Senate Budget and Fiscal Review Subcommittee No. 1 on Education

For our final subcommittee number 1 hearing. Subcommittees are convening today to discuss lingering issues from the final June budget agreement, as well as to hear comments from the public as we near the tail end of the budget process. For today's hearing, there is one issue on the agenda, which covers the higher education student housing program for the California Community Colleges. We will invite the Department of Finance, the community college's Chance Community College chancellor's office, and the legislative analyst's office to the witness table.

Do you wanna come up here?

And you can begin whenever you're ready.

Sure. I'm I'm happy to start. Chris Ferguson, executive vice chancellor of finance and strategic initiatives at the California Community College Chancellor's Office. Senators, thank you for allowing us to be here today. As it relates to student housing, housing instability is usually the norm, not the expectation in our system.

Nearly three out of five community college students have experienced housing insecurity, and one in four indicate being homeless more than any other higher education segment in California. You know, our basic needs challenges are widespread and persistent, with two thirds of our students facing at least one form of basic needs and security, with only modest improvements over time, underscoring ongoing structural structural affordability challenges that our students are facing.

And of course, as we know well, housing insecurity directly undermines student success and equity, and that students facing housing instability are more likely to struggle academically, with disproportionately higher impacts on underrepresented student populations.

With that, under the affordable student housing program, in the 2122 budget, there was a commitment to provide and 2223 budget, there was a commitment to to provide approximately 1,100,000,000 in total resources to support affordable student housing projects at California Community Colleges, with the goal being, providing substantially below market rate rent, based, units to our students. At the time, there were 35 applications to participate in the program.

We did do around four update. So that 35 is now roughly 19. And of those nineteen, seventeen were in the original batch, projects have been submitted. When I say round four, that is we ask districts to go back to update their list and to submit new requests by July 1. With that, the 19 applications total about 1.2 1,300,000,000 in need.

So while the program has around, 218,000,000 in available capacity today, The need clearly outstrips, what is available. I would note that the total number of beds associated with that with those 19 applications is roughly 3,800. So 3,800 students. If we were able to fund all of those applications, would have access to a more affordable housing option while they attend a California Community College. We will be scoring those applications this fall and ranking them according to a rubric.

And that rubric relies upon a number of categories from cost per bed to location in the state to intersegmental partnerships. Information once that scoring has occurred to, staff. And of course, we continue to monitor, existing projects, as they construct and come online. As of August 2026, there are five projects that are operational today. One at Santa Rosa Junior College, one at Napa Valley College, Lake Tahoe Community College, Riverside Community College District, which is a an intersegmental project with UC Riverside and Sierra College.

And, they have very high occupancy rates, pretty much throughout. There's one where we are working at Napa Valley College to improve that occupancy rate through partnerships, with other universities, other campuses in the region. But overall, this is a tremendous benefit to our system. We look forward to working with the legislature and the administration to further address affordability challenges that our students face, and certainly providing affordable housing is one way that we can do that. Thank you.

Happy to answer any questions at at the appropriate time.

Good morning, Karen, Senator. Lisa King with the Legislative Analyst's Office. So as the Chancellor's Office has mentioned, of the funding that the legislature previously designated for community college student housing projects, 218,000,000 remains available for allocation. And that's a mix of unallocated funds from previous rounds as well as funds that have been returned by a couple of projects that have withdrawn from the program.

We estimate that the available funds could likely support between two and five projects from that new round of applications that the chancellor's office just described.

Those projects would likely yield a total of several 100 beds across the selected campuses. As you know, these projects would be debt financed through the state lease revenue bond program created a couple of years ago for this purpose, with the state repaying those bonds using general fund, and this is non proposition 98 general fund. We estimate that the annual debt service costs on this $218,000,000 would be approximately 15,000,000, though that amount could be higher or lower depending on interest rates.

In addition to the new projects that are before you today, there are some projects previously approved for this lease revenue bond program that are still in progress. I believe there are nine that are continuing right now.

