Senate Budget and Fiscal Review Subcommittee No. 1 on Education

Remember to drop by the hearing.

Senate Budget Subcommitee number one on Education will come to order. We will begin as a Subcommitee. When I have other Members come, I will call the roll.

I would have preferred not to start, but we have a room full of people and we have a very full agenda and have to try to be done by a little before noon. And so I want to get going.

This is our seventh hearing in this budget process and the first one that we have had since the Governor issued his May revised versus revised budget. Today our hearing is on the three segments of higher education and some related issues, including the state library.

Tomorrow at the same time, we will be having a hearing on the K through 12 and preschool issues. And to set the context, the May revision is the starting point for discussions.

But that is a starting point and we will now move into negotiations in hearing the different items on the budget to land a final budget legislatively by June 15th and statewide by June 30th.

And we will not be taking actions today, but we will be sending signals about what we like and what we don't like in a way that it tries to instruct those negotiations moving forward. There will be a time that we then take action specifically on every issue.

But for now, we have in front of us a balanced budget from the Governor and we want to give feedback and negotiate because the budget will be different than what the may revise is.

I think one of the most major issues that's in front of us today has to do with, with the base funding for the University of California and the California State University system. Basically, the Governor started with a 7.95% proposed reduction. In the May revise, it moved to 3%.

If you really look, as I think some of us will say when it comes up, it's not that clean because there are labor contracts and there's inflation. So the net effect of a 3% reduction is, is higher.

And I expect it will be our goal to continue to close that gap and to try to reverse as much of the remaining cut is there. But we are to the point that for everything that you choose to fund or you reject, you have to come up with a funding source to do it.

It is not just a clean thing. So that is the context for the hearings today and tomorrow. And we will go through the major items that the Governor included in this, his May revise with no further ado. And I should mention that we will take public comment after all the items are done.

And as usual, I will judge how long the public comment will be based on how much time we have left and how many people. I will do a show of hands.

So for those of you that are planning on hiding in the hallway two or two and a half hours from now, I would love to have you inside the room to signal your intent that you want to speak so I can make that judgment, when that comes up.

We will move to issue number one, which is the Bureau for Private Post Secondary Education. It's a proposed fund shift.

On the panel we have John Parson from the Department of Finance, Charlene Manning from the Department of Finance, Lisa King from the Legislative Analyst Office, and Deborah Cochran from the Bureau for Private Post Secondary Education. Welcome to the Committee and we will go in that order. So we will start with the Department of Finance.

Charlene Manning, Department of Finance. I'm actually going to turn it over to Deborah.

Good morning. Deborah Cochrane, Bureau Chief of California's Bureau for Private Post Secondary Education. The Bureau for Private Post Secondary education oversees nearly 900 colleges, private colleges operating within California, and more than 100 colleges enrolling California students via distance education.

Its operations are funded through the Private Post Secondary Education Administrative Fund, supported by fees paid by the private, mostly for profit, colleges it regulates. The Fund has operated with a structural deficit since 2017-18 and the Bureau has relied on short term external assistance, including loans, to remain solvent since that time.

In 2022-23 the Legislature provided the bureau with $24 million from the General Fund over three years to stabilize funding. With that $24 million infusion now concluded, the Bureau is currently projected to become insolvent in the amount of $4.1 million in fiscal year 26-27.

In exchange for those General Fund resources, the Bureau was asked to explore different funding alternatives to support the Bureau's operations on an ongoing basis. The Bureau contracted with the foundation for California Community Colleges for this work and submitted a report to the Legislature in February of 2024.

Those recommendations included finding alternative funding structures for certain student facing components of the Bureau's work in line with the recommendations before you today. Specifically, the Bureau administers a tuition recovery fund known as STRF, which provides reimbursement to students who attended colleges that closed before its students could have graduated.

The Bureau also has a student focused team known as the Office of Student Assistance and Relief, or OSAR, tasked by law with conducting outreach to students and helping them access financial relief.

The Bureau is seeking a legislative change in line with the recommendations of the foundation for California Community Colleges, which will allow the transfer of expenditure authority of approximately $2.7 million per year related to that Office of Student Assistance and Relief and the Administration of the Student Tuition Recovery Fund claims from the Bureau's Administrative Fund to the STRF.

The STRF currently has roughly $35 million, and adoption of this funding shift will ensure the Bureau's solvency through this 2026 sunset review process, during which fee increased discussions can include more comprehensive funding structures going forward.

We're happy to take any questions you have.

Let me ask first now, does the Department of Finance have any comments?

John Parsons, Department of Finance. No comments at this time.

Okay. And then the Legislative Analyst.

Good morning, Senator. Lisa King with the Legislative Analyst's Office. So we think this proposal is reasonable. The activities that would be shifted over to the Student Tuition Recovery Fund, or STRF, are related to the fund's objective of providing financial relief to students in the event of school closures.

And moreover, as Ms. Cochrane has shared, STRF is currently in a better position to cover these costs than the Bureau's Administrative Fund, which is facing insolvency. The one issue we'd add here is that the money in STRF comes from an assessment or fee paid by students enrolled at the institutions overseen by the Bureau.

Currently, these fees are paused because the Fund balance is so high. But if the state were to shift additional costs onto the Fund, then that could mean that down the line, the fees either restart sooner or later or are set at a slightly higher level. Thank you.

Thank you. Let me ask a couple of questions. And first, the money that supports this would run out in the fiscal year. That's a year from now without the action that's in front of us. Is that correct?

Yes, that is correct. That's 26-27.

Yes. So and if we approve this, then it's solvent through 26-27, and it allows us to consider the alternate revenue things with next year's budget. And that would still be timely, correct?

Yes, that's correct.

Okay, for those of you following at home, that was a yes. And then the other question is, is that one of the major options is, is a sustainable fee model? Have you done the work on that yet to see how that would be set up? Who would cost. I mean, who would pay the cost and.

And what the calculations are? Is that already done as part of that previous report, or is that work that you're going to do in anticipation of this consideration next year?

Thank you for the question. That work has concluded that the report was delivered to the Legislature in February of 2024, along with certain recommendations that were endorsed by the Bureau that the Recommendations in front of you would allow the Bureau to remain solvent for the next fiscal year.

But finance has not sort of come forward supporting one of the recommendations because the short term issue is just being solvent through the budget year and the out year and then its turn and look at these options. Is that right?

Yes, that is correct. The recommendations that were delivered do also include specific recommendations regarding raising fees, typical licensee fees, so that this would allow those proposals, which still do need to move forward, to happen in the context of the sunset review process next year.

Okay, then just in general, I don't have any problem with this. This gets us to the, to the next year and to the extent that, that you can refresh the Committee on the different options that would be good so that we're just ready when they hit us next year.

I could ask other people for questions, but I would be unsuccessful. So I think we aired this and I really appreciate it and we will look forward to continuing to work together and try to just make sure this is addressed in this budget.

Thank you so much.

Thank you very much.

We're going to move to item number two, which is the University of California College of the Law, San Francisco.

And we'll have Gabriela Chavez from the Department of Finance, Ian Klein from the Legislative Analyst Office, Kathleen Fullerton will be here, as will Seija Virtanen from the University of California and David Seward from the UC College of Law, San Francisco. So welcome to the Committee.

So there's one more person here that I have on my list, so whenever it gets to that, let me know who that person is. So I'm just aware of who's here at the table. But let's go into order. So let's begin with the Department of Finance.

Good morning Chair Laird, Gabriela Chavez with the Department of Finance. The May revision reduces the University of California's base reduction proposed in the Governor's Budget from $396.6 million ongoing General Fund to $129.7 million ongoing General Fund. This is roughly a 3% base reduction.

The adjustment maintains the multi year compact with the University of California in exchange for clear commitments to expand student access, equity and affordability and to create pathways to high demand career opportunities while helping to address the ongoing statewide budget pressures.

The May revision includes an augmentation of $1.8 million in one time General Fund to expand First Start academies within the University of California system. First Start is a long term college prep program for high school students in foster care.

The May revision proposes reverting $3.6 million of the $50.7 million in ongoing General Fund provided to support UC affordable student housing projects. These reflect specific part of the debt service savings within this item and leaves roughly $47.1 million in ongoing General Fund.

Also, the May revision proposes to use interest earnings from previous bond issuances to support $5.8 million towards the seismic renovation of the Powell Library at the UCLA campus.

The May revision also includes budget Bill Language that enables the University of California to account for all non resident student replacement at the 3 campus UC Berkeley, UC San Diego and UCLA exceeding the 902 targets during the compact within the Administration from 2022-23 to 2026-27.

Lastly, the May revision includes several budget Bill Language amendments mostly to correct oversight and errors made at the Governor's Budget. Happy to answer any questions you may have.

Thank you. We'll move to the Legislative Analyst.

Good Morning, Chair Laird. Ian Klein with the LAO. We have a few items to consider with respect to the State Operations Reduction proposal. After accounting for all changes in core funding, including anticipated growth in tuition and fee revenue, UC's ongoing core funding increases by 2.2% or $233 million in 25-26.

With this funding, UC will be able to cover all of its non discretionary and some of its discretionary 25-26 spending priorities. UC indicates it will still implement some cost saving measures to bring its long term spending in line with its budget.

With the reduced base reduction, UC notes that the programmatic impact of these actions will be less severe than under the Governor's January budget proposal. With respect to the First Star proposal, we recommend rejecting this proposal as it's problematic in several ways. It funds a new One Time initiative while the state is cutting base funding and facing out your deficits.

Moreover, the new One Time initiative has similar objectives to existing UC programs. Additionally, the proposal gives a nonprofit organization, First Star, significant program control which raises questions about the cohesion of campus services as well as the State's ability to oversight and accountability.

Lastly, the Administration has not justified the proposed level of funding for this program. With respect to the Higher Education Student Housing Grant Program proposal; in total, there is $6.2 million in potential debt service savings. As you heard, the May revision recommends reverting $3.6 million of that debt service savings. We recommend approving that proposal.

There is another $2.6 million available that could also be reverted and we understand that there are ongoing conversations regarding an additional project that could be funding using this differential and we would be happy to provide additional context regarding this project if needed. With respect to the UCLA Powell Library proposal.

We have no major issues with this proposal and recommend it be approved. And finally, concerning the non resident reduction language, we also have no issues with this proposal and recommended, recommend it be approved. So I'll pause my comments there, but I'm happy to answer questions.

Thank you. And just before we go to the University of California, we have a quorum and I'm going to ask that the role be called.

[Roll Call]

We have a quorum. So let's move to the University of California.

Good morning Chair Laird and Senator, thanks for the opportunity to speak to you today. I'm Kathleen Fullerton, Associate Vice President for State Government Relations on behalf of the University of California. First, I want to thank the Legislature for its overwhelming support for rejecting the cuts to UC and CSU, particularly through the budget letter sent earlier this year.

