really appreciate the context and. And the request coming forward. Thank you. Thank you, Mr. Chair.

Thank you. That concludes this issue. We'll hold it open and move on to our final issue of the day, which is the Title 9 update. This will only be, I believe, the community college Chancellor's office providing us an Update on Title 9.

Thank you. Good afternoon, Mr. Chair and Members. David O'Brien, Vice Chancellor for External Relations for the California Community College's Chancellor's Office. On behalf of Chancellor Christian, we are grateful to all of you for agendizing this really critical and important issue.

I want to reiterate that the California community colleges are committed to ensuring that all of our campuses provide a safe, welcoming and inclusive environment for all Members of the campus community, and that includes students, faculty and staff. Discrimination on the basis of sex, including sexual orientation or gender identity health has no place on our campuses, period.

In terms of the update that is required as part of your legislation, Mr. Chair, and that we're happy to provide. I won't reiterate some of what your staff agenda goes into about the unique nature of our system. It's all in there and it's very well done.

But I would just to summarize what's in here, the community colleges, at least from a system level perspective are a little bit unique when it comes to this particular issue because as you'll find when you look at the way we're set up, the primary responsibility under Title Ix, the legal responsibilities in terms of what I'm saying, in terms of what the Department of Education enforces, and the investigatory processes they do around Title IX occur at the campus and district level.

They don't occur at the Chancellor's office level. So as a result, we're set up a little bit differently. And there's a handy comparison chart on page 48 of your agenda here that shows the differences with the other two higher education systems.

We were pleased, and I want to say that we're grateful to the Legislature, particularly the Chair Fong of our Higher Education Committee and the wonderful staff there, for working on some legislation last year to try and come to a place where we can be responsive to the Legislature's concerns here within the framework of the community college system that we have.

So Assemblymember Fong authored legislation, Assembly Bill 2048, last year that requires the Chancellor's office to issue a set of recommendations to the Legislature on essentially how to achieve these goals of ensuring that safe campus environment that we are effectively preventing whenever we can, detecting whenever we can, and responding to incidents of sexual harassment, assault or discrimination on our campuses.

In response to that legislation, we have established a work group on gender equity at the California Community Colleges. I'm grateful to Chancellor Christian for asking me to chair that work group. We've also got Members of our Board of Governors, campus and district chief Executive officers, trustees, faculty, other staff and administrators, including Title IX coordinators and students.

Most importantly, I think on that work group and that workgroup is meeting now as we speak this spring, the plan is that the workgroup is going to deliver first to the Board of Governors and then to the Legislature a set of policy recommendations, including any changes to a Chancellor's office policy, Board of Governors, Title 5 regulations or statute that we are recommending that we've come up with this work group to again ensure that we're meeting the Legislature's desire to effectively respond to incidents of discrimination, harassment on our campuses, we were reminded very helpfully by the Legislature last year that even though there has been a weakening of Title IX protections at the federal level owing to the fact that a federal judge recently overturned President Biden's Title 9 regulations, which took a more expansive view, including gender identity issues and protections for pregnant and parenting students, even though, you know that's now been struck down by a court and the federal protections are now somewhat less expansive than they were owing to the enforcement of the current Administration.

There is state law that remains in place, and I think that goes to what Executive Vice Chancellor Ferguson said all the way back in his opening remarks, that we are endeavoring to remind our campuses that state law protecting some of those student populations, like students who are pregnant or parenting, like students who are gender nonconforming or transgender, those protections remain in place.

And it is our expectation that those students and others protect, covered by those, continue to have those protections under state law, regardless of what the Federal Government says.

Lastly, I just want to note that it is our expectation that at roughly this time or whenever this update occurs next year, that we will have a more substantive update for you based on the recommendations of that workgroup that's met. We anticipate that the report will have been issued by then.

It is due to the Legislature by December 2025, and this is one reporting deadline we anticipate we will be able to make. And the report, again, in addition to addressing any statutory changes or state regulatory changes we're recommending, it will also address whether there's a need for additional state budget resources to go towards this issue.

I would note in particular, one thing that came up in our conversations with Higher Ed Committee staff around this issue is that we are the only one of the three system offices that doesn't have a centralized civil rights office or unit or even a formally designated Title IX coordinator.

And so we've begun some very early discussions about it. It's we think it's too early to put anything before you for your consideration in the budget year.

But there's a possibility we may want to include in those recommendations, you know, some sort of Office of Civil Rights and Non Discrimination at the Chancellor's Office that include could include not just a Title IX coordinator, but also, for instance, a tribal and Native American liaison, which is an effort we're stepping up our engagement in, as well as a DEIA coordinator as well.

So stay tuned. A lot to come, but we remain as committed as ever to the idea that our campuses be safe, welcoming and inclusive for everyone. Thank you.

Turn it over to our Chair of Higher Education. Thank you so much, Mr. Chair, and thank you for your leadership and efforts on Assembly Bill 2326 and to chair Alvarez and all my colleagues for the partnership last year on the Call to Action Bill package. Really grateful for the updates here today.

And we know that the report coming forward is something that we're going to continue to look at the recommendations and implementation of the work and efforts. So the work group is so critical to providing those standardized procedures up and down the state.

Appreciate your updates here, Vice Chancellor, and the work and efforts to uplift a possible Office of Civil Rights. So thanks for putting that on our radar as well. But we've got to continue to uplift our students, faculty and staff to keep our campuses safe and to prevent discrimination and harassment and to address these issues.