And we would note that several of these previously approved projects have seen cost increases. Statute does set an expectation that districts cover cost increases using local funds, and the chancellor's office has issued guidance directing districts to do this to the greatest extent possible. And that said, we have seen to date one project request and receive additional state funding for this purpose. Thank you, and I'm happy to take questions.

Good morning, Chair and Senator. Alexandra Waldman with the Department of Finance. The 2024 budget act established a state lease revenue bond financing mechanism to support 13 affordable student housing projects at the California Community Colleges. Two districts elected to withdraw their projects from the financing in 2024.

Of the remaining eleven, five are in design, four are under construction, and two have been completed with one recently included in the spring twenty twenty six bond sale and the other due to be included in the upcoming fall twenty twenty six bond sale.

Most recently, the twenty twenty six twenty seven three party budget agreement included a commitment to utilize 218,200,000 in unallocated authority from the original funding transition and the two withdrawn projects and reallocate this authority to some additional affordable student housing projects. Thank you, and I'd be happy to take any questions at the appropriate time.

Thank you. Thank you for your presentation. I'll go ahead and get us started, and then I'll see if the members of the committee, have any questions. I wanna follow-up, first on something that the chancellor's office had mentioned. And so you talked about improving occupancy rates through partnerships.

You know, I think that that's really critical. Obviously, if we're going to be building this housing is making sure that students are actually utilizing it. And so what are the occupancy rates currently for the various campuses? I don't know if you happen to have those numbers or percentages on you. I would love to be able to see them.

And would also love to understand, like, for what those partnerships look like. If you can kind of further describe how you're working with other institutions to make sure that we're getting that housing filled.

Certainly. So, I do have the occupancy rates. So Santa Rosa Junior College is at 97%, Napa Valley College is at 55%, Lake Tahoe Community College, 97%, Riverside Community College District, the joint project with UC Riverside, is at a 100%. And Sierra College is at a 100% occupancy. So what it looks like from a partnership perspective is there's two ways.

There is from the start, the project was constructed on an intersegmental basis, and there are three there are four projects in the state that were designed with that in mind. One at UC Merced with Merced College, one at Riverside with u between Riverside Community College District and the University of California Riverside, one with Imperial Valley College and San Diego State University, and then one between Cabrillo College and UC Santa Cruz. So that is one approach.

The secondary approach is we've always said this is about maximizing the return to students. So for example, with Napa Valley, it's they've been encouraged to reach out to other universities in the area.

So we have, you know, within a 50 mile area, you have, for example, Sonoma State University, very close. So to reach out to those universities, make it available, make it available to any other community colleges that may be in the area. Solano Community College is also relatively, close, from a driving distance perspective to Napa Valley College, and they've been encouraged to establish that partnership to get those rates back up.

We do acknowledge that 55% is a challenge, and part of the challenge with Napa Valley in particular is that was constructed as a P3 project. So the other four projects that I mentioned were not constructed under a P3 approach.

And you said it was constructed as a P3 project. Can you speak a little bit more to what is a p three project?

Yeah. So in this case, it was a public private partnership, with a 135 of the beds being deemed affordable beds, and that was the contribution from the district to ensure affordability. And there are roughly 453 market rate beds in the project, that were outside the application, that was funded by the state. So in that respect, market rate is paying for a good portion of the overall project with the state's contribution paying for those affordable beds in the project.

And is it that you're having trouble getting students to fill? I'm imagining the market rate beds.

Yeah. That I would have to get back to you on the specifics, but that's my understanding. It's the market rate side that's the challenge.

Interesting. Okay. I also recognize that costs are continuing to go up as folks are actively building these projects, right? And that's just like across the board, whether it's residential, commercial, infrastructure, every everybody's having issues with with the cost of building right now. So how is the chancellor's office preparing itself in the case that costs are going to come up go up over the time that you're building these projects?

I I appreciate that we're having the special subcommittee today, but I wanna know, you know, financially what you all are preparing yourselves to do in that case.