I also want to thank Governor Newsom for his decision to reduce the proposed budget cut to UC from 8% to 3% or $129 million in the May revision. That change helps us avoid the most immediate and severe impacts to students and programs.

I want to acknowledge also that this is a difficult budget year and you're going to have to make some really tough choices. And I know that higher education is one priority among many. But I have to ask that you continue to prioritize higher education by eliminating the cut to UC.

$129 million will still be difficult to absorb and will have long term impacts. Although $129 million may seem like a small amount in comparison to the entire state budget, it goes a long way for our students, employees and communities. We are feeling squeezed from multiple sides.

Costs continue to rise by nearly $343 million in 25-26 alone due to salary agreements, benefits and inflation. But most notably, the Federal Government continues to cancel awards for research. These cancellations have escalated into the hundreds of millions of dollars and we are feeling real impacts today.

This loss of research funding will have long term adverse consequences like preventing us from hiring the next generation of faculty who will be teaching the next generation of scientists. We are doing our best to address these problems now.

Campuses have already taken cost cutting steps like hiring freezes, delaying capital projects, minimizing administrative expenses like travel, and reducing faculty startup and retention funds. And the Office of the President will be reducing the amount it charges campuses for its budget by 10% next year. This will help alleviate some of the budget pressures on campuses.

In addition to the proposed state cut, the cost increases and federal award cancellations. The $271 million that we are expecting to receive under the Compact is being deferred. Deferring compact funding presents significant challenges as well. As campuses have already enrolled students based on the Compact's requirements. The cost of enrolling a student isn't a one year expense.

It lasts four years or more. So cuts today impact students already enrolled for the next few years.

All of these budget pressures compound over time and the long term impacts of a base budget cut and compact deferrals threaten UC's ability to deliver in the future on the shared goals of accessibility, affordability and student success.

Under the Governor's proposed budget and if future budgets continue to cut base funding and defer compact payments, UC will likely need to slow or defer enrollment growth. Or the alternative would be that students experience a lesser level of service from UC not seen in prior generations. I would be remiss if I did not alert you to these problems now.

To our system, eliminating $129 million cut could mean that we do not have to lay off our staff, staff or faculty. Because state funding is a major part of campus budgets, it is challenging to navigate reductions without impacting people.

One campus told us that each 1% reductions in state funding equates to 10 to 20 potential lost jobs. Eliminating $129 million cut could also mean that students feel less impact. We would be able to avoid larger class sizes, longer waiting lists or fewer advisors.

Sustained investment is essential to ensuring UC remains a world class institution that serves Californians. Now I'm going to turn it to Seiya to speak on the technical elements of the May revise.

Good morning, Chair Laird and Members of the Committee. I'm Seija Virtanen. Thank you for having me here today. I'm going to talk about the other aspects of the Governor's May revision proposals.

First we want to thank the Department of Finance for the clarifying budget Bill Language on the non resident replacement for Berkeley, LA and and San Diego and we request that the Legislature approve that language. This language standardizes the non resident enrollment replacement to be treated similarly to other enrollment growth and it prevents unfunded enrollment.

On the student housing issue. In the budget act of 2022, the Legislature approved five student housing projects that were bond funded for the University. These student housing projects will provide very low cost housing for low income students students and are intended to alleviate the housing crisis.

The University was able to sell the bonds for those five projects at a savings of $6.2 million and we're thankful that the Governor has allowed the University to retain $2.6 million of those funds for the UC Davis project, providing the students of that campus with affordable student housing options.

And we're requesting that the Legislature approved approve the UC Davis project. The Governor proposes to withdraw the remaining $3.6 million from the University. And we request that the Legislature allow us to retain another $2.6 million for the UC Santa Barbara Affordable student housing project.

Allowing these funds to be spent on the student housing project will provide UC Santa Barbara students with affordable student housing options that don't currently exist in that area.

Another capital outlay project in this May revision is the UCLA Powell Library project with a request for $5.7 million in remaining bond earnings toward the previously legislatively approved Powell seismic, Powell Library seismic renovation project. Excuse me. And to fix some deferred maintenance at the library.

These funds are interest earnings from very old bonds and they will not increase the state's debt burden. And also the funds cannot be spent on any other agency other than the University of California. The original Powell Library seismic renovation project was always intended to use these funds.

At the time there was a misunderstanding, mostly by the University, about needing the budget Bill Language. And we are now requesting that the language be approved by the Legislature. This project was initially selected by UC due to the heavy student use of the building and the high seismic rating of the library.

The original project cost was $17 million. And with the deferred maintenance component being added, the total project cost would be $19.7 million. And I'm happy to answer any questions from the Committee. Thank you for your time.

Thank you very much. Then we'll move to UC San Francisco Law.

Thank you very much, Senator, Members of the Committee. My name is David Seward. I am the CFO of the institution. UC Law San Francisco, as a proud affiliate of the University of California system, supports the Governor's May revision proposal.

The budget allows us to continue and fulfill our public mission which is to provide legal education of the highest quality at the lowest possible cost to a population representative of California's diversity. We do that while being a partner to the community that we reside in.

San Francisco's Tenderloin District, San Francisco's Civic Center, Mid market areas where we function as an institutional anchor for those communities. The budget gives us the means to stabilize our core budget, fund mandatory cost increases and allows us to continue our cost restructuring efforts while protecting our key academic functionality, instructional program and student facing functions.

So I'm here to again express express our support for the Governor's May revision proposal and answer Any questions you may have.

Thank you. Let me note for the record that Senator Perez has arrived and we will add her to the roll. We will move to questions. And let me start out to Finance. The Legislative Analyst just had a strong recommendation to reject the first Star youth cohort.

And I wondered if you would respond to the concerns that they raised in their comments.

Gabriela Chavez with the Department of Finance. I believe the concern that LAO is raising is that the program exists and there are other foster programs that support students. What I will mention that this investment is different is that the investment would not be standing alone. The program really maximizes the services within the community.

Nonprofits, the local education agency, Department of Education. And the impact that the program produces goes far beyond the number of students enrolled in the program. So currently there's a program at UCLA, CSU San Bernardino, in Sacramento, State. Each Cohort has about 30 students. But the impact of the program goes beyond.

It could be hundreds and even thousands because even the student doesn't have to be enrolled in the program to be referred to County Services, Education Department. And we see this very congruent with the master plan and the higher education plan in terms of maximizing education in a very unique.

This proposal comes from one time funds. Are you intending that this program would continue after the budget year?

The program only requires one time funding. This is what is very unique about the program. The other three offices, three cohorts that we have also included only one time funding. The program maximizes nonprofits, philanthropic funds, the county, city office.

The answer to the question-

Only one time Funding.

That if this extends, it's not with-

It wouldn't require additional ongoing funding.

Okay.

Similar as the previous investment, like the 1920. It was only one time $740,000.

Okay, thank you. I appreciate the response. Let me go to UC San Francisco. I got lobbied in the last day or two about your project on the tower and yet I don't see it in any of these materials.

Is the the construction or the operation of the tower going forward threatened by something that is in front of us today?

No. The governor's proposal maintains the Administration support for our phase two of the project. And those funds are incorporated within the may revise. So that project is continuing. We're in the middle of phase one. Phase two follows within months and we are with the Governor's May revised and the January budget. We're aligned and going forward.

And then tell us what the impact is of the proposed reduction in your base funding that's in the May revise.

Well, the college has been managing a core budget deficit and we recognize the state's financial constraints, as is the case with the UC system and CSU. Our budget cut has been reduced from 7.95% to 3%. So that's a much more manageable situation. So we, you know, recognizing constraint where we are accepting that outcome and we will manage around it.

You could lobby more effectively.

Well, Senator, then-

Accept the cut. When we're sitting here fighting about the cuts to UC.

The State's-

But that. No, no, no. You, you have a relationship with the Governor. I appreciate that, but we would like to be helping you here.

Well, you can most certainly help us by supporting the Governor's May revision process proposal.

Okay.

This just one comment, Mr. Chair.

Yes.

So unlike UC and CSU, College of the Law, San Francisco was provided a base augmentation in the January governor's proposal. So they're being treated a little bit differently than UC and CSU which were subject to base reductions.

So while their base reduction as of May revision is slightly decreased, they're being treated differently than UC and CSU in the context of already being proposed to be given a base augmentation. So I think that's an important factor to consider for this as well.

Appreciate the comment. Then going to the UC based funding issue in and let me just ask the legislative analysts this. Last year we deferred the 5% for the compact. In this year the recommendation is to defer the percent for the compact, but we're not funding the 5% that was deferred from last year. Is that correct?

So last year UC was provided a base augmentation. In 24-25, their base augmentation that was planned for this year 25-26 as part of the January governor's proposal has been deferred effectively until next year.

Part of the 24-25 Budget act was that UC would be subject to a one time $125 million base reduction which would then be reinstated this year, the current year with the May revision proposal. Now that base reduction has been restored under this proposal and with the May revision, they are now subject to a $130 million base reduction.

So the offsetting action of those two is that UC is effectively subject to a reduction of about $8 million ongoing when you account for also debt service reduction that's included.

Does UC want to comment on that?

Thank you, sir for the opportunity to comment. So in the current year, just for clarity, we did get the 5% and then $125 million cut which ended up being a $2.9 million increase or $134 million. For the budget year, we are proposed to receive that 3% cut.

As the LAO noted in their opening comments, we have some new tuition revenue under our Tuition Stability Plan, but we don't agree that we have enough funding to cover all of our mandatory costs. The Tuition Stability Plan requires that we set aside 45% of new undergraduate tuition for return to student financial aid and 50% of PhD tuition.

And altogether that ends up being about estimated just over $100 million of new tuition revenue that we get that then goes away to help the students, but doesn't necessarily go to University operations.

When we count all of our new mandatory costs, including enrollment growth at $62.8 million, the student financial aid at just over $100 million, we have contractually committed union labor contracts at about $51 million. We have new retirement contributions, $19 million. Employee health benefits are going up by $40 million.

Retiree health benefits, which we are on a pay as you go basis, are going up by over $11 million. And then with the faculty merit of 36, we lost the court case and we have to provide those annually. You're at over $322 million in new costs for the University.

So when we add all of that up, the new revenues, the restoration of the $125 million and the student financial tuition is not sufficient to cover those costs. So we are starting the year at a deficit. And if you add some of our more flexible costs to that, we would be at a deficit of 5%.

So we with the mandatory cost, a deficit of 1.3%. And then with the non mandatory, if implemented, we'd be at over a 5% loss. So we don't think we have enough. And that's why we are putting forward the request to for consideration to not receive a cut this year.

And obviously between the two of you, you can understand how confusing this issue is. And it is not clean just year to year in what it is. And nevertheless, the one thing that I'm not sure that you quantified is that you have certain labor agreements with salary increases and there is inflation.

And so the effect on your budget for those two things, it means that a 3% cut is at a higher level. And yet I'm not sure you were able to quantify those.

