The 2016-17 Budget

California Spending Plan


Proposition 98

State budgeting for schools and community colleges is based primarily on Proposition 98, approved by voters in 1988 and amended in 1990. Below, we provide an overview of Proposition 98 funding and spending changes under the enacted budget package. We then highlight Proposition 98 spending changes specifically for K–12 education and the California Community Colleges (CCC). In the “Higher Education” section of this report, we discuss certain crosscutting CCC issues. On the Education portion of our website, we post many “EdBudget Tables” summarizing key components of the education budget.

Minimum Guarantee

Proposition 98 Funding Revised Upward Across Three–Year Period. Proposition 98 establishes a minimum funding requirement commonly called the minimum guarantee. Figure 9 shows the estimates of the minimum guarantee for 2014–15, 2015–16, and 2016–17. Compared with the estimates from June 2015, the 2014–15 and 2015–16 guarantees have increased by $843 million and $641 million, respectively. These upward revisions are due primarily to increases in state revenue relative to the amounts assumed in last year’s budget package. The estimate of the 2016–17 minimum guarantee is $3.5 billion (5.1 percent) higher than the 2015–16 Budget Act level.

Figure 9

Tracking Changes in the Proposition 98 Minimum Guarantee

(Dollars in Millions)

June 2015

June 2016

Change

Amount

Percent

2014–15

$66,303

$67,146

$843

1.3%

2015–16

68,409

69,050

641

0.9

2016–17

71,874

3,465a

5.1

aReflects change from June 2015 estimate of 2015–16 minimum guarantee.

Two Key Drivers of Increase in 2016–17. Figure 10 shows Proposition 98 funding for each segment. Total funding for all segments in 2016–17 is $71.9 billion, a $2.8 billion (4.1 percent) increase above the revised 2015–16 level. This change in the guarantee reflects 3.6 percent growth in the “Test 3 factor” combined with a supplemental appropriation of $502 million. The Test 3 factor consists of 3.1 percent growth in per capita General Fund plus an additional 0.5 percent increase set forth in the State Constitution. The supplemental appropriation ensures that the minimum guarantee grows at least as quickly as the rest of the state budget.

Figure 10

Proposition 98 Funding by Segment and Source

(Dollars in Millions)

2014–15
Actual

2015–16
Revised

2016–17
Enacted

Change From 2015–16

Amount

Percent

Preschoola

$664

$885

$975

$90

10%

K–12 Education

General Fund

$44,251

$43,340

$44,465

$1,125

3%

Local property tax

14,810

16,759

18,057

1,298

8

Subtotals

($59,061)

($60,099)

($62,522)

($2,422)

(4%)

California Community Colleges

General Fund

$5,025

$5,415

$5,528

$113

2%

Local property tax

2,306

2,569

2,767

198

8

Subtotals

($7,331)

($7,983)

($8,295)

($311)

(4%)

Other Agenciesb

$90

$82

$83

Totals

$67,146

$69,050

$71,874

$2,824

4%

General Fund

$50,029

$49,722

$51,050

$1,328

3%

Local property tax

17,117

19,328

20,824

1,496

8

aBeginning in 2015–16, includes $145 million for wraparound care formerly funded with non–Proposition 98 General Fund.

bIncludes state agencies providing direct instruction to K–12 students. Consists entirely of General Fund.

Increase Covered About Evenly From Higher State General Fund and Local Property Tax Revenue. Of total Proposition 98 funding in 2016–17, $51.1 billion is state General Fund and $20.8 billion is local property tax revenue. From 2015–16 to 2016–17, state General Fund increases by $1.3 billion (accounting for slightly less than half of the $2.8 billion increase in the guarantee) and local property tax revenue increases by $1.5 billion (accounting for slightly more than half of the increase in the guarantee). The primary factor explaining the growth in property tax revenue is the strong 6.2 percent increase in assessed property values. In addition, the budget plan assumes property tax revenue increases by $419 million due to the triple flip ending, thereby completing the shift of revenue from cities, counties, and special districts to school districts and community colleges.