Yeah. I think we first and foremost, we start with value engineering. So we ask districts to look at their project and ensure that you're maximizing the the value engineering aspects, the cost of the project. So an example of what a district may do originally they may have planned for a kitchenette in every dorm room or every student housing unit and they may shift to a centralized kitchen, you know, to try and reduce cost for that particular project. So they will look at those types of approaches.

They'll look at maintaining bed counts through, you know, decreasing the number of single occupancy units and increasing the number of double occupancy units. They'll look at, for example, they may have been supporting family housing and they may have wanted to build a playground for young children that would be with with those students and they will say, well, we'll we'll we'll move the potential playground.

So they will look at all of those aspects of how can you drive down the cost, how can you do the the core focus of housing at an affordable rate, and in a way where the construction cost can be managed from within existing resources, You know, in the event after all of those attempts are are completed, if there is a need, districts then have, you know, a few choices. One is to look internally to say what resources may we have available to support the project.

They may have had a flexible bond that their community had supported.

They may have some other private philanthropy that would support the district in completing the project. They may have a nonprofit partner in some cases. And then of course the very last challenge is in law. There is an ability to request an augmentation. That should be, you know, one of the last areas that we turn to.

But it is correct that there is that that challenge in terms of cost escalation. Our commitment to your staff and to the administration though is, you know, at this point if there is a project that may be considering it, we will sit down, we'll discuss what's changed, what's occurring, what we're seeing, all the steps the district has taken before, you know, putting forward any, you know, official requests.

I think that's I will have a couple of questions right now, but I also wanna allow for my colleagues to raise questions. So Senator Chua Bogue, do you wanna go first?

Thank you, madam Chair. Good morning. You're welcome. So I I've been a proponent of building housing on campuses. I think it's the best bang for our buck for both the state and the universities as well as the students.

On on the public partnership, with regards to Napa, are we so when we're we have I know we have a formula on how we prioritize these these, well, grants before and then the projects that we're helping, subsidize. In that formula, do we take into consideration the demand? Because, even though, of course, we're looking at Napa, you just said, you know, 55% occupancy rate with the majority of them being affordable.

But if they're not being occupied, then we're we're kinda losing out as a state as far as the the funding goes. It doesn't really work.

So are we looking and reassessing whether or not moving forward, we're going to look at, you know, prioritize market rate moving forward. And and I know it makes it a little more less cost effective. But once again, if they're not being leased out, they're not going to be. And I and when you look at the, intersegmental component of the allocation, are you folks looking at, well, let me preface that question. How far are the closest universities by vehicle, by car?

Because usually it's very difficult for people as students to have a car and be able to. So that's also another component that we need to look at. And so I'm looking at proximity to the schools. I'm looking at, whether or not there is a backlog need for for those universities, which I would assume that that would have been a consideration in the in in selecting these projects for to build.

Yeah. So unpacking that a bit. So in terms of unmet demand, that is certainly one of the criteria in our scoring rubric. So we're trying to figure out what is the wait list, what is the demand, what are county sorry, county rental vacancy rates. So we do look at that aspect when considering our ranking criteria.

In terms of that intersegmental approach, usually it is campus to campus at the local level and they, develop that, to have that project from the start be co located. So, you know, for example, the co located project between Riverside Community College District and the University of California Riverside is on the University of California Riverside. I believe the UC Merced project is similar. The Cabrillo project will be closer to the Cabrillo campus. And I believe the San Diego project will be closer to the Imperial Valley campus.

So in that inter intersegmental approach, they are looking at that low that locale that range from their facility to their partner facility. So that is taken into consideration.

Is there a sorry to interrupt, but is there a maximum distance that we're looking at, or a minimum distance for these campuses?

We don't look at it from distance. We look at it from the two campuses working together from the start to say this is what we would recommend, and knowing the campuses, they're doing that naturally to say the demand would have to account for that, because if you're too far away from one of your facilities, that's going to impact that demand, whether that student would opt to live there and take that type of commute.