Thank you for that clarification, sir. The $51 million number that I provided includes only those labor agreements that are currently effective. We have some labor agreements that are under negotiation. Should those be settled soon, it would increase that cost for that Line item. We also have regular inflation that we're trying to deal with.

We don't yet know how the tariffs, for example, might impact our procurement of goods for our campuses. But we are currently estimating for procurement, which I consider a negotiable item, a non mandatory. We're about $36 million in growth across our 10 campuses.

And let me do one last question and I will get to my colleagues, but when President Drake was somewhere recently, he used the statistic that 66% of UC graduates graduate without debt and that the other third have debt. And the average amount of debt for the third is $17,000, which is remarkable progress.

And I think a lot of it is due to the middle class scholarship because that reached into the place that that there was a lot of debt. And yet you're not on our panel for student aid. That is about four items in the future and yet it really affects your ability to graduate people without debt.

Do you have any comment you'd like to make about the middle class scholarship and what it means to UC since you're not on that panel?

Thank you for that question, sir. We have about 99,000 undergraduate California resident students who receive some amount of middle class scholarship. Middle class scholarship has been a wonderful program that has allowed the University to do what we call offer our debt free UC packet.

This is a financial aid packet that reduces the students, what we call sometimes self help or work requirement for the student, allowing that amount to be reduced to a level that we think is more manageable for student working part time for the kind of jobs that students are able to get, usually minimum wage.

And it has been instrumental for reducing our students need to take on debt and the state's fiscal situation. The Governor is proposing to I think at least discontinue the one time funds that were supplementing that program. What that would mean for UC is that we'll have to scale back the amount that students are getting.

Under the current program. It would still be the 99,000 students who get that financial aid, but they would each get much less middle class scholarship. So either that self help amount for students has to go up.

So right now if a student is covering about $7,000 of their own expenses and education, we would increase that to potentially $10,000. Or the students who are more close to that parental income of $70,000-$60,000, they would see a greater loss of middle class scholarship and have to cover more of their education.

I think, and I don't want to jump too far ahead because we could well be having this discussion all over again in a few items.

But when we discussed this last year when there was a major proposed cut, it was to take it back to previous levels, but there were so many more people added that actually the grants would be less than they were before the addition because of the way that works. And I think that's the potential here.

That's correct. The way the current, what we sometimes call middle class scholarship 2.0 language is written, instead of reducing the number of students who are receiving, receiving the potential scholarships, we just give everybody less.

And when we did the revision that was in the early part of the decade, we really added people and we added some money. And so now it's like, oh, let's go back to the previous level, but without reducing the number of students, which is exactly what you're talking about. I want to give my colleagues a chance now.

Senator Ochoa Bogh. Do you have questions on this item on? Your mic.

Yes, Mr. Chair, thank you. Good morning. I do want to echo the the, the comments that you made a little earlier today. In addition to that, I would also like to ask a question with regards to the state operations reductions that we currently have for the UC system.

Do the cuts, and I know that you, you mentioned some of the cuts and what you will be prioritizing in actual in the cuts that are going to be forced upon you with this budget, will there be any I know you talked about faculty, not sure which one it was, but the faculty cuts that will happen or the salary reductions that may happen.

But on that end, what about the Administration cost? Are you folks, I think I missed whether or not there were any Administration costs, especially when you're looking at, you know, much of those expenses that happen in the salaries and the Administration part of it. Are there any conversations on that end and how will they be addressed?

Yes. Thank you for the question. We're starting with the cuts that will have the least impact to our students and employees and that would be a lot of the administrative costs like you mentioned. So we've, we've taken steps to reduce things like travel expenses or, you know, freezing positions.

But a notable decision that was made at the office of the President level is to reduce the amount that we charge campuses by 10%. So camp we charge campuses for the office of the President, President's administrative budget.

So we are reducing the impact to campuses by 10% just to get at the, you know, the issue that you talk about. But the goal and the planning, the scenario planning that we're doing focuses on administrative reductions. First, in order to minimize the impact to our students and employees.

And the faculty as well.

Yes. Okay, our employees.

That's what I wanted to make sure that we emphasize that if we're going to see cuts on the faculty and the service and the students, that also the Administration is also impacted equally, if not more so as part of the leadership on that end. Okay, thank you.

Just before I go to Senator Perez, let me ask a follow up question to that, because it's a 10% cut to the campuses to the Office of President. Is the Office of President then making cuts based on the reduced revenues from the campuses?

Yeah, that's part of the scenario planning as well, is where can the Office of the President reduce its own administrative expenses? Or alternatively look for other sources of revenue that it needs to continue to function. But the main goal was to minimize the impact to campuses.

Well, I get it. Minimized, but it sounds like you said a mix. So it wouldn't necessarily all be cut. You might look for some extra revenues to deal with some of the-

Correct.

Okay, thank you. Let me go to Senator Perez.

Yeah, I had a couple of questions. First and foremost, I wanted to know if you happen to be able to estimate how many less students you would be able to enroll with the 3% cut. Would you have to. Would you have to enroll less students than what you currently have, the students you're currently enrolling?

And are you also expecting an increase in enrollment as a result of the economy? Right. I think when we see our economy, you know, face tough times, we also see an increase in enrollment at our college and University campuses. So are you seeing those trends show up as well?

So we'd love to hear what, what you're seeing in terms of expected number of students on campus and how this budget could impact that number.

And that's to the University of California.

Yes, that's to the UC.

Yeah, thanks for the question. We are committed to the compact, which requires us to increase our California resident enrollment. And because of where we are in the admission cycle, we believe we will meet that goal for increased enrollment for the students coming in for the fall.

However, if we continue to get compact payments deferred, plus potential state cuts, plus a question mark of federal cuts, we cannot continue that growth, which is in line with what the compact requires. So I want to be very clear that this is a potential outcome.

But these are prioritization decisions that I think the leadership of the UC, as well as the Legislature and the Administration need to fully understand in order to come to some agreement on what level of funding is appropriate and where those priorities are. But yes, very possible that enrollment will be impacted.

And then, you know, if we decide to move forward with increasing enrollment or even holding it flat, that means student, student services will be impacted. We have to find the money somewhere to accommodate the students.

May I just add to that, that for fall of 2025, to clarify, we are expecting to meet the compact enrollment. I think we're talking about fall of 2026 as the potentially impacted enrollment year.

So are you seeing an increase in students applying to the UC system coming from, you know, obviously you just went through an application process. You all just did admittance letters. Right. And students kind of have an idea of which campuses they're going to at this point.

So did you see an increase in some of those numbers for this upcoming school year and are you seeing that trend start to move in that direction?

Applications were due In November of 2024, offers were made by March 1st of 2025, and the statement of intent to register were due by May 1st. We saw an increase in the number of applications to the University.

We have not yet compiled the data on the so called sirs to see what the the response rate was, but we do anticipate to grow enrollment for fall of 2025. In terms of students. Students still see the University of California as a place that offers them value and seem to want to come here.

We are somewhat worried about a potential drop off in our international students who would be first time enrollees given some of the actions that have been taking place on the federal level. But we won't really see that until fall enrollment starts and we see the students actually arrive on campus.

No, thank you for that and that's helpful as well. You know, I've shared before, but you know, the UC system, the CSU system, I think are both incredibly important.

And I think especially during times when we're facing an uncertain economy, there are many students that will look to go back to school, go back to University, or choose to go back to college. And making sure that that opportunity is there and available to them, I think is really important.

So I also just want to bring up what our chair had mentioned earlier, just in regards to the middle class scholarship and you know, the ripple effect that that has on you all when we make cuts to that program.

I was speaking with Senator Laird the other day and he was surprised to learn that I received a middle class scholarship. I guess I happened to not men this to him, but you know, it certainly made a difference in that aid. Right?

Part of what is so important, and I know you all recognize this too, the UC does an incredible job of enrolling so many first time college students, so many low income students that without financial aid would not be able to go to the UC system.

And being able to have access to a Cal Grant, being able to have access to middle class scholarship, really determines whether or not they make that choice. But we know that the value of a college degree, particularly a degree to one of our incredible UC campuses is worth its weight in gold.

It can be really just a life changing experience for a student to be able to go to one of your institutions. So appreciated that Archer highlighted that and the comments that you made just in terms of the impact that that could have on your campus as well.

We are certainly happy to see the reduction, you know, from 8% to 3% for the cuts towards the UC system. I think ideally we'd see no cuts at all because we realize just the important services that you offer, especially as we face uncertain times. So thank you and thank you for answering all of those questions.

Thanks to my colleagues. And just to wrap this up, I think that, that we heard from everybody that we are not comfortable with the remaining 3% cut and we would really like to figure out a way to address that in the negotiations and going forward.

And you can understand in some of the exchanges how confusing it is to the public and it just not being a straight year over year.

There's all these different factors that factor into this and I know that there even some other debt service or some counting to change to the meaning of 3% when the 3% was recommended in the May revise. And so I get it.

But it's we have asked for enrollment, we have asked to buy out the out of state tuition. We want enough student aid to lessen or come close to eliminate debt coming out. And we stand the risk of stepping back on each of those goals by what comes out in this budget.

So we are going to continue to work on it in the next few weeks and I really appreciate you being here today. We are going to move to issue number three which is the UC Berkeley Local News Fellowship Program. We will have two people remaining, Ian Klein and Seha Vertinen.

And an introduction that this had been a one time funding in 2022 and it is in essence expiring. And I thought it was important to agendize and have a discussion so we know what's at risk in this budget. So let's begin with the Legislative Analyst.

Thank you very much Mr. Chair. Ian Klein with the LAO so we've been asked to share a new legislative proposal to provide 151,000,001 time Non Proposition 98 General Fund for UC's Berkeley Journalism Fellowship Program. As you just mentioned, the state provided this program with some one time funding several years ago.

Fellowship program is intended to support local journalism by placing early career reporters and editors in newsrooms for two year fellowships. Each fellow is provided with funding for two years and the one time support previously provided is set to expire after the third and final cohort with these funds to be completely expended by the end of 2027.

Now, we understand that this is a legislative proposal. However, in January we recommend setting a high bar for new spending given the state's budget condition with the May revision. The Governor recognizes that the state condition has deteriorated somewhat since that time.

Given this reality, it is harder to justify new spending on one time programs and initiatives throughout education programs are being downsized and eliminated with ongoing core funding being reduced. Furthermore, the program has some funding still existing, so there is no immediate need for additional support. Finally, this initiative funding.

This initiative would come at the expense of existing programs. So given these concerns, we recommend rejecting this proposal.

Thank you, University of California.

Thank you.

Thank you, Chair Laird. For background, the University of California received $25 million as part of the Budget Act of 2022 on a one time basis. As the LAO said, for three cohorts of journalistic fellows. The funds will be fully spent by December of 2027. And I'm available to answer questions. Thank you.