New Maintenance Factor Created in 2016–17. In 2014–15, General Fund tax revenue increased by 11 percent over the prior–year level, resulting in a maintenance factor payment of $5.7 billion—the largest payment the state has ever made. In 2015–16, the budget assumes the state makes an additional maintenance factor payment of $379 million, reducing the total outstanding obligation to $155 million. In 2016–17, the budget assumes the state creates $746 million in new maintenance factor. The amount of new maintenance factor created is based on the difference between the Proposition 98 Test 2 and Test 3 factors. In 2016–17, growth in the Test 2 factor (per capita personal income) is strong (5.4 percent) relative to growth in the Test 3 factor (3.6 percent).

Overview of New Spending

Budget Package Contains Many Spending Changes. Given the increases in the minimum guarantee across the three–year period, the budget plan contains higher corresponding spending each year, as detailed below.

Higher 2014–15 Spending. Of the $843 million increase in the 2014–15 minimum guarantee, the bulk of the additional spending ($665 million) is discretionary funding provided on a per–student basis, with funds scored to outstanding mandate claims for those local educational agencies (LEAs) with such claims. As shown in Figure 11, the remainder of the 2014–15 funds are designated for eight other initiatives.

Figure 11

2014–15 Proposition 98 Changesa

(In Millions)

2014–15 Spending as of 2015–16 Budget Act

$66,303

Technical Adjustments

$90

Policy Changes

Provide K–12 mandates payments/discretionary funds

$636

Provide CCC mandates payments/discretionary funds

29

Accelerate progress of CCC online education initative

20

Provide grants for academic and behavioral supports

20

Fund charter school startup grants

20

Fund school water safety grants

10

Support California School Information Services

7

Conduct a teacher recruitment campaign

5

Fund K–12 High Speed Networkb

4

Replace state’s standardized school district accounting system

3

Subtotal

($753)

Total Changes

$843

2014–15 Spending as of 2016–17 Budget Act

$67,146

aAll items shown are funded on a one–time basis.

bBudget also includes $5 million in 2016–17 funds.

Higher 2015–16 Spending. Of the $641 million increase in the 2015–16 minimum guarantee, more than half of the additional spending ($386 million) also is discretionary funding provided on a per–student basis and associated with the mandates backlogs. As shown in Figure 12, the remainder of the 2015–16 funds are designated for eight other initiatives, the largest being $200 million to establish the College Readiness Block Grant. Spending changes for 2015–16 also include adjustments relating to property tax estimates, as discussed in the box on the next page.

Figure 12

2015–16 Proposition 98 Changesa

(In Millions)

2015–16 Spending as of 2015–16 Budget Act

$68,409

Technical Adjustments

–$25

Policy Changes

Provide K–12 mandates payments/discretionary funds

$310

Establish College Readiness Block Grant

200

Provide CCC mandates payments/discretionary funds

76

Fund CCEE for training and pilot program

24

Support classified school employees interested in teachingb

20

Fund dropout and truancy prevention program

18

Fund CTE Incentive Grant for Secondary Schoolsc

8

Improve CCC technology infrastructure

7

Increase funding for school breakfast programs

2

Support school activities sponsored by the Special Olympics

1

Subtotal

($666)

Total Changes

$641

2015–16 Spending as of 2016–17 Budget Act

$69,050

aAll items shown are funded on a one–time basis.

bClassified school employees include instructional aides, bilingual assistants, and library assistants.

cBudget also includes $292 million in 2016–17 funds.

CCEE = California Collaborative for Educational Excellence and CTE = career technical education.

Higher 2016–17 Spending. In 2016–17, the guarantee increases $2.8 billion. In addition, $1.2 billion is freed up from prior–year, one–time spending, resulting in $4 billion in total available spending. Of this amount, $3.3 billion is higher K–12 spending and $716 million is higher community college spending. The largest increase in K–12 spending is a $2.9 billion augmentation for the Local Control Funding Formula (LCFF). The largest increase in CCC spending is $200 million for a new Strong Workforce Program. As shown in Figure 13, the remainder of the 2016–17 funds are designated for more than two dozen other initiatives.