These are very critical issues up and down the state to really make sure that our students or staff faculty feel safe and really appreciate the context and efforts here. And thank you to the Committee staff and to everyone for the work and efforts and collaboration and all my colleagues as well. Thank you, Mr. Chair.

Thank you. And acknowledge the work that Chair of higher education, Mr. Fong did last year with a package of bills around Title nine. Really focusing on this. Appreciate you coming forward so quickly with this update. Really being responsive to us. Appreciate that. Ms. Patel. Yes.

I just want to plant a seed out in the universe. With our increased amount of student housing coming on campus, I think it will be critical that we have a Title IX officer, Office of Civil Rights established through the Chancellor's office because chances are we will see more concerns pop up in those situations.

So just putting the seat out there for future thought.

Excellent point. I would agree. I anticipate us seeing something in the next year or two from the Chancellor's office as a proposal. So with that, thank you very much and thanks to everybody else. We did get to hear from a few folks, public comments. So if you already spoke earlier, thank you.

If you did not speak earlier, this is your opportunity to have one minute of your public comment and we ask you to come forward, state your name and if you have an affiliation and give you one minute and I will notify you when the time has expired. Thank you very much and welcome.

Thank you. Good afternoon, Chair Alvarez and Members of the Subcommitee. I'm Dr. Catherine Jeffrey, the Superintendent, President of Santa Monica Community College District. I appear before you today making a direct appeal for support from the Legislature for smc. Earlier this year, our community experienced significant destruction from the Palisades fire.

Nearly 10,000 structures, mostly residential, were destroyed or damaged to the point of being uninhabitable. Many SMC students, staff and faculty lost their homes or became unhoused as a result of the fires. SMC has worked diligently to do everything possible to ensure the continuity of educational programs and services for students.

However, the loss of enrollment for Santa Monica College, coupled with the expiring hold harmless protections will force us into a situation where we have to make tough decisions on reductions of programs, courses and or staff. We have submitted a budget request to the Assembly and are hopeful that with your help SMC can continue to provide.

Thank you to our ongoing to our surrounding community. Thank you so much for your support.

Good afternoon Chair Alvarez and Members. I'm Sabrina Means with Capital Advisors Group. On behalf of Santa Monica College. Echoing the comments by Dr. Jeffrey, my colleagues and I have been working very closely with your staff. Thank you. Mark Martin and the Office of Assembly Members Burr on the budget request to extend Santa Monica's hold harmless provision. It's.

It's a simple extension of the provision which has been carved out for other community college districts in the past that have faced exigent circumstances. Ideally, our community can recover in faster than five years and the full length of the hold harmless would not be necessary.

However, without this we would have to make cuts and it will could then lower enrollment and thus continue a cascading effect of a fiscal tailspin.

We've had previous conversations with the Chancellor's office regarding an emergency emergency conditions allowance, but it appears that that option would not be viable for Santa Monica College to recover its apportionment funding until at least 2728. We look forward to continuing this work with your Subcommitee and the rest of the Legislature. Thank you. Thank you.

Anna Matthews with the Faculty Association of California Community Colleges. The skiff is held together like by band aids, like stability, hold harmless, ECA, three year rolling averages and more. So small drops in Enrollment and unpredictable changes can alter a college's funding model from year to year and drastically reduce its funding.

This isn't sustainable and makes planning ahead for colleges difficult. Colleges on hold harmless have been moved to a funding floor and will lose their COLA this year despite rising costs. We urgently need universal COLA. There are many structural issues with the scif.

There are clear winners and losers in the supplemental allocation as the Pell Grant threshold does not reflect the poverty levels at colleges in high cost of living areas. The student success allocation doesn't invest in all the missions of California community colleges equally disadvantaging programs like cte. We need a different funding formula.

The skiff is too complex and unstable. We suggest a universal basic allocation with FTEs instead. Thank you.

Thank you.

I'm Matt Wetztein. It's my pleasure to be the President of Cabrillo College and I want to echo some of the comments that were made about the funding formula, but also extend my thanks and appreciation to the Committee and to Finance and the Staff. At the Chancellor's office for the support. We'Ve received as an emergency conditions college.

We've had a wildfire and a flood in our district in the last five years. Two data points on the funding formula. At the first year of its inception. The gap between the highest funded district and the lowest funded district was around $6,000. In other words, 6,000 more for for that particular district.

That gap in the last year for apportionment data for our System is now 11,000 greater than $11,000. I would submit to you. That's not good public policy that have that wide of a gap between per student funding for our colleges. And I would also point you to. The staff report on the number of.

Colleges that are being funded on the skiff being so Low. It's a broken policy. It needs to be fixed and fair funding floors need to be established for colleges particularly like mine. Thank you.

Hi. Carol Gonzalez. On behalf of Long Beach City College, a district that has been working to secure state funding for student housing since the funds have been made available since 2021. Since then the district has applied at every opportunity and has moved up in the ranking each time.

They have also kept the momentum going and have done everything possible to be as close to shovel ready as possible. LBCC would like to respectfully ask for your consideration of reappropriating the funds that the districts have returned. They have they. They've been listed on the top rankings for future projects.

Intend to stay true to the requested amount of 60.5 million. Plan to invest more local funds to meet the increased cost of building and giving their intersegmental collaboration and regional needs. We ask that you consider this project. We are more than happy to have individual follow ups and we've passed along copies of their project.

Thank you for your consideration.

Thank you.

Afternoon chair and Members. Dani Mae Santiago with Calbright College, the online community college district. On behalf of over 6,000 current students of which 33% are students, student parents or caregivers and 70% of our students are either unemployed or work two or more jobs and over 1,200 alumni, students and certificates.