Great. Are there questions or comments from my colleagues?

Yes, sir.

That was a yes. Yes, Senator Ocho Bogh.

Thank you, Mr. Chair. So I understand that there was a $501,000,001 time Fund that is expiring December 2027 with three cohorts for the UC Berkeley of journalism. Oh no, that's the proposal for now. That's a proposal for this legislative session. And then. I'm sorry, let me back track.

The 2022 was a $251,000,001 time Fund for the local news Fellowship program for UC Berkeley. A couple of questions. First, clarification. The Journalism Fellowship program versus the News Fellowship program, is it the same program? Different program.

It would be a continuation of the existing program.

Okay. Just different titles?

I believe so. It would be a continuation of this one time funding previously provided.

I don't think I would get bogged down on the titles. There's a proposal to continue the program with the fixed amount of money.

Just curious, because it has different verbs. And this is how we get new programs in place with new titles. And so I want to make sure that we have clarity as to what the program will be.

And then in addition to that, as far as the cohorts, how many students are in each cohort that we spent $25 million in? Technically five years. So $5 million per year. So how many students per Cohort for those three?

The first cohort had 39 fellows and there are now 75 fellows in the second one.

Okay. And then in addition to that in as you're prioritizing, because everything's about priorities with, with funding. Where does this come into other programs for research per se in other areas that you're losing funding? Why this particular emphasis on this, on this program versus research areas in other areas where you're potentially losing money?

If I can intervene for a second, I think that this was housed with UC in a way that the Legislature made the decision. This was important. And I think UC will just automatically default to the fact that their core operations are their priority. But this was a legislative priority, housed with the University of California.

So it puts them in an awkward position to ask that question.

Okay, so I apologize. So let me redirect the question to maybe Senator Laird, maybe, you know, the history. Why did we prioritize as the Legislature this particular program?

Well, I, I was going to take somebody out of order in a second that might address that, but I think that, that there has been an issue the Legislature has tried to address on a policy basis on the, the health of newsrooms and, and reporters in, in print or traditionally print press across the state.

And it's been done in a couple of ways. There was the deal that was made in the Assembly with Google for money for press, which seems to be, let's just say, stressed right now. And there's this where there are fellows in press outlets all across the state doing training, doing reporting that wouldn't be done otherwise.

That is therefore a priority of the Legislature, and the Governor signed it when it happened, but it was a priority of the Legislature.

Okay, so context on there. I always wonder, you know, how we prioritize the expenditures of funding for many of the programs that we have here in budget, and to what end do we benefit or the taxpayer benefit from actually allocating this funding to this program when we have other areas where it should be funded.

So that was my question, trying to consider where that would be.

So I'll hold it off for right now and then let me see if I can gather my other thoughts.

Great, Senator Perez.

I think I understand where Senator Ochoa-bogh is coming from, you know, with her question. I think, you know, given that we're just facing a very difficult budget situation, we're in a budget of, you know, having to make tough choices, trying to understand the intentionality, you know, behind this.

So just so I understand as well, this is pulling from. This is pulling from a different Fund, which is also why we're discussing it as a different issue than per se, like what we were discussing with the UC, the UC College of Law.

So this is other funding that was set aside, you know, specifically to Fund the local news program with UC Berkeley. And so we had funding that was allocated over the last five years. This new funding proposal for the 15 million would be another five years that that amount of money would be spread over time.

And it looks like the amount of students that were impacted, or 76 students, if I'm correct, 39 students in 2023, 37 students in 2024. And we are the sole group that's funding it or it's a partnership between nonprofits and other groups.

The funding was appropriated by the Legislature to the University of California and was provided out as grants to the news organizations to hire the fellows. So all of the money went to the news organizations for the fellows salaries.

And it's been three years and it's been the General Fund. And this proposal is to continue the cohort.

And that's not done in partnership with any other, like, groups or I know some of the other programs that we have, you know, for STAR Youth Cohort that we were just talking about. Right. It's a partnership between philanthropic, nonprofit. Are there any other groups that partner with us in order to create this fellowship program?

I don't believe so, perhaps daily.

I think what I'm going to do is that we have the person that was sort of instrumental in this, that was our colleague that has come back. So I was going to allow him to make a few comments that are brief, out of order, and he may choose to address some of those issues.

And Senator Blakespear is here as well. So, Senator Glazer, would you like to step to the MIC and make a few comments and possibly address an issue or two that was raised?

Thank you, Senator Laird. Steve Glazer, I'm here as a volunteer on behalf of this program. Just to be clear on that. First, I want to thank Senator Blakespear who's been a great champion of journalism here in the Senate.

Senator Laird as well, and Senators Padilla, Smallwood, Cuevas, Umberg and Allen and Grayson, who also championed this proposal that's before you today. It's proposed to continue an existing program put in by the Legislature three years ago.

Because of the importance of the program, which I'll speak to briefly, but I think it's pretty clear to most that the news community, the local news community, is in crisis. There's been enormous layoffs throughout the state over the last 25 years.

The Los Angeles Times has laid off half their newsroom in the last three years, over 200 reporters out of work because of the financial crisis. And we're not trying to address the base reasons for that here. We're just what the Legislature, in their wisdom three years ago decided was this is a place of importance.

Why is it important? It's important because most of the decisions that you make as Senators comes from learning about problems in your community. Problems of unfairness, injustice, problems of corruption. It comes out of the storytelling that local news creates. They're the enterprise that is talking to your constituents to see how things are working.

Are they working well or they're not? And whether there should be changes. So we as legislators realize that local news is fundamental to our ability to be a representative democracy. And when our country was founded almost 250 years ago, our founders determined that a free press, an independent press, was integral to what a democracy was all about.

And they lit a torch for the importance of the free press, to have an educated electorate. So people knew and they actually financially supported it in a variety of ways, which has gone away.

So the program that's before you is to say this is a priority for the state, for the Legislature to have a robust local news community. And what this program has done is created fellowships, all administered by UC Berkeley. They created the program, they select the fellows and they select the outlets, diverse outlets throughout the state.

And we'd be happy to provide information on.

Thank you. Let me just ask if Senator Blakespear has a very brief comment.

Yes, thank you. I appreciate the opportunity to just give a brief comment. I very much support this coming from being a journalist for five years for the Associated Press and the Los Angeles Times and having a degree from journalism school, Northwestern.

The reality is that our news is in crisis and we need to support it because it's a public trust. So recognizing that the. This is something that the state Legislature has been involved in, we have an existing program that is allowing fellows these are professionals to cover the news in 34 different. Throughout the state, 34 different newsrooms.

This is something we want to continue and not have die, because it's something that really matters to all of us in government is that we have reporters who are able to cover government and able to cover corruption and crime and schools and all the things.

And if we allow this to die, recognizing the crisis that we're already in, more than a fourth of our newsrooms have closed in the last 10 years. And we have examples, like Steve Glazer just said, where half of a newsroom is cut from the LA Times.

So having these, these are real stories that are produced that would not be produced otherwise. So this is really why we need to support it and have it be part of the budget. It's a relatively small in the scope of 322 billion, you know, 15 million a year to continue this.

And it was funded several years ago and it's existing and it's operating and it's successful.

So thank you. Thank you very much. Appreciate both of you. Let me do one other thing because I'm not going to have the process of the hearing deteriorate completely. Those of you that are here for this item, we will take public comment at the end.

But if there's a show of hands of people that are here and wish to support this item, in case you can't stay, could we see your hands? So we know who's here for that. Okay, great. And we will note Senator Blakespear raised her hand. So thank you very much.

I would just make the comment that I have been interviewed in my district by a fellow of this program, and the added breadth to that local outlet was really amazing.

And I think one of the difficult things as new newsrooms retrench across the state is it allows less and less opportunities for those breaking in to get the experience and move up. And that's in many ways what this program does, is it allows people to get that experience and move in and do it.

And so I'm really cognizant of our financial situation. But I think it's important to put this in the mix and just have a debate as we move to the close of, of the budget just to see if there's anything we can do to keep the next cohort on track. So, any final questions or comments?

No, and I appreciate the feedback. And at one point when I was a college student, this, you know, journalism as a career I was looking at going into, I made a choice otherwise for the reasons that have already been stated about the crisis that the industry is facing, unfortunately. And, you know, value the impact of fellowship programs.

Used to run fellowship programs myself, and making sure that students get that kind of valuable on the job work experience so that they can realize that these are careers and fields that they want to go into.

I just want to make sure that we're asking these questions because we're also looking at major cuts, you know, across the board, whether it be, you know, two entire systems, the UC, the CSU, you know, cuts to things like the middle class scholarship.

And so being able to better understand the kind of impact that our dollars are having so that I can make that justification to students, students, to other folks as we're having conversations with them is something that's incredibly important to me. So.

And I'm sure Senator Glazer appreciates that as somebody that used to sit on the board of Trustees or Board of Regents. I'm forgetting trustees. Yes. So I used to work at the Campaign for College Opportunity and would watch you sometimes during those meetings. So appreciate that.

And I'm really sorry that we're running late or else I'd have you deliver commentary on how he was in those meetings. Any further comments? Oh, Senator Ochoa-Bogh, just two questions.

So this isn't in until 2027, December 27th. So why are we carrying the budget request as of now?

Because it's. It's about cohorts that are two years and start and go. And the. The current last cohort ends then. But no new cohort would start unless we made an appropriation.

Okay, and then how long is that 15 year, $15 million supposed to last?

I think it's a cohort for two years. Is that correct?

Ongoing. zero, so you want this to be $15 million ongoing? Per Senator. Laser comments. Off, off microphone. Off the microphone. Okay, thank you.

Okay, well, I think we have aired this issue and let people know. So thank you very much. We appreciate it. We're going to move to issue number four, which is the May revision proposals about the California State University system.

We have Devin Mitchell from the Department of Finance, Natalie Gonzalez from the Legislative Analyst's Office, and Cheryl Ide from the California State University Chancellor's Office. And we will go in that order. So let's begin with the Department. Now that you're in your chair, let's begin with the Department of Finance. Welcome to the Committee.

Good morning, Senator Laird, Members of the Committee, Devin Mitchell with the Department of Finance. I'm here to discuss the May revision proposal for the California State University.

And that is the Ongoing base reduction to the CSU has been revised to 143.8 million ongoing General Fund the Governor's Budget included a proposed ongoing base reduction of 375.2 million representing an ongoing 7.95% reduction.

The revised amount reflects an ongoing reduction of approximately 3% in order to help the CSU meet its compact commitments and support campuses and students while helping to address ongoing statewide budget pressures.

Additionally, in calculating the General Fund base that was used to determine the CSU's ongoing reduction in a $75,000,000 one time reduction in 24/25 was reinserted into CSU's base. This was done to align the calculation methodologies for UC and the CSU. Thank you and happy to take any questions at the appropriate time.

Thank you. We'll move to the Legislative Analyst.