Figure 13

2016–17 Proposition 98 Changes

(In Millions)

2015–16 Revised Spending

$69,050

Technical Adjustments

–$1,167

K–12 Education

Increase LCFF funding

$2,942

Fund CTE Incentive Grant for Secondary Schoolsa

292

Increase preschool funding rates

44

Fund truancy and dropout prevention program

9

Add 2,959 full–day preschool slotsb

8

Fund High Speed Networkc

5

Support Exploratorium

4

Support Student Friendly Services

2

Improve web–based planning and reporting tools (year one of three)

1

Remove augmentation for infants and toddlers with disabilities

–30

Subtotal

($3,276)

California Community Colleges

Create Strong Workforce Program

$200

Fund deferred maintenance and instructional equipment (one time)

154

Fund 2 percent enrollment growth

114

Provide apportionment increase (above growth and COLA)

75

Extend CTE Pathways Initative for one yeard

48

Augment Basic Skills Initiativee

30

Fund Innovation Awards (one time)

25

Fund intersegmental college success partnerships

15

Restore funding for select student support programs

11

Increase funding for Institutional Effectiveness Initiative

10

Fund development of “zero–textbook–cost” degree programs (one time)

5

Increase ongoing support for technology infrastructure

5

Provide technical assistance to adult education consortia (one time)

5

Restore funding for part–time faculty office hours

4

Improve systemwide data security

3

Fund digital instructional materials for incarcerated adultsf

3

Expand outreach and marketing

3

Extend Full–Time Student Success Grant to Cal Grant C recipients

2

Expand equal employment opportunity activities

2

Increase apprenticeship reimbursement rate

2

Augment funding for systemwide Academic Senate

g

Subtotal

($716)

Total Changes

$2,824

2016–17 Enacted Spending

$71,874

aBudget also includes $8 million in 2015–16 funding for this purpose. Reflects year two of a three–year program.

bSlots funded as of March 1, 2017.

cBudget also includes $3.5 million in 2015–16 funds.

dBudget sunsets the CTE Pathways Initative and folds funding into the Strong Workforce Program after 2016–17.

eIn 2016–17, funds provide additional Basic Skills and Student Outcomes Transformation grants. In subsequent years, funds augment the Basic Skills Initative.

fIn recent years, the California Department of Corrections and Rehabilitation has purchased these materials with non–Proposition 98 funds.

gProvides $300,000.

LCFF = Local Control Funding Formula; CTE = career technical education; and COLA = cost–of–living adjustment.

Additional $218 Million in Spending Associated With Settle–Up Payment. The budget plan also includes a $218 million settle–up payment related to meeting the Proposition 98 minimum guarantee for 2009–10. This payment reduces the state’s outstanding settle–up obligation to $1 billion. Of the $218 million provided, the budget plan allocates $194 million for reducing the K–12 mandates backlog and $24 million for deferred maintenance and instructional equipment at the community colleges. The state budget package scores this spending as a Proposition 2 debt payment.

K–12 Education

$63.3 Billion Proposition 98 Funding for K–12 Education and Preschool Combined. This 2016–17 level is $2.5 billion (4.1 percent) more than the revised 2015–16 funding and $3.7 billion (6.3 percent) more than the 2015–16 Budget Act level. The budget increases funding per student by $440 (4.3 percent) over the 2015–16 Budget Act level, bringing Proposition 98 funding per student up to $10,657. We discuss specific K–12 augmentations below. We discuss specific preschool augmentations in the “Child Care and Preschool” section of the report.

New Spending

Large Increase for LCFF. The $2.9 billion augmentation brings total funding for implementing LCFF for school districts and charter schools up to $55.8 billion, a 5.7 percent increase over the revised 2015–16 level. The administration estimates this funding will close 54 percent of the gap between current funding levels and LCFF target rates, bringing LCFF to 96 percent of its full implementation cost. School districts and charter schools may use LCFF monies for any educational purpose.

Significant Discretionary One–Time Funding. The largest one–time augmentation for K–12 education is $1.3 billion that LEAs may use for any locally determined purpose. Funding would be distributed based on average daily attendance. If an LEA has unpaid mandate claims, funding would pay all or a portion of those claims. As many LEAs do not have any unpaid claims, we estimate only about half ($617 million) of the funding provided would reduce the K–12 mandates backlog. We estimate the outstanding K–12 mandates backlog will be $987 million at the end of 2016–17.

