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California Budget May Revise Additional Analysis

Dear Peralta Community,

I want to follow up on the PCCD Announcement sent on Friday, May 21, 2021, which you can read online here: https://gems.peralta.edu/california-budget-update-the-may-revise. That was a very high level analysis of the budget, and I'd like to provide you and the Peralta Community with additional details about this fantastic budget revision proposed for the next fiscal year.
Most notably, the proposal increases the Cost of Living Adjustment or "COLA" for the Student Centered Funding Formula (SCFF) from the 1.5% proposed in January to 4.05%, reflecting a compounded adjustment of 2.3% for 2020-21 and 1.7% for 2021-22, and matching the proposed rate for K-12. It also increases the COLA for categorical slightly to 1.7% (up from 1.5%) and proposes a 5% increase for the Student Equity and Achievement and Strong Workforce Programs, new spending to expand vocational training opportunities and English as a Second Language (ESL) opportunities, support for affordability and basic needs strategies, and investments in technology. 

Elimination of Budget Deferrals
The May Revision proposes to use one-time funds of $1.45 billion to eliminate budget year deferrals rather than carrying a portion of the deferrals forward as proposed in January. The deferrals would be paid back in July and August 2021. 


College Affordability Zero Cost Textbook Pathways 
Compared to the January proposal, the May Revision increases funding for expansion of Zero Cost Textbook pathways from $15 million to $115 million one-time. The definition of such pathways would be expanded to include low- to no-cost degrees in cases where colleges cannot eliminate the cost due to royalties paid to authors. 


Grants to Dislocated Workers
The May Revision provides $1 billion in one-time federal funds to the California Student Aid Commission (CSAC) to support a grant program for displaced workers who want to enroll in an education program, start a business, or engage in training to reskill or upskill. The funds would be available over approximately three years, and CSAC would disseminate the funds to the higher education segments to provide grants to individuals on behalf of the Commission. The grants would be aimed at workers displaced from their employment due to COVID-19, and could be spent on high-quality training or starting a business. 


Other Changes to Financial Aid
The May Revision leaves in place proposals from the January Governor’s Budget to increase the number of competitive Cal Grant awards by 9,000 and provide access awards for foster youth, and to require high school seniors to complete a financial aid application.  

Student Needs Basic Needs Centers
The May Revision includes a new proposal for ongoing funding of $30 million to support basic needs centers and coordinators. According to the Department of Finance, the proposal would allow for the integration of financial aid and basic needs centers, as proposed by the Chancellor’s Office in its Plan for an Equitable Recovery. This funding would be in addition to the January proposal for $30 million ongoing to support targeted basic needs for mental health services and access to technology.


Workforce Development Regional Partnerships
The proposal includes $250 million in non-Proposition 98 General Funds for workforce development, to be allocated to the Office of Planning and Research to provide grants to regional K-16 collaborative. The grants would require the involvement of at least one institution from all three segments, with a focus on aligning higher education with workforce needs and streamlining pathways to high-paying, in demand jobs. The proposal is intended to support five to eight grants for a collaborative modeled after the Fresno K-16 Collaborative. In a separate proposal, $20 million one-time Proposition 98 funds would be provided to the community colleges to work with the California Workforce Development Board to build on current High Road Training Partnerships and High Road Construction Careers projects, and align them with community college pathways to train and bridge students into good quality jobs in industries that support the state’s economic recovery (including construction; healthcare; information technology; trade and logistics; forestry and agriculture; manufacturing; education; leisure and hospitality; janitorial and building maintenance; and clean energy and utilities). The training partnerships are intended to target workers from disadvantaged communities and many will target industries hit hardest by COVID-19.

The May Revision includes another $50 million in one-time non-Proposition 98 General Funds for the Labor and Workforce Development Agency and $10 million in one-time Proposition 98 funds to the community colleges for Regional Equity and Recovery Partnerships. The funding is intended to provide competitive grants to regional workforce development boards for regional partnerships with community college consortia to assess demand for good quality jobs and then design short-term targeted education, training, and job placement. 


Other Actions Competency-based Education
The May Revision includes $10 million one-time to support a workgroup focusing on the planning and implementation of competency-based education (CBE), including the development of a funding model to support it. The funding could be used to support work the Chancellor’s Office is already doing on CBE, and to support pilot efforts at the college level.  


COVID-19 Block Grants
The May Revision includes a proposal for $50 million one-time for institutional block grants to help colleges transition back to in-person education following the shift to online instruction and other disruptions related to the pandemic.  


Technology-focused Investments
The May Revision proposes $10 million ongoing for program pathways technology and program mapping. The funding is intended to expand the implementation of mapping software that helps students understand curriculum pathways to facilitate pathway choice, student progress, and completion. Colleges would be encouraged to work with their university partners to ensure that program maps facilitate student planning for transfer and streamline baccalaureate completion. The May Revision also includes $4 million ongoing to support technology allowing colleges to provide enhanced library services. It leaves in place the January proposal for $10.6 million for a more robust online education ecosystem and infrastructure.  


Deferred Maintenance
The May Revision includes $314 million in one-time Proposition 98 funds and an additional $250 million in federal funds to address deferred maintenance across the system.  


Online Education
The May Revision maintains a proposal for districts to adopt policies by June 30, 2022 requiring campuses to maintain their courses and programs offered via online learning programs at a level that is at least 10 percentage points higher than the amount offered during the 2018‒19 academic year 


Fifty Percent Law
A second requirement related to budget levels is a statutory requirement that each district spend at least half of its Current Expense of Education each fiscal year for salaries and benefits of classroom instructors. Under existing law, a district may apply for an exemption under limited circumstances. 


Full-Time Faculty Obligation
State law sets a goal that 75% of instructional hours in each district should be taught by full-time faculty. Each district has a baseline reflecting the number of full-time faculty in 1988-89. Each year, if the Board of Governors determines that adequate funds exist in the budget, districts are required to increase their base number of full-time faculty over the prior year in proportion to the amount of growth in funded credit full-time equivalent students. The target number of faculty is called the Faculty Obligation Number (FON). An additional increase to the FON is required when the budget includes funds specifically for the purposes of increasing the full-time faculty percentage. The chancellor is required to assess a penalty for a district that does not meet its FON for a given year. The Board of Governors, at their November 2020 meeting, determined that the Budget Act of 2020 did not provide adequate funding to support increases to districts’ full-time faculty hiring obligations for Fall 2021. As a result, districts may maintain FON compliance for Fall 2021 by meeting their Fall 2020 FON, Fall 2021 FON, or the percentage of instructional hours taught by full-time faculty that was achieved for Fall 2020. Districts must continue to report actual full-time and part-time faculty data to the Chancellor’s Office. While penalties are deferred and not waived, the Chancellor’s Office will continue to calculate and publish FON data for the system. Due to the robust levels of funding proposed for the 2021 Budget, we anticipate that the Board of Governors will approve full implementation of the FON for Fall 2022 

The Finance team is actively working on the preliminary budget for PCCD. Thank you all for your input as the budget goes through the collaborative governance process.
Very best wishes,

Adil Ahmed

Interim Vice Chancellor 

Department of Finance & Administration

Peralta Community College District

Tags: Budget, Finance and Administration


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