So, you know, if we were a 100 miles apart in an extreme example, it's not feasible to expect a student from one institution to drive a 100 miles to the affordable unit. It it it just wouldn't work.

I absolutely agree with you, which is why I'm curious as to when we're looking at the distance between campuses, what is that look like? What is the average or what is the the reasonable amount of distance that is being considered?

Yeah. And I don't think there's a specific standard. Of the projects that are there, I want to say that most are within five miles of each other. Just knowing Riverside and and Riverside Community College, it's around five miles. But, you know, for example, with the Riverside Community College District, they do make it available to any student in the district.

So whether you're at the Moreno Valley campus, the Norco campus, or the Riverside Community College campus, or any student can submit an application to be in that affordable housing. So while it is close to Riverside Community College, any student in the district, would have that access. When we look at Merced, it is going to be on the Merced campus and I believe similarly, it's about five to 10 miles between the two campuses as well.

In that case it's intentionally co located so that it facilitates transfer and it enables our students to also learn from students on the campus. So the examples that I have are all very close.

Now Imperial Valley Campus is quite a distance from the the main San Diego State campus, but the housing that is being constructed is actually close to their Imperial Valley Center. So it is close to a facility that offers opportunity for San Diego State.

Okay. And then going back to the Napa Valley One, where we're at 55%, what is the closest university?

I believe the closest public university would be Sonoma State. I have not double checked that, but it would be, I believe.

And how far is that in distance?

I want to say 20 miles, but I will have to check that.

20 miles. Okay. Are there any other colleges close by that could be utilized on that on that campus?

Not to my awareness. I know Solano is about 15 to 20 miles as well, but our encouragement is it doesn't matter where the college is located, in terms of serving students maximize the closest, university partnerships. It's about serving our needs. So, you know, we would not say go to one that's further first. We would say go to any that are close in proximity and work with them to see what can be done.

Okay. Just just asking because I think it there's something to be said about learning from from Napa moving forward.

That's right. Yeah. And it really is that focus on demand. Time that the studies were done, the demand was sufficient. But it turns out that that demand has changed over time, whereas the other projects are in areas where that demand has sustained and remained.

Interesting. Thank you, madam Chair.

Thank you, Senator Schoebuck. Senator Archuleta?

Yes. Thank you, madam Chair, and welcome. Thank you for coming out. You had mentioned a 135 beds public private. That sounds like a great program because when you get public tell me a little bit more about how you got, and I'm assuming the community involved in this.

Yeah. So I would have to get back to you with more specifics from the district. The project from the start actually predated the state program. They had been working with the California School Finance Authority to potentially do conduit bonds to help support their contribution for the project. But what they did is the focus was affordable beds from market rate beds.

And the project from the start was designed to be close to the campus, and meet demand based on what they had been seeing at the time. So all of the the demand was pre pandemic. That's when the project was, you know, envisioned, when the planning began. The state's program came online and happened to fit nicely with what they were attempting to do.

So what the state did is it was effectively saying, we will buy a portion or support a portion of the project so that a portion of those beds are affordable rate beds.

Which, when you're talking about locations and the project, which is your most successful? Though you saw a a quick response and the student body was just really excited that finally they cut the ribbon and and you've opened new doors of opportunities because housing is such an issue. No doubt.

So I would say there there that all five that have come online have varying degrees of success. I can speak to three having been to three of them specifically. So at Lake Tahoe, the success is is outstanding. The campus community that they're building body president lives in that housing as well. Is very well known, very connected to the campus as a result.

In Riverside, we know that the students are learning from UC Riverside students and vice versa. We know that they have a staff, at the housing location throughout the week to assist students and to guide them. Sierra College in particular was, you know, a story around being ready at the right time. So they had pre planned a project. They had envisioned.

They'd been working on it. They didn't have a funding source. And when the state program came to be, it enabled them to move quickly to construct and provide that opportunity to their students. So all have varying degrees of success. All had varying degrees of planning.