Continues Second Year of Career Technical Education (CTE) Incentive Grant. The 2015–16 budget package created a three–year competitive grant program to promote CTE at secondary schools and provided $400 million for the first year of the program. Consistent with the authorizing legislation, the 2016–17 budget provides $300 million in second–year funding. Grantees are required to match these grant funds. As originally designed, the program provided separate pools of funding for large–, medium–, and small–sized applicants, based on applicants’ average daily attendance in grades 7–12. The 2016–17 trailer legislation eliminates those separate funding pools. In addition, it gives the California Department of Education (CDE) authority to (1) review grantees’ expenditures on CTE each year to determine if they have met their match requirement and (2) reduce future funding if the requirement has not been met.

Creates New College Readiness Block Grant Program. The 2016–17 budget package includes $200 million in one–time funding for activities designed to increase college–going rates among certain groups of students. Specifically, trailer legislation requires CDE to allocate an equal amount to schools for each low–income, English learner, or foster youth high school student, with no school serving at least one of these students receiving less than $75,000. The legislation specifies that schools can spend the funds through 2018–19. Allowable activities include increasing the number of college preparatory classes high schools offer, hiring college counselors, and paying for testing fees and preparation materials.

Requires Various Associated College Readiness Plans and Reports. As a condition of receiving funds, schools must develop plans that (1) provide information about how many of their students have access to college preparatory classes, (2) identify how they will use the funds to increase college readiness, and (3) describe how their college–readiness efforts align with their Local Control and Accountability Plans. Schools must discuss their plans at a public meeting and adopt their plans at a subsequent public meeting. By January 1, 2017, schools also must submit reports to CDE about how they will measure the impact of the grant funding on their students’ success in higher education. The department, in turn, must submit a report to the Legislature by April 30, 2017 summarizing districts’ plans to track their performance. The department also must post annually on its website a list of high schools that have low–income, English learner, and foster youth students combined comprising more than 75 percent of their students.

Initiates New Activities of California Collaborative for Educational Excellence (CCEE). The CCEE was established in 2013–14 to advise and assist LEAs in improving student outcomes. The budget provides $29.6 million (one time) for the CCEE to conduct two specific types of activities. The CCEE must use at least $20 million to train LEAs on how to use the evaluation rubrics. (By October 2016, the State Board of Education must adopt evaluation rubrics that help LEAs assess their strengths and weaknesses and help CCEE and county offices of education (COEs) determine if LEAs need assistance.) The CCEE training must be made available to all LEAs and can be provided to employees, parents, students, and other members of the community. The remainder of available funding (up to $9.6 million) is for the CCEE to create a pilot program that will help inform its efforts to assist LEAs that are struggling. To the extent possible, the pilot program is to include LEAs from all regions of the state.

Supports New Dropout and Truancy Prevention Program. Proposition 47, which was approved by voters in November 2014, reduced the penalties for certain crimes. The measure requires that the resulting state savings, as estimated by the Department of Finance (DOF), be spent on designated programs beginning in 2016–17. Of the savings, 25 percent must go to CDE for the new Learning Communities for School Success Program, which provides competitive grants to schools to reduce dropout and truancy. The administration currently estimates that $9.9 million in state savings will be available for this new program. The budget package includes an additional $18 million in one–time funds for the program, resulting in total program funding of $27.9 million. Of that amount, $27.1 million is Proposition 98 program funding; $493,000 is ongoing non–Proposition 98 General Fund for CDE to administer the new program; and $300,000 is one–time Proposition 98 funding for CDE to contract with an LEA that, in turn, would coordinate regional meetings, conduct trainings, and provide technical assistance to grantees.

Funds Charter School Startup Grants. The budget plan includes $20 million (one time) to provide startup grants for charter schools that are within one year of opening or have been open for less than one year. Applicants may receive grants of up to $575,000 each ($375,000 each for nonclassroom–based schools) based on the budgets and justifications provided in their applications. Charter schools located in low–income communities and counties with few or no existing charter schools receive priority for funding. Trailer legislation requires CDE to exhaust the remaining available federal funds before allocating any state funds. (The CDE currently administers a federally funded startup grant program that has an estimated carryover balance of approximately $20 million.)

Increases Grant Amount for Academic and Behavioral Supports. The budget provides $20 million on a one–time basis to help LEAs implement a statewide framework for supporting students with academic or behavioral issues. This funding is in addition to $10 million in one–time funding provided to the Orange County Department of Education in 2015–16 to develop this framework.