Good morning Mr. Chair and Senators Natalie Gonzalez with the Legislative Analyst Office. With the new base reduction accounting for the targeted augmentations that CSU will receive for retiree health and pensions as well as anticipated tuition revenue, CSU's core funding is expected to increase by $321 million in 25/26.

This is compared to a $66 million increase at Governor's Budget. CSU however, estimates that it will still face a small budget shortfall in 25/26 as non discretionary costs are estimated to exceed available funding. Given though that this shortfall is notably smaller than the one seen at Governor's Budget, campuses would see less programmatic impact.

Thank you and happy to take any questions.

Thank you. Then we're going to move to the CSU system.

Good morning Chair and Members Cheryl Ide with California State University first and foremost, the CO CSU deeply appreciates the Governor's proposal in the Mayor vision to partially restore our base by budget. This action reflects a meaningful commitment to public higher education during a very difficult fiscal year.

While the reduction from 375 to about 144 million is meaningful, it still represents a permanent 3% cut to our system. We are taking this seriously. Campuses are preparing for constrained budgets in 25/26 through hiring freezes, delayed investments in infrastructure and student services, and targeted reductions in course offerings and support programs.

The Chancellor's Office will also absorb reductions while preserving essential system wide services. Our campuses are doing all they can to protect the academic core and minimize impacts to students, but after multiple years of increased cost pressures, this becomes more difficult with each cut.

Campuses are using attrition, vacancy management and careful budget planning to avoid deeper personnel impacts where possible. Looking ahead, we are still finalizing our 25/26 enrollment plan. While we expect to continue to narrow the system wide gap between our actual enrollment and the current enrollment target, long term growth will be difficult without reliable adequate funding.

On many campuses we expect to see slight increases where there's capacity and demand. While other campuses will continue efforts to reverse enrollment declines through expanded outreach, new partnerships and program alignment with workforce needs. We're committed to being a strong partner with the Administration and Legislature in navigating these fiscal challenges and continuing to serve our over 460,000 students.

Thank you and happy to take questions.

Thank you. Let me begin and then I'm going to go to my colleagues. But let me begin with the CSU because there have been a couple of rather lively meetings at the Sonoma State campus about reductions there. And if you stand back, it appears that there's really.

There's been five or six campuses of all those in the system that might be disproportionately stressed financially. Whether it's I think San Francisco State, Cal State, East Bay, Monterey Bay goes in and out and there's Sonoma State and Cal Maritime was there until the merger.

So maybe with the 3% cut or irrespective of the 3% cut, you have financial challenges at some of the campuses and how will you be addressing them?

Yeah, so there's about seven campuses actually have these financial challenges. Not as bad, but getting close to what Sonoma State currently has. And so they're all making various cuts and various very difficult decisions to be able to move forward. While the reduction is from 8% to 3%, there's still going to be very difficult challenges.

Many of them have declining enrollment issues that we just mentioned earlier. And so they're trying to right size to be able to get to that right place where they don't have to continue to make worse impacts.

There was several, there were several proposals, one of which to looked at potentially looking at just targeting the state Ops portion versus the local assistance portions to mitigate students.

The chancellor's office is already should explain. To the uninitiated what that means.

So because we have, we don't have a state Ops portion and a local assistance portion, the cut is, affects all everything. Whereas the state, state departments actually have their cuts just to their state operations. Ours is to the entirety of that. It is going to impact how we serve students.

And so there were various proposals on looking at just taking and directing it at state Ops. We don't have that same kind of flexibility. It's kind of a blunt force instrument to look at it that way because our campuses are all doing different things.

Again, we have those seven campuses that have already really cut back as much as they can. Whereas we have some campuses like, you know, some of our larger campuses, some of our high interest campuses that may not have those same type of bare bone type cuts that they're going to have to take.

And so looking at it from a perspective where you're focusing just on the admin, there's still some cuts that can be made whereas other people are down to the bone and that's when they're having to get down to the student things, the student impacts there.

So it's a little bit different amongst our 23 campuses and how we look at them. So sorry, a long winded way of answering your question.

No, that's very helpful. And then you probably sat through our UC hearing and the same question comes to you, which is there is a 3% reduction, but you have some labor contracts in force, you're negotiating others and there's inflation. How will will a 3% cut really hit this?

So we have 12 collective bargaining units, three of which already have contracts in place and the others are still are going to be in flux and there's going to be conversations. We look at may revision and as a point in time. And so we're very pleased to see a reduction to 8% to 3% at the same time.

It's a point in time. And so those collective bargaining conversations don't really get kicked off and really start coming down to the, to the pieces and where things are going until we see the final budget act. And so in that I would be remiss to say that we would love to see that 3% go away.

We appreciate the Legislature's support in the budget request on the Assembly side and we saw many Senators that signed on. Thank you, Senator Choa Bogue, for your signature on that and Senator Perez for your signature on that to be able to move forward and reduce these cuts and eliminate them entirely.

And just for the record, I don't usually sign letters. I know. I'm clear on the issue, but I don't write letters to myself. Yes. So that's why I'm not on there. Yeah. Although I made the front page in the Santa Cruz paper once when I did do that, so I'm conscious of that.

Yeah.

And, and so the other thing is, is the University of California has been very clear about cuts in federal research and the impacts. How has the CSU system thus far been affected by the cuts that have already happened? Or are in process for the Federal Government.

Yeah. So we're seeing plenty of those cuts as well. We don't have the same level of research base in the way that the UC does, but we are seeing all those cuts and taking them very seriously and trying to plan for those. But we have seen reductions.

I provided your staff some information about that a little bit a few weeks ago to be able to kind of get a grasp on that. But if there's any further questions on those beyond what we've already provided, I'm happy to get that updates and information to you.

Great. And then a random comment which is there was another one of those hearings at the federal level in the House of Representatives a couple of weeks ago with college presidents trying to play gotcha with them.

And the President of Cal Poly was hauled back and did an outstanding job and really flew the flag high for CSU and I think deflected a lot of the craziness. So he deserves some praise for surviving that. Let me ask my colleagues.

Senator Perez, so some similar question that I asked the UC earlier, just in terms of what you're seeing with enrollment trends. You know, I know we typically see more students enroll into colleges and universities during kind of uncertain economic times. So want to see if you've seen maybe an increase in enrollment numbers.

I know we talked a little bit about some of the CSU's enrollment numbers kind of the last time that we had some hearings. So, you know, what do you, what are you expecting based off the applications that you received in late 2024?

Yeah, so we actually had our. We've had two consecutive years of our largest freshman class coming into the CSU. And we're happy to be able to see that enrollment, that growth. Obviously that is a, a goal that's shared amongst all parties to be able to see CSU grow.

The challenge that we have of that is that we're 60% funded statewide to be able to Fund for each one of those students. And so we have a budget reallocation plan that where we kind of right size amongst ourselves within a finite pot of funding that we receive in the state.

And so we will see some growth in Enrollment, about a little under 4,000. That's not nearly what folks would really love to see. It's not really what we would like to see either. But in order to be able to support the students throughout, we'd have to make sure that we had that dedicated funding from the state.

So a lot of it is just taking from campuses that are under enrolled and being Able to support those that have the ability to grow.

The other question I wanted to ask about, and one that honestly makes me very proud to be a CSU grad, is the CSU serves such a large number of working class students, particularly, I mean, a huge portion of your students are first time college graduates, first in their family to even attend college.

And so, you know, just in terms of a 3% cut. I know, you know, we were happy to see the Governor reduce some of those cuts, but obviously we want to see those cuts reduced even further.

And I think particularly for the CSU system that has a much smaller endowment than maybe some of the other institutions, those are going to be harder challenges to navigate. In addition to that, there's other resources that your campuses have to provide for students.

I know I went to Cal State LA and we had our child care center, I believe the name was Anna Bing Arnold Child Care center, that we were really happy to have in that enrollment list. To get on that list, you actually had to sign up while you were still pregnant as a student.

The second you became pregnant, you wanted to put your name down because the list was so long and the demand was so long to get into a center like that. So, you know, it kind of highlights to me just the kind of, as we call them, non traditional students, but it's honestly become the traditional student. Right.

That enters into a CSU campus. So we'd love to hear you talk about that. Just some of the challenges that the CSU system in particular faces with some of these cuts, financial constraints, and the resources that you all have to provide to meet the unique needs of serving these types of students.

Yeah, so that's a really great question. And I think that, you know, they're a little bit different per campus. Everybody serves a little bit of a different mix of students. And so while you have a really good example at Cal State la, other folks are going to have different examples.

I gave the example with Chair Laird about how we have the seven campuses that are struggling somewhere along the lines of some Sonoma State. And so while it might be a childcare center at Cal State la, it's also, it could be a labor cut at Sonoma State that we unfortunately have to see.

And so it varies by campus, by campus on what that actually looks like. But if you wanted to see something specific for a particular campus, I'd be happy to follow up and get some more information on what that looks like for you. If the Cal State LA is your Alma mater, Happy to look into that for you.

Yeah. And I think I want to highlight more than anything that, you know, know, because of the unique needs of the students at your various campuses, that, you know, there are certain programs that CSU has to invest in and Fund and support to support, for example, students that are parents, you know, that have.

That have children so that they're able to go to school and can attend your campus. And the financial resources that you all might have access to might be a little bit more limited than, let's say, another institution or other institutions that maybe have more resources that they're able to tap into.

The final question that I wanted to ask about, and I know this was brought up a bit earlier by Senator Ochoa Bogan in regards to the UC system, but, you know, as you go about looking to do more with less, which we're always asking our college institutions to do, just how you'll go about making some of those decisions and prioritizing really, you know, students needs as well as, like, their education.

I have a very close relationship with many of the faculty that I attended school with. Actually, some of them are my constituents. Constituents. Many of them live in South Pasadena, Pasadena, Glendale. And so I engage with them regularly. And, you know, they've shared with me that as a result of.

Of just the funding constraints that they've seen, many, you know, kind of unique programs that they've had to offer have to go away. Some of those elective programs have to go away.

And it's, you know, it's been a real challenge, while at the same time maybe, you know, expansion of other, you know, like, large sports facilities and other things like that. So we'd love to hear, just as you approach this issue, how you'll go about prioritizing investments, particularly in, you know, in. In. In this space.

And as we're kind of facing tough challenges with the budget, so obviously our goal is to make sure that the CSU is not facing any cuts, but, you know, recognize that we're also facing some of those tough decisions.

And I want to hear how you'll be, you know, prioritizing staff, faculty, making sure that those resources are being allocated, you know, directly to what students are attending those campuses for, which is to get a great quality education.

Yeah, and that's like. That's a really great question. We at the Chancellor's office, we largely allow presidents to. To be able to determine what fits best in their local area and what that looks like.

And so, as I mentioned a little bit earlier, whereas you may have a lot of student parents at some areas, they may, prioritize that over other areas that maybe have a larger STEM program. And so we really allow campuses and presidents to be able to speak to what the local need is on their campus and prioritize up.