I do know Santa Rosa was in a similar position where they had pre planned the project, and had been working with the California School Finance Authority to use conduit bonds. The difference for those two when they were considering conduit bonds is you would have had more market rate or market level rents to pay for those bonds whereas with the state program it enabled affordable rent levels.

And and my last point and question is affordability and, obviously, some students are a little tougher to work with because of their financial situation and yet we have others that may not be in that way. Do you have a a scale that the higher end would contribute rather than using a grant totally? Yeah. So we we don't have a

scale, but what we do is we have priority for underrepresented students that are in that income bracket for placement into available housing stock that is there. So when you're applying, if you're in those lower income brackets, you get a higher priority in terms of access to available housing. And I know one of the rent levels off hand, and this is this is why I think it's so powerful for our students.

So at Riverside Community College, I went on their website, I looked at the cost for a student, and it's $733 per month, which is in California a very affordable rate for students. So that impact, to your point is real for our students, and the focus is on those that have the greatest needs.

Okay.

Thank you, madam Chair. Thank you.

I know that Senator Ochoa Bog, I think, had a follow-up question she wanted to ask.

I think Senator Ochoa might have kind of alluded to it. It was just basically asking if those market rate, units have not been, occupied, would there be a consideration to lower the rent to ensure that they are rented rather than having vacant something rather than nothing. But is that, is that even possible?

Yeah. We can certainly, relay that to the district. I don't know what the finance situation on that particular building looks like from a a debt service repayment through the p three side of the house. But certainly my economics background would say that's one of the first things you do is start lowering the cost because you still get more revenue. So, you know, certainly we'll work with the district.

And how long has it been vacant? How long have you been working on trying to get it occupied?

So I believe the facility and I'll I'll have to get back to you, but I believe it's been open for about a year and a half, if I recall.

Okay. So a year and a half, we're both in real estate. We would look at lowering prices in order to get it to get a unit occupied.

Yeah. My colleagues, we're we're concerned about the market rate, and it's a business, one way or the other. You gotta look at it. Supply and demand. And and my thought pattern is with the number of students that are trying to live on campus, and not all are in that dire need situation, because we have others that have money's coming from parents and what have you, that they should be paying a little bit more.

And the Veterans Administration is very generous with our students, our veterans, and so they're able to pay a little bit more because of their benefits they're able to receive from the VA. Well, for some young person, 18 years old, not finding that job yet and so on. So I just wanna balance it to make sure that we're not losing anything to offset the other. I guess it's called subsidy, but, you know, you need to

do it. Yep. Absolutely. We'll commit to working with the district on that, and I absolutely agree. It's an economic principle.

Sometimes you actually get more revenue by charging a lower amount.

And like I said, it's something is better than nothing. And in real estate, we always look you know, market rate is basically what a buyer is willing and able to pay. And if it's vacant for a year and a half, it means that it's not at market rate. It needs to be reevaluated and so forth.

But at this, you know, when you're looking at that from that perspective, from a real estate perspective, you know, it can be rented, maybe not at what we are aspiring to or had planned for, but that means you're not at market rate.

Just just a little bit of insight on that.

No. Very helpful. Thank you.

Thank you. I I appreciate the comments from my colleagues, because obviously, if we're gonna invest $8 into building housing, we just wanna make sure that it's full. I think at the end of the day, that's what you're hearing from all the members of the committee. And, you know, I I I'm happy we're gonna be reallocating some of this money.

I recognize some of this was left over, you know, from when we transitioned to the bond, and the other was from two projects that we weren't able to take to fruition, and so you're gonna have the scoring methodology to determine which projects are going to be able to move forward.

So I'll be excited to see which ones those are, but and hearing you talk about some of the project proposals and what's been successful, I mean, it's pretty clear that there's a trend here that partnerships with the UC system, with the CSU system, have really been fruitful in in their successes. And so I'd encourage you all as a system to continue seeking out some of those partnerships. You know, I know, I mean, Cal State LA, for example, built student housing. That was very significant.