Funds Safe Drinking Water Grants. The budget provides $9.5 million in one–time funding for a grant program to improve the access to, and quality of, safe drinking water in child care, preschool, and K–12 facilities. The grant program will be operated by the State Water Resources Control Board, in consultation with CDE. Trailer legislation specifies funds from the grant can be used for the installation of water bottle filling stations or drinking fountain filters to remove contaminants.

Reinstates Funding for K–12 High Speed Network (HSN). The state funds the K–12 HSN as an annual grant from CDE to the Imperial COE to assist schools with network connectivity, Internet services, and information sharing. The 2015–16 budget provided no state funding for HSN, instead supporting the program through HSN’s reserve. The 2016–17 budget includes $8 million ($4.5 million ongoing and $3.5 million one time) to support the network. To help address HSN’s cash flow issues, trailer legislation requires CDE to release three–quarters of the grant by the end of August and the remaining one–quarter by the end of January. Budget language requires the grantee or its contractor, the Corporation for Education Network Initiatives in California, to report quarterly to DOF and the Legislature about the state and federal subsidies it receives as a result of the Broadband Infrastructure Improvement Grants (BIIG), a program the state funded in 2014–15 and 2015–16. Budget language also specifies that the HSN cannot spend any of the state and federal subsidies resulting from the BIIG without DOF approval and notification to the Joint Legislative Budget Committee (JLBC).

Provides Ongoing Support to the Exploratorium in San Francisco. Trailer legislation provides $3.5 million in ongoing Proposition 98 funding to the Exploratorium, a science museum in San Francisco. This funding is intended to support professional development for teachers implementing the state’s new science standards. This funding is provided as an add–on to the LCFF allocation for the San Francisco Unified School District, which, in turn, must pass the funds through to the Exploratorium.

Re–Initiates Replacement of Standardized Account Code Structure (SACS). The state uses the SACS system to collect financial data from LEAs and meet various reporting requirements. The state initially approved the SACS replacement project in 2011. In 2014, the state approved a major cost escalation of the project (from $5.9 million to $21.2 million). In August 2015, the California Department of Technology nonetheless notified the JLBC that it was terminating the SACS replacement project, citing insufficient funding. The 2016–17 budget re–initiates the project, providing $3 million in Proposition 98 funding for CDE to contract with a COE, which in turn would contract with a vendor to replace SACS. The project is no longer required to undergo the state’s standard review and oversight process. Trailer legislation specifies that release of the funds is contingent on CDE entering the contract with a COE and receiving DOF approval, with notification to the JLBC. The $3 million is intended to cover a portion of project costs, with future budget requests funding remaining costs.

Increases Funding for Student Friendly Services College Planning Website. The budget provides a $2 million ongoing augmentation for this program, raising the total annual state appropriation from $500,000 to $2.5 million. The funding goes to Riverside COE, which, in turn, passes it through to the nonprofit California College Guidance Initiative (CCGI). The CCGI oversees a website that provides college planning tools to school districts, high school counselors, students, and parents. The CCGI indicates that the additional funding would be used to expand the website’s college planning tools.

Increases Funding for School Breakfast Programs. For many years, the state has provided an annual appropriation of $1 million to help schools start or expand school breakfast programs. The 2016–17 budget provides a one–time augmentation of $2 million for these programs. Budget language specifies the funds may be spent over two years. The new funding will be prioritized for applicants that both (1) plan to start or expand programs that serve breakfast during the school day (“after the bell”) and (2) enroll high proportions of students from low–income families.

Continues Technical Assistance for Career Pathways Trust Grantees. The state provided a first round of Career Pathways Trust grants in 2014–15 and a second round of grants in 2015–16. The competitive grants funded partnerships of schools, colleges, and workforce entities to strengthen career linkages. The 2016–17 budget designates $300,000 (Proposition 98) in carryover from the first round for CDE to continue its contract with Napa COE and Napa Valley Unified School District to provide technical assistance to grantees.