Obviously, there's a large commitment at every single one of the campuses to be able to protect students, students and pre ex student needs. And so that would be the forefront of what everybody is making their decisions based on. Also recognizing that it's very, very hard to get people back once you let them go.

And so that's never the first thing that anybody wants to go to. Everybody wants to protect their talent as moving forward as best as they can, because once you lose them, that's it. Right?

Absolutely. Thank you. And you know, it was already discussed before, and I know we'll talk about the middle class scholarship later, but just also want to highlight the huge impact that cuts to financial aid have on your institutions.

As was mentioned earlier, when I was a student at Cal State la, I benefited from the middle class scholarship and so understand the ripple effect that that has on you all, especially at institutions where you might be the first in your family to be going to college.

And, you know, one of the reasons Cal State LA was recognized was for its impact on economic mobility. And that comes from so many of our students coming from low income families. And you know, even for myself, I mean, I, you know, I make more than both of my parents now. Like, that's incredible.

And that's the case for so many other Cal State grads that I know and went to school with. And so, you know, I see the impact on myself, I see the impact on so many of my friends.

So appreciate the work that you all do and want to continue fighting, you know, to make sure that you guys aren't facing any cuts and that you have all the resources you need to serve your students. Thank you. We appreciate that.

Senator Ochoa-Bogh.

Yes. So echo all of the questions.

I would be, you know, at this point I would be ready to just make a motion to reject all the cuts, but I know that's probably not something that we could do, but I'm sure that off the record, I think my colleagues here on the dais would all second and approve the motion on that end.

But aside from that, I have placed that on record, just my intent.

But I do want to just kind of emphasize and go back to what I said with earlier with the UC system and that was that if there are to be any cuts that we make sure that, you know, we prioritize our students, our faculty, or staff, but also that if there are cuts to be made, that they're equivalent, if not, you know, more on the admin stripe.

Because I think the hardest part, part in this work is to hear from our students about services not being provided or classes not being available and having to extend their graduation periods in order to be able to get the classes that they have and be able to graduate. So that is a huge concern.

But also on the faculty level, many of them, you know, many a times making it very, very hard for them to be able to stay in the profession. And, you know, the complaints that they have about not being properly compensated for the work that they do.

And as you mentioned earlier, when that talent goes, you know, into other places, it's really hard to get them back. So make sure that we prioritize that.

And then the observations and the articles that we've seen with the Administration and the cost and the admin, what people are getting paid at the very highest level in at Both the UC CSU's system, I think should be noted and placed on record as to. People are watching. They're watching as to what the Administration is getting paid.

And so when we're asking our students to pay more in fees, whether it's in the UC system, in the CSU, and we're seeing the salaries for the admin being extremely high, per some of the articles that we've read, that's something to consider as we move forward in cuts and allocation of funding.

So I just wanted to place that on record that the public is watching and so are we. And so we want to make sure that, you know, as leaders, we take the lead and say, hey, you know, we're the first to model and ensure and protect what we're actually representing, which is our students and our faculty.

And I would just, I would note on that is that the chancellor's office has committed to, to taking a larger cut to be able to offset all campus cuts on it. You know, while we still figure out what this cut's actually going to look like, hopefully it's zero.

So just wanted to please plant that seed in your heart.

When it was the 8% cut, the Chancellor's office was committed to taking the full 8% to offset everybody else who was less than 4. And so that was really the commitment that was made to make sure. And we plan on seeing that moving forward for whatever that cut may look like and what it would be.

So we recognize that. We understand that and that was our commitment to.

Well, great. Thank my colleagues for the questions and you for the answers. I think overall it's very clear that we would like to keep going to eliminate the reduction of 3%. That that's our goal is heading in that direction as we move to the negotiations.

And then with regard to CSU specifically, I followed, but I did not have the stamina to listen to both five hour meetings at Sonoma State.

And it was clear that there's a whole mix of issues that there had not been sort of actions taken over a period of years when enrollment was going down and the budget was wasn't balanced. It sort of led at once.

But it's also clear that there was almost no notice given in consultation and it just got out there in public when it did happen.

And so I think that if we are successful in restoring the cut, I think we'll hope for some, some complementary actions from CSU in sort of uprighting the campuses that are stressed in a way that maybe it can be done in a fashion that's not meat cleaver but over time.

And so I think that's a thing that if we are successful in restoring the cut, we would look to CSU to work with on that to have a good outcome. So just putting that on the record. So thank you. I appreciate again my colleagues, I appreciate your questions and answers.

And we will move forward the next few weeks and do our best on this issue. We're going to move to item number five, which is community colleges.

And we have Justin Hurst from the Department of Finance, Alex Shope from the Department of Finance, Lisa King from the Legislative Analyst Office, Ken Kapan from the Legislative Analyst's Office, and Chris Ferguson from the California Community College's Chancellor's Office.

And once again we have a sixth person and we'll see if that sixth person is necessary at 1.0 here. So let's go in that order. Let's begin with the Department of Finance.

Good morning, Mr. Chair. Senators Alex Shope with the Department of Finance. So I'm here, I'm just going to cover the TK re bench split proposal and then I'll hand it off to my colleague.

So to provide just a little bit of context, the May revision continues to re bench the Proposition 98 minimum guarantee to reflect updated cost estimates associated with the expansion of transitional kindergarten.

25/26 is the final year of the first four year re bench process in which funding has been increased each year to correspond with the expansion in pupils eligible to enroll in transitional kindergarten.

So to this point, the re bench funding has been subject to the TK to 12 community college split in which community colleges receive roughly 11% and TK receives roughly 89% of total total Proposition 98 funding with some items of course that are largely or entirely funded on one side or the other removed from the Prop 98 total that is then subject to the split calculation.

So that brings us to the May revised proposal which is to remove the TK expansion funding from that TK12 community college split. I think similar to something like Proposition 28, right?

This re bench is due solely to expansion on the TK to 12 side and the Administration views this proposal as aligning the program funding with where those costs are being realized. Thank you. Happy to take questions at the appropriate time.

Okay then.

Good morning. Justin Hurst with the Department of Finance. I'll be covering more of the investments as specific to the community college system in the May revision for core apportionments.

The May revision includes an ongoing 12.9 million Proposition 98 reduction relative to Governor's Budget in the apportionment's cost of living adjustment to reflect a change from 2.43% at Governor's Budget to an estimated 2.3% at the May revision. The total proposed Investment is now $217.5 million in ongoing Proposition 98 funds.

Similarly, there's an ongoing reduction of 122,000 Proposition 98 relative to Governor's Budget in select categorical and adult education program cost of living adjustment funding to reflect that same change in COLA. This brings the total investment now to 30.1 million in ongoing funds to address and close projected apportionment deficits both in the current year and the budget year.

There is an increase of 210.2 million Proposition 98 in the current year which is one time and then 104.7 million Proposition 98 ongoing in the budget year in response to strong FTEs growth in the system.

There is a proposed ongoing increase of 109.5 million Proposition 98 to Fund a revised target of 2.35% enrollment growth in the student centered funding formula. I will note this is a revision from a targeted 0.5% growth as proposed with Governor's Budget. So this total growth investment now sits at 139.9 million ongoing Proposition 98 based on P1 data.

Similarly, there is a one time fire related property tax backfill that is being provided with Miravision in the amount of 3.8 million Proposition 98 in the current year and 8 million Proposition 98 in the budget year for community college districts as affected by the fires relating to the Governor's emergency State of Emergency declaration in January.

The May revision additionally proposes the apportionment's deferral of 531.6 million Proposition 98 from May and June 2026 to July of 2026 which represents a deferral from the fiscal year 2025-26 to fiscal year 2026 to 27. There is a proposed appropriation for E.

Transcript California to backfill a 6.6 million Proposition 98 shortfall from funds that were reappropriated as a part of the 2024 Budget act that failed to materialize, which in effect makes that proposed $12 million investment whole.

We are amending the reappropriation item as provided in this Governor's Budget to Reflect reappropriation of 311 million in one time Proposition 98 funds that will be used towards backfilling a prior year apportionment decrease and a current year apportionments decrease as relating to that TK split in addition to paying back part of that budget year proposed deferral.

Moving on There is a reduction of 59,000,000 one time Proposition 98 funds in in the budget year relating to apportionments that will then subsequently be backfilled with a withdrawal from the Public School System stabilization account in the budget year to support core apportionments for the Collaborative Enterprise Resource Planning Project, otherwise known as the Collaborative ERP that was put forward with the Governor's Budget earlier this year.

The Administration is withdrawing that full investment of 168 million Proposition 98 for the common Cloud Data Platform. The Administration is reducing the investment of 162.5 million Proposition 98 to a revised 12 million in one time Proposition 98 funds for the Rising Scholars Network.

The May revision reduces the proposed ongoing augmentation from 30 million Proposition 98 to 10 million Proposition 98. The May revision proposes reducing the investment for the career passport from 50 million in one time Proposition 98 funds to 25 million in one time Proposition 90 for the master Plan investment relating to credit for prior learning.

The May Revision reflects reducing that investment from 43 million Proposition 98 to 15 million with regards to the one time Fund component and moving to the ongoing Fund component revising down from 7 million Proposition 98 to 5 million Proposition 98. Finally, updates have been made to the Trailer Bill proposals as relating to these investments.

In addition, there is a Trailer Bill proposal that is put forward with May revision that updates certain reporting requirements for the community colleges in order to better align data reporting and program sunset timelines with those reports. Happy to take any questions.

Thank you very much. We're going to move to the Legislative Analyst.

Lisa King with the Leg Analyst's Office. So tomorrow morning, as part of your K12 hearing, you'll hear our full analysis of the mayor vision Proposition 98 plan. But for the purposes of today's hearing, I'll focus my comments on two topics, the community college specific proposals and then the split of funds between the schools and the colLeges.

So starting with the community college proposals, as you've heard from the Department of Finance, the May revision continues to provide a cost of living adjustment for apportionments as well as funding a higher level of enrollment growth. Based on recent trends, we think these two proposals in particular are reasonable ways to prioritize core program costs for 202526.

We do, however, have a couple of concerns and other proposals. First, as you've heard, the May revision includes $532 million in deferrals for the colleges. You'll hear tomorrow that these deferrals for the colleges are proportionally larger than they are for K12 school districts.

Our concern here is that relying on deferrals, especially larger ones, has out your risks for the state. Entering 2026-27, the state would have a hole in the community college budget that it effectively needs to fill before it can afford COLA or gross in that year.

And moreover, the cost of repaying the deferral will further eat into the amount of funding that you have available for future costs. We recommend avoiding deferrals this year. You could hold onto that tool for addressing a more severe downturn down the line where you have fewer alternatives.

Our second concern relates to the apportionment cost estimates for 202526 which we think likely are too low under the May revision. We estimate that apportionment costs are 143 million higher than the May revision level.