Some years ago, they've had trouble with filling it, and I know that there's been some conversations that have happened between them and PCC, but it's those kinds of partnerships that I think allow us to better, you know, solve the student housing crisis.

So I'd encourage you all to continue to collaborate with one another, so that these projects are successful, they're reaching a 100% occupancy, and students are benefiting from creating those relationships with, students in other segments.

Yeah. Absolutely committed to that. Ironically, I happened to be on the Cal State LA campus last week, and saw the housing that you're referring to, And the student body spoke specifically to the outreach to PCC and the collaboration that's occurring to try and enable available housing to be occupied by students in our local community colleges. So absolutely committed to facilitating those types of partnerships.

Thank you.

If there are no other comments from any of our other presenters, I think that will be it for, this item. And this is actually all the discussion items that we have on today's agenda. We'll now move on to public comment, and thank everybody for their presentations. If there's anyone in Room 112 who wants to provide public comment on items that were on today's agenda, please line up. We ask that you limit your testimony to one minute.

I'll go ahead and time that on my phone. Give me one moment. Alrighty. Now let us begin.

Good morning. Andrew Martinez, Community College League of California, in support of the investments into our housing, and appreciate it being brought up today. Thank you.

Jason Henderson on behalf of the Faculty Association California Community Colleges in support of using additional money for projects with availability and need. Thank you.

Thank you, Mark McDonald on behalf of the State Center Community College District in support of this action, but also wanted to note, let's not forget the projects that have already been approved and make sure that we can see those to completion. Thank you.

Good morning, senators. Jeton Stevens with Public Advocates. We're also the conveners of the California Affordable Student Housing Coalition. I just wanna thank, you all for bringing this issue back up so we can discuss and make sure that that, monies are being reallocated to go towards affordable student housing. There was also quite a bit of discussion about making sure that there's enough demand, and I would also encourage, this committee to consider, expanding access to part time students.

Many community college students go to school part time, including student parents, foster youth, students that are disabled. And so, there's this significant overlap between the 60% that are struggling with housing and our part time students. And so I think, would love to work with y'all to consider expanding access to them as well. Thank you.

Tiffany Mok, on behalf of CFT, a union of educators and classified professionals, thank you so much for this hearing that centers on the affordability of student housing, which we strongly support. I always want also wanted to note the tangential tie that, you know, the importance of student housing is also they can access their classes and with their classes, access faculty in office hours. And so we also urge this committee to fully fund office hours. Thank you so much.

Good morning. Diego Zamayo, Interim Latina Advocate here on behalf of Long Beach City College. The district has applied for funding since the grant program started in 2021 and every and after every iteration. Long Beach City College conducted a survey, finding a strong need and demand for housing and would even support CSULB's waiting for waiting list for housing should there ever be any occupancy available. They are thankful for the committee's consideration in of the topic and hope to maximize the use of unallocated funds available.

Thank you very much.

Good morning, madam Chair and members. Carol Gonzalez on behalf of Gabilan Community College. The college serves students in rural areas from Gilroy up to San Jose. It's in an interesting position because it's around basic eight districts, so it makes it really hard to compete in the region when it comes down to scoring and the way that the chancellor's office scores projects. We just wanted to elevate that as consideration as you see the list come out next year.

It's hard to compete because of those conditions, but we're seeing a greater demand for student housing, especially as folks are migrating down considering the high cost in San Jose. And for those reasons, they're really excited to see additional funding go towards student housing and really hope that it's dispersed in an equitable way equitable way, and they could hopefully one day access those funds just considering the scoring metric. Thank you.

Seeing nobody else, rising and having heard from all members of the committee, we will go ahead and, finish today's agenda, and I wanna thank everybody for participating today. If you were not able to testify, please submit your comments or suggestions in writing to the budget and fiscal review committee, or visit our website. Your comments and suggestions are important to us, and we wanna include your testimony in the official hearing records. We thank everyone and we appreciate your participation.

We have included, concluded the agenda for today's hearing.

So the Senate, sub budget, sub committee number 1 on education is adjourned.