Makes Various Adjustments to CDE Workload and Funding. The budget provides CDE with a $4.3 million augmentation (non–Proposition 98 General Fund and federal funds combined) to support various new workload. Of this increase, $3.1 million is one time or limited term and $1.2 million is ongoing. The largest single augmentation is $1.2 million (one time federal funds) for CDE to develop a new video series for teachers focused on the state’s English learner standards. Other notable augmentations include $423,000 (ongoing non–Proposition 98 General Fund) for CDE to ensure schools understand the importance of providing appropriate services to all English learners pursuant to the DJ v. California settlement and $362,000 (one time, non–Proposition 98 General Fund) for the Instructional Quality Commission to develop curriculum frameworks for science and health. (See our associated online EdBudget table for the complete list of changes.)

Requires CDE to Expand Scope of Kindergarten Implementation Study. Chapter 723 of 2014 (AB 1719, Weber) requires CDE to provide the Legislature with a statewide evaluation of kindergarten programs, including part–day and full–day programs, by July 1, 2017. The 2016–17 budget includes $150,000 in one–time funds for CDE to expand the scope of this evaluation. Trailer legislation expands the scope by requiring CDE to estimate the average costs of part–day and full–day kindergarten programs and provide options for incentivizing full–day programs, such as providing differentiated full–day and part–day funding rates.

Creates Competitive Grant Program to Improve Math Readiness. In addition to changes in state funding, the budget designates $6.4 million in federal Title II carryover funds for a new program designed to reduce math remediation among college freshmen. Trailer legislation specifies that CDE is to award five grants to partnerships of schools and institutions of higher education. The partnerships are to develop 12th grade math courses and provide other supports. Priority will be given to partnerships that have high math remediation rates.

Transfers Administration of Food Program. The budget also transfers one position, $108,000 federal funds for administration, and $4.5 million federal program funds from CDE to the Department of Social Services to administer the federal Commodity Supplemental Food Program. This program provides foods purchased by the U.S. Department of Agriculture to nonprofit organizations that prepare meals for low–income senior citizens. (Originally, CDE administered the program because it also served low–income children.)

Teacher Workforce

Funds Several Teacher Workforce Initiatives. The budget funds three initiatives designed to increase the supply of K–12 teachers. All three initiatives are funded on a one–time basis and administered by the Commission on Teacher Credentialing (CTC). The budget also funds CTC for second–year implementation of certain activities. We describe each of these actions below.

Provides Financial Assistance for Classified School Employees Interested in Teaching. The budget provides $20 million to LEAs for the purpose of assisting classified school employees in completing their bachelor’s degree and pursuing a teaching credential in a shortage area. Classified school employees include instructional aides, bilingual assistants, and library assistants. LEAs could provide up to 1,000 awards of up to $4,000 per year to help classified staff with education costs. The budget makes the funds available for expenditure from 2016–17 through 2020–21.

Provides Grants to Encourage Four–Year Integrated Programs. Some universities currently offer integrated programs that enable a participant to earn a bachelor’s degree and a teaching credential within four years. The budget provides $10 million (non–Proposition 98 General Fund) to expand the number of these programs in California. The CTC is to competitively award planning grants of up to $250,000 to universities for supporting faculty release time for coursework design, hiring program coordinators, creating summer courses, and recruiting students. Integrated programs with a focus on issuing credentials to special education, science, math, and bilingual teaching candidates receive funding priority.

Runs Recruitment Campaign Through California Center on Teaching Careers. The budget provides $5 million to reestablish a teacher recruitment center. (From 1997 to 2003, the state supported teacher recruitment activities through such a center.) The center is to focus on recruiting qualified and capable individuals into the teaching profession, with priority given to recruiting individuals into low–income schools and the fields of special education, math, science, and bilingual education. The commission is to consult with all the education segments in establishing the specific goals and activities of the center. The CTC must use a competitive bid process to select an LEA to operate the center.

Funds Second–Year Implementation of Two CTC Projects. The budget includes $1.5 million (non–Proposition 98 General Fund) to complete CTC’s work on streamlining the accreditation data system. Last year’s budget package provided $3.5 million for this purpose. The budget also provides $1 million (non–Proposition 98 General Fund) for CTC’s activities related to updating the teacher and administrator performance assessments. The 2015–16 budget provided $4 million for this purpose.