And the main factor driving our higher cost estimate compared to the Department of Finance's is is related to the supplemental allocation, the piece that provides districts with funding based on their low income student counts.

Whereas the May revision assumes no growth in those counts, we assume growth that is more in line with recent enrollment trends and financial aid eligibility expansions. We recommend adopting these higher apportionment cost estimates because it would reduce the risk of a shortfall in apportionments next year.

A shortfall would be another cost that you're looking to backfill this time next year. As part of your hearing tomorrow, my colleague Penn Kaplan will present an LIO alternative plan for Proposition 98 that among other things, avoids deferrals for both colleges and schools, and budgets for higher apportionment funding.

In order to free up funding for these purposes, our LAO Alternative Plan does include a few actions on the community college side that I wanted to go ahead and walk through now.

First, our alternative plan rejects $52 million in remaining new one time spending on three initiatives, career passports, Credit for Prior Learning, and the Common Cloud Data Platform. And this reflects concerns we raised about all three of these proposals in your earlier hearings this past March.

Second, our Alternative Plan reduces ongoing funding for a program that currently has a sizable surplus, the Part Time Faculty Health Program. This reduction would just be to align program funding with actual costs, which have been coming in about 150 million lower each year than the program is budgeted for.

The third way our alternative Plan makes room to Fund core programs at the colleges is that it uses a different distribution of funds between the schools and the colleges.

And to better explain this last point, we have a short handout that I believe you have in front of you titled the 2025-26 Analysis of the School and Community College Funding Split. I'll just briefly walk through this before concluding my comments.

So as background the state constitution, Proposition 98 itself is silent on the distribution of funding between schools and community colleges. Historically, the state has distributed Proposition 98 funds with about 89% going to the schools and 11% going to the colleges, and that's based on the actual allocation of funds in the year 1989-90.

This calculation is not codified, and in fact, over the years the state has made various changes to it, excluding or adding certain programs to the calculation, implicitly as a way of moving funds between the two segments.

As you've heard from the Department of Finance, the May revision includes a new exclusion related to transitional kindergarten funds, and this has the effect of shifting 492 million in funds from the community colleges to the schools. Of that amount, 233 million is ongoing. If you turn the page, you'll see our assessment of this overall approach.

In short, we don't see a compelling reason to allocate Proposition 98 funding based on spending decisions that were made in 1989.

We think that this overall approach yields outcomes that are disconnected from enrollment trends at the schools and colleges, from the evolving responsibilities and cost pressures that both segments have faced over the past 35 years, and frankly, also from the Legislature's priorities. The split is effectively a constraint on your decisions as you build the budget.

We recommend discontinuing the use of the split as a budgeting tool and instead of providing a designated split of funds and seeing what the state can Fund within each side, recommend instead of building a K14 budget that for both schools and community colleges, funds COLA funds, enrollment adjustments and then with any remaining funds supports the new spending proposals that you find most compelling.

Thank you. Happy to take questions.

Thank you. Any other comments from the LAO at this point? Then let's go to the Community College Chancellor's Office.

Senator, Members of the Committee, Chris Ferguson, Executive Vice Chancellor of Finance and Strategic Initiatives at the California Community College Chancellor's Office despite the state's challenging fiscal situation, with a $12 billion deficit, $16 billion in revenue impacts, we are thankful that the May revision focuses on the core needs of our colleges and that is making sure that there's not a deficit factor in the student Centered funding formula, providing funding so that we don't have unfunded FTEs within that funding funding structure and also ensuring that our cost of living adjustment, the statutory cost of living adjustment, is funded for both the student centered funding formula and select categorical programs.

We are also thankful that although there are significantly fewer overall resources dedicated to supporting the Common Cloud data platform, supporting credit for prior learning, supporting the Rising Scholars Network and supporting career Passports, we remain thankful that there is a continued focus on those initiatives.

Although the funding structure the funding would be less, we do intend to use those resources to have as big an impact system wide as we possibly can. So with Common Cloud data platform we will certainly engage more colleges. We will attempt to have more interlinked data between all of the colleges in the system.

It won't get us all the way there, but it will help us down the pathway toward realizing the vision of having real time data and having that available to to inform for counselors to inform students pathways. As you're probably well aware, we have numerous students throughout the system that take courses at various campuses.

They're not always at the same campus and it becomes a challenge to advise those students when we don't have a linked data system credit for prior learning policies. The data is very clear that students who receive credit for prior learning complete more expeditiously.

We know that there had been some previous concern raised around what credit would be provided to students. We are perfectly fine if the trailer Bill Language, if this were to move forward said that all of the units need to be degree applicable, we would have no concerns with that.

In terms of overall structure, I think we would note a couple risks and you know, just a couple high level components. The noted shift in the split and approach does have a $492 million impact on our system. That 492 million is split between roughly 2601,000,001 time and around 233 million ongoing.

That does mean within the administration's proposed May revision that they use a large deferral in the budget year to navigate the available resour that would traditionally be provided for community college purposes.

We would echo the comment made by the LAO around the deferral and that is there is a long term risk with a sizable deferral because if the state is unable or not in a position to begin repaying or restoring the deferred funding in future years, it's likely that additional consideration for even larger deferrals, which is what we saw in the Great Recession, would occur.

So we would say to the extent there are additional resources available as you discuss the final budget, that we focus on trying to reduce the size of that deferral as best as we can to mitigate long term risk.

Certainly we would have no concern if there was consideration for additional resources to Fund unfunded growth in the current year. And absolutely to the extent the Committee were to consider investments that support our students, we would have no concerns as well. Again, we're thankful for the package that is there. If there are other opportunities to invest.

Again, that's reducing the size of the proposed deferral. Looking at funding unfunded growth in the current year, starting in the current year rather than the budget year, making sure the SEFF is fully funded and then student support services. That would conclude my remarks.

Thank you very much. Then we're going to bring it back for questions and let me start with a few on the subjects that were generally mentioned. Let me ask the community college system so there is a funded level of enrollment growth and usually what is in the student centered funding formula.

Hold harmless list fluctuates by how big that enrollment growth is. So what is left on the hold harmless list with this enrollment growth if we were to adopt this level?

Yes.

So funding a lot of the unfunded enrollment doesn't necessarily change the number of districts that are on hold harmless because there is a strong correlation between those districts on the hold harmless provision and not having recovered to pre pandemic enrollment levels or we looked at it in 2016 not having gone back to where we had been 10 years ago.

There's a strong correlation between that. So funding unfunded growth unfortunately isn't having the type of impact that we would expect. If I recall the data Correctly, there was potentially one district and it was a basic aid district that may shift from being on the hold harmless to being off the hold harmless.

And so for those that are on the hold harmless, it starts to hit in the budget year in that they don't get any increase. Yes, that is accurate.

Unless we take any other action that. Is accurate based on statute. Today there is a cost of living adjustment applied to the base supplemental and success metrics and the base allocation portions of the student centered funding formula. If you're receiving stability, which is our version of declining enrollment protections, you would also get that statutory COLA.

But districts that are funded on the hold harmless amount starting in 25-26, according to statute, do not receive a cost of living adjustment.

Okay, thank you. And of course we will continue to talk about that in the next few weeks. Let me go to finance on the issue of the, of the split. And these facts were in evidence for the years up to this.

And yet deciding this year to do the split in three years and making it retroactive means there's two years. It goes back in the budget where everybody has spent the budget and they are done and yet they're getting this filter when all the way along we knew that was the case and it could.

Why do two retroactive years as part of this?

You know, I think I would first say obviously, Right. I think this has been a conversation around how the split or how the TK RE bench is allocated. You know, since this was part of the 2122 budget agreement.

I think in short, you know, we see, you know, as I mentioned in my, in my opening remarks, you know, this is aligning the funding with where the costs are being realized. You know, I think.

But you could have aligned it in the years that people were planning their budgets rather than saying now that you're done with those two year budgets, this is when we've decided to align.

That's a problem. Sure. I think, you know, obviously being here now, knowing that it hasn't happened yet. Right. We still obviously budget within the three year budget window. You know, I think that we view this as the correct decision. You know, while we are still able to look back at those years. Right.

Obviously, you know, there's kind of two sides to this, I think. Right. Where you can see it as, you know, if 11% is going to community colleges. Right. There's that amount that is not going to the projected cost for transitional kindergarten.

You know, so I think now in the last year of the re bench, while we still can look back, we see it as the appropriate time.

And I think, you know, as my colleague noted, we did try to do it in a way that, you know, didn't have a greater impact on the community colleges, you know, being able to use savings, looking back for those one time costs in the past year and the current year to be able to.

But at the same time, we're exhausting all the reserves in Prop 98 and doing a $600 million plus deferral to the next year where there's no assurance.

We have Learned, particularly with UCs and CSU's, that when you do deferrals, that's a nice thing to get you through a budget, but it usually is not made good in the next year.

And so if we're looking at a similar problem in the out year that we have this year, we're exhausting all the reserves in Prop 98, admittedly to arcane rules, and not a big amount compared to the rainy day Fund, but that seems that we're just setting ourselves up next year for a big problem.

Do you want to tell me why that would not be a big problem next year?

You know, I don't want to, I don't want to sort of speak too much on the out years, just, you know, given the uncertainty that we're facing. You know, I think obviously I don't think the deferrals are sort of the kind of tool of choice.

I think with the budget realities that we're seeing in the budget year, it is something, you know, that we have to use this year, but I know.

It'S not the tool of choice. But then we'll be sitting here next year and the Reserve will be gone and we won't be able to Fund the deferral and we'll have an ongoing level that's above where it is. And so I can see that coming a mile away.

I'm not seeking another appointment, but it would be nice to be somewhere else rather than sitting here a year from now if all those things come true. So. Okay, I think we have beaten that one.

Yeah. Yes. If I may, just from the community college perspective, we would always prefer a deferral over a true reduction as it allows us to maintain that higher level of spending. You just couldn't ditch your prior incarnation, could you?

You're not obligated to defend finance. You are not obligated to do that. This is, this is defending the system and. Zero, no, I expect that's what you would say. So we're totally good. We're totally good. Let Me ask my colleagues any questions. Senator Perez.

Yeah. So I just want to reiterate what the chair already highlighted, which is this. This retroactive approach. You know, I see it here within the community college system, but also see it as well.

And I know we're not talking about the K through 12 systems and Prop 98 Today, that'll be for tomorrow, but also seeing that same strategy applied there. And so I kind of see that as like, a little bit problematic to have to go back in time to look at money that was already spent.

So is there a reason why we're using that particularly for community colleges, particularly in the K12 space? And in addition, I was very happy to see Universal TK be supported and funded.

Taking that funding then from the community college system is a little bit odd, and I think kind of places them in a very awkward position against one another as well. Obviously, I think they're very supportive of Universal TK and then at the same time wanting to ensure that they have full funding for their system as well.

Well, so do you all see how that can kind of place them at odds in a bit of a strange situation and just want to understand what the thinking was in doing that? So.

Yeah, I think we. We do understand, obviously, that there is an impact with this shift. You know, again, I think I would just reiterate that it's. It's. There's an impact on both sides. Right. The part of the agreement, I think, to expand Transitional Kindergarten, that was contingent on there being a re.

Bench an increase to Proposition 98 funding. So that, you know, the amount, which I think right now, what we're looking at in the budget year at full expansion is 2.1 billion. So that those costs would not crowd out other programs, whether, you know, it's on the TK to 12 side or community colleges.

You know, I think that understanding that the guarantee was increased from the level where it was to accommodate those costs, you know, we believe that the funding should be kind of going towards those costs. The TK expansion costs specifically are sort of to accommodate that increase in Ada due to tk.

So I think, you know, I think absent this shift, right. It could be seen potentially as, you know, not funding that expansion to the necessary level on the TK to 12 side.

And if I may add, I believe this will be discussed at more length tomorrow. But there is also a deferral that is proposed on the K12 side of the budget.

We have the overall Prop 98 tomorrow. We're just veering into it by getting to community colleges Today.

So if I could just add a little context from the community college perspective, and that is we are a core trainer of the state's workforce. We work in partnership with the University of California, California State University, and independent institutions to help train our workforce.

So in terms of data, we looked at how many students in 2324 took at least one course in early childhood education. It's up 10,000 from the prior year. It's at 121,000 students, give or take.

When we look at how many students in our system took at least one education course or course toward becoming a teacher, we had 321,000 students. Roughly. When we look at majors and intended majors and what we're seeing from our student body in 2324, we saw roughly 123,000 students indicate they would like to major in early childhood education.

And when we look at education globally, and this can be any number of fields within teaching, we saw roughly 116,000 students in our system indicate that they want to be on a teaching pathway. So I just, as part of the conversation, would reiterate, our system, along with our partners, are training the workforce needed for transitional kindergarten.

And appreciate you sharing that. I mean, it's all intertwined, right? And I think we've realized that when we're talking about education that folks, you know, start in tk, the hope is that they go on to future jobs and careers and potentially enter into the education workforce to be able to teach, you know, future children and future generations.

So, and, and that's, that is why it's very kind of odd to kind of place them against one another, I think in many ways in this budget and just want to highlight, and I'm going to talk again tomorrow, just the kind of strange nature of doing these retroactive cuts and using budgets from years past.

And I, I hope that's not a trend that we begin to, to use to try to balance our budget because I think it creates several challenges. The other piece that I want to talk about is the fire related costs. So one appreciate that fire related property tax backfill was included in this budget.

As folks know, I represent Altadena, I represent Pasadena, I represent the San Gabriel Mountains, the entire area that was impacted by the Eaton fires. And so that's something that is very necessary. Altadena had over 9,000 structures that were impacted. A huge portion of the community has been displaced and is going through the recovery process right now.

And so that's had a huge impact because all of that area is within Pasadena Community College. District service area. And so that is going to have an impact not just on pusd, but also on PCC as well. PCC is a single campus district and so they take a huge hit when they lose that amount of student population.

But I do want to highlight, you know, a funding request that I had some submitted along with Assemblymember John Haribadian, and that was to recover some of the costs that were lost by PCC during the fires and some of the major investments that they made. In my district, I served the San Gabriel Valley.

There was a lot of confusion that happened throughout the fires with people confusing the City of Los Angeles and thinking that it covered Altadena, Altadena as an unincorporated area in the San Gabriel Valley. And because of that, in order to best serve those that were impacted by the fires, PCC really had to step up.

They utilized their foothill campus to serve as a disaster recovery Center for almost three months. It's actually still serving many people right now. FEMA is located there, Red Cross is located there, DMV is located there. And their entire facility was being used for that project purpose.

In addition to that, when there were major town halls to provide updates for myself from LA County, from local city leaders, we utilize PCC campuses and part of the reason why PCC became such an important resource was because they are one of the few locations near the Altadena region that has that amount of space.

There are very few locations within the region of, you know, Pasadena, Altadena that have that amount of space and square footage where you could set up shop like that.

When the insurance Commissioner came into Pasadena to do a workshop to explain to people how to navigate their insurance policies, we did it at PCC and we've continued to hose things in partnership with pcc.

And President Jose Gomez has been incredibly gracious enough to, to volunteer his staff to allow us to utilize his resources and his facilities in order for us to be able to get resources out to the community. So, you know, it's really a priority for me to make sure that that gets filled, that we fulfill their request.

You know, they needed additional resources because they basically volunteered their staff to be able to do this. In addition to that, pcc, both their main campus as well as their off site campus, their foothill campus is located, their foothill campus is located a little less than five miles away from the Bern area. PCC's campus is.

Their main campus is also located about a 15 minute drive from the burn area. And so ash, smoke, all of that cleanup that had to happen, their entire football field. That was all an investment as well.

So I really want to highlight that as a campus that was located so incredibly close to the Eaton Fire burn area that they're going to need additional resources beyond just covering this property tax backfill, which I know is kind of a basic thing we're going to need to do for all school districts that lost enrollment.

So I really want to emphasize that and kind of the unique nature that happened here when we talk about fire recovery, when we talk about trying to center equity in that process, to take into account the unique ways that our community had to step up. Because we only have a very small community college district.

We are not serviced by laccd. We are serviced by Pasadena Community College District, which, as I said, is one college for one district. So they have less resources. So I really want to emphasize that. You know, I was told that that was not approved, but I.

I want us to continue to have that conversation because it is something that's very important to my district and is very, very important, particularly to pcc.

Thank you. And you weren't asking for a response?

Okay. Do you have any questions?

No.

Sorry, I'm trying to be very quick in this. So I want to go back to the funding allocation that we're doing right now. I am grateful for the fact that you. That Ms. Ling King, Lisa King, highlighted the fact that the 11% is not constitutional. We've just made that arbitrarily and that we can mitigate.

I was not aware of that. So thank you for educating us today on that, on that front. But I am a little concerned about. We have here, and this is to the Department of Finance. We have here the change that would be retroactive two years back, in reality, going back to what my.

What the chair said and Senator Perez mentioned. What does that look like in real life, in real time? I mean, this is what we're saying in writing, in theory, but what does that look like? And how does that impact our colleges if we're doing this retroactively?

And then the other question that I have as a follow up to that, as we're developing the TK and we're allocating this funding. I know it was mentioned that it would take $2.1 billion to fully Fund the TK program. The 492 million that is being allocated right now, is that fully funding the program as it exists.

Because I know that in other conversations in our Committee, we've spoken about the fact that our school districts are having difficulties basically implementing the program because of the infrastructure as well as the workforce not being readily available right now.

So that $492 million, is that what we currently have in place that needs to be funded, or is that in hopes that it will help develop the infrastructure and the workforce moving forward? And, and what does that look like then to our community colleges? If it's retroactively. Retroactive, how does that impact budgetarily moving forward?

I know what in theory you're putting in writing, but what does that look like in real life, in real time?

Justin Hersh with the Department of Finance. Before I hand it off to my other colleague with the Department of Finance, I will note that in terms of the three year window, that $492 million figure that you mentioned is scored differently in each of those years.

So 160, thereabouts, is, my colleague may have to correct me on that number is the prior year and the current year together. And we were fortunate with regards to what funding that we've been able to identify with the help of the community colleges in savings that we're proposing be reappropriated.

So from the perspective of the system, we are hoping to mitigate the impact in the prior year and the current year and backfilling that with those reappropriated funds moving forward.

Go ahead.

Hi, Alex Shop, Department of Finance. So, right, so the 492 million, that's essentially the amount within the three year window. So 232424252526 of the total funding for TK in those years, that is going to the community colleges when it's subject to the split.

So basically the 11%, so the 2.1 billion, that is the total funding for TK expansion in the budget year. So for example, of that number, 233 million, that ongoing number that we've been citing, that's that roughly 11% of that total funding level that under the split goes to the community colleges.

And I believe. Zero, Chair. Chair.

Thank you, Senator. Ken Kapphahn with the legislative office. So one of the things I've heard the Chair mention in the past is we sometimes have this tale of two budgets where Proposition 98 looks much different than the rest of the state budget. This year, you almost have a tale of two budgets within Proposition 98.

So if you look at the community colleges, the Governor is proposing to withdraw almost 400 million in proposals from January. When you hear about K12 education tomorrow, you'll hear that a lot of those proposals are essentially unchanged from January, in some cases expanded.

And this shift has a lot of is a big part of the reason why there is this much different approach between schools and community colleges this year.

But I think your comment and the comment earlier from Senator Perez was getting to a more productive approach to this budget, which is to think about what are the priorities that you want to Fund this year.

One thing I've heard from this Committee also in the Assembly yesterday was that continuing to Fund transitional kindergarten and implement it was a high priority. So, okay, let's set aside funding to pay for those students. I've heard that funding the cost of living adjustment is a high priority. Let's set aside funding for that funding.

Community college enrollment I think I'm hearing as a priority. So this is a tighter budget and the state doesn't have a lot of new funding to work with, but it's not a terrible budget and there is still some funding for some new augmentations.

Our recommendation is let's figure out those high priorities, put together a budget that can pay for those things that you want to cover and not worry so much about whether it's Community colleges are receiving 10.8% this year and 11.2 next year and 11% the year after that.

If it is helpful to your point, effectively, what's happening in the prior year and the current year is a series of accounting and technical swaps in terms of what resources are supporting the student centered funding formula in a given year. The net net of this adjustment, though, is that there's a $531 million deferral in the budget year.

That's from our perspective, the net of, you know, the totality of the package that's put forward.

Okay, so it'd be more of a deferral and that's what it looks like in real life.

Yeah.

Okay, that's helpful. Thank you for that clarity. And then.

There was one other item, but I think, I think I'm gonna hold off.

Okay. Then, I appreciate the discussion, and I think we've been really clear about a few issues, but let me do one last thing in response to Senator Ochoa Bogh, and that is is I actually really appreciate the recommendation to think differently about the split. It's not something I think we will do in the next four weeks.

And yet, for--because it sounds like you might not have the history that some of us have, I was a community college trustee in the 1990s, and the argument about the split has taken a number of different forms. And when Prop 98 was passed, there was--35 years ago--there was really a division between community colleges and K-12, and for the decade or two afterwards, the community colleges felt like they'd been ripped off in the split and that they had a different commitment for a higher split, and it finally sort of got locked in in a way that it just continued.

And I think some of the concern about that fell away, especially since we had budgets that just kept going up and so the percentages kept meeting what their needs were. Then when we had the bad budgets, it turns out the split and Prop 98 protected community colleges in a way they hadn't been protected. As we were sitting there and looking for cuts at UC and CSU, community colleges were protected within the context of Proposition 98 and the split.