Reappropriates Funding for Teacher Misconduct Reviews. The 2015–16 budget package provided CTC with $3.9 million in teacher credential fee revenue to address higher ongoing workload related to teacher disciplinary cases. Specifically, the budget assumed CTC would face higher ongoing costs for the Office of the Attorney General (AG) to review serious disciplinary cases. The AG was unable to hire all anticipated additional staff in 2015–16, resulting in $2.4 million in unspent current–year funds. The 2016–17 Budget Act reappropriates these funds to hire additional temporary AG staff in the upcoming year.

State Special Schools

Funds Deferred Maintenance at State Special Schools (SSS). The budget includes a total of $5.8 million to address deferred maintenance issues at the SSS, which include two schools for the deaf, one school for the blind, and three diagnostic centers. Of these funds, $1.8 million is earmarked from the SSS operating budget, and $4 million is additional one–time funding. The SSS have indicated they will use these funds to replace roofs, install a new emergency communication system at one of its schools for the deaf (Fremont), and complete several smaller projects. Before expending these funds, the SSS reports a backlog of $17 million in maintenance projects.

Funds New Activity Center on Fremont Campus. The budget provides $1.7 million to construct a new middle school activity center at the California School for the Deaf in Fremont. This facility will host extracurricular activities for the approximately 60 middle school students residing on campus.

California Community Colleges

$8.3 Billion Proposition 98 Funding for CCC in 2016–17. This is $311 million (3.9 percent) more than the revised 2015–16 funding level and $379 million (4.8 percent) more than the 2015–16 Budget Act level. The 2016–17 budget increases funding per full–time equivalent (FTE) student by $245 (3.8 percent) over the 2015–16 Budget Act level, bringing Proposition 98 funding per FTE student up to $6,624. These per–student amounts do not include $500 million for the Adult Education Block Grant, as most block grant funding is allocated to providers other than community colleges. We describe major CCC spending and programmatic changes below. (Figure 11 through Figure 13 show all CCC spending changes.)

Apportionments

Funds 2 Percent Enrollment Growth. The 2016–17 budget includes $114 million to accommodate 2 percent enrollment growth systemwide. In addition, the budget adjusts for enrollment declines that districts experienced in 2015–16 and anticipated enrollment restoration in 2016–17. (If its enrollment declines in a given year, a district’s funding correspondingly declines the following year. Districts, however, generally have three years to restore enrollment up to earlier levels and earn back the associated funding.) After adjusting for declining enrollment (–1.1 percent) and restoration (0.7 percent), the 2016–17 budget provides $95 million for net enrollment growth of 1.6 percent, representing about 18,000 FTE students.

Provides $75 Million in Additional Unrestricted Funds. Colleges may use this ongoing apportionment increase for any educational or operational purpose, including hiring additional faculty, paying retirement costs, expanding professional development, and maintaining facilities.

Two Related Actions. Trailer legislation extends the time for the San Francisco Community College District to earn back funding from past enrollment declines. Specifically, trailer legislation gives the district through 2021–22 to earn back funding up to its 2012–13 enrollment level. Trailer legislation also authorizes basic aid districts to receive an allocation of 2015–16 full–time faculty funding.

Workforce Programs

Provides $200 Million for New Strong Workforce Program. The purpose of the new program is to improve the availability and quality of CTE and workforce programs leading to certificates, degrees, and other credentials. The ongoing funding is consistent with recommendations of the Task Force on Workforce, Job Creation, and a Strong Economy, a group established by the Board of Governors (BOG) in late 2014.

Emphasizes Regional Planning. Trailer legislation requires community colleges to coordinate their CTE activities within seven existing regional consortia. Each consortium, consisting of all community colleges in the region, is to ensure that its offerings are responsive to the needs of employers, workers, civic leaders, and students. To this end, each consortium must collaborate with local workforce development boards, economic development and industry sector leaders, and representatives from civic and labor organizations within its region. Each consortium also must collaborate with LEAs, adult education consortia, and interested California State University and University of California campuses to improve program alignment.

Requires Consortia to Develop Four–Year Program Plans. Consortia must meet at least annually to develop or update four–year program plans based on analyses of regional labor market needs. Each plan must include: regional goals aligned with performance measures under the federal Workforce Innovation and Opportunity Act (WIOA); a work plan, spending plan, and budget for regionally prioritized projects identifying the amounts allocated for one–time and ongoing expenditure; and a description of the alignment of the plan with other CTE and workforce plans in the area, including the regional WIOA plan. The Chancellor’s Office will review the plans and provide technical assistance to consortia not meeting their goals. The Chancellor’s Office is to post regional plans on the CCC website and, beginning January 1, 2018, annually submit a report to the Governor and the Legislature on performance outcomes, disaggregated for underserved demographic groups.

Allocates Funds to Regions and Districts. The budget directs the Chancellor to provide 40 percent of program funds to the seven CTE regional consortia and 60 percent directly to community college districts. Both pots of funding are for supporting regionally prioritized initiatives aligned with their CTE program plans. The legislation prohibits districts from using the new funds to supplant existing support for CTE programs. The legislation permits the Chancellor to allocate up to 5 percent of the funds to a community college district for statewide activities to improve and administer the program.

Requires Chancellor’s Office to Recommend Funding Allocations. For 2016–17, each region’s and district’s funding allocation will reflect its share of (1) the state’s unemployed adults, (2) FTE students enrolled in CTE courses, and (3) projected job openings. Each of these factors will determine one–third of that year’s allocation. Beginning in 2017–18, unemployment and CTE enrollment each will comprise 33 percent of the allocation, job openings will comprise 17 percent, and successful workforce outcomes (as evidenced by the WIOA performance measures) will comprise 17 percent. The Chancellor’s Office will provide its recommended funding allocation to DOF and the Legislative Analyst’s Office by August 30 of each year. Release of funds is subject to DOF’s approval.

Requires Chancellor’s Office to Develop Certain Workforce Policies. Most notably, trailer legislation requires the Chancellor’s Office to submit a plan by July 1, 2017 to (1) reduce the time required to gain local and state approval for a new course or program to no more than one academic year and (2) ensure portability of approved courses and programs across colleges and districts. In addition, the legislation directs the Chancellor’s Office to eliminate barriers to hiring qualified instructors for CTE courses, including reevaluating the required minimum qualifications for CTE instructors. The legislation directs the Chancellor’s Office to consult with various stakeholders, including the CCC Academic Senate and the California Workforce Development Board, in developing these policies. Legislation also directs the Academic Senate to establish a CTE committee, with at least 70 percent of members consisting of CTE faculty, to provide recommendations on CTE issues.

Extends $48 Million for CTE Pathways Initiative for One Year. The goal of this initiative is to help regions develop sustainable policies and infrastructure to improve CTE pathways among schools, community colleges, and regional business and labor organizations. Beginning in 2017–18, trailer legislation repurposes the funding for the Strong Workforce Program.

Other Categorical Programs

Augments Basic Skills Funding. The budget provides $30 million in 2016–17 for additional Basic Skills and Student Outcomes Transformation Program grants. Established last year as a one–time initiative, this program had more eligible applicants than available funding in 2015–16. That year, the Chancellor’s Office awarded $60 million to 43 eligible colleges. The 2016–17 funding will provide grants to another 21 eligible colleges that did not receive an award last year due to limited funding. The grants are for colleges to adopt or expand the use of evidence–based models for basic skills assessment, placement, instruction, and student support. Colleges may expend their grants over three years. Beginning in 2017–18, the $30 million is to be repurposed on an ongoing basis for the Basic Skills Initiative.

Modifies Rules for Basic Skills Initiative. Trailer legislation refines the purposes of CCC’s longstanding basic skills categorical program. To date, funding has been for various activities intended to improve the outcomes of students needing basic skills help. Allowable activities have included curriculum planning and development, advisement and counseling, and supplemental instruction and tutoring. The new language continues to allow these activities while specifying four more allowable activities: (1) implementing or expanding the use of evidence–based practices and principles; (2) accelerating the adoption and use of open educational resources in basic skills English, math, and English as a second language (ESL) courses; (3) collaborating with high schools and the California State University (CSU) campuses to better align remedial instruction among LEAs, community colleges, and CSU campuses; and (4) implementing assessment and placement practices that increase the likelihood students will be appropriately placed in college–level rather than remedial courses.

Introduces Performance Funding Into Initiative. Trailer legislation also requires the Chancellor, beginning in 2016–17, to use a new method for distributing Basic Skills Initiative funding. To introduce an element of performance funding, the new method allocates half of the funding based on the district’s share of statewide BOG fee waiver recipients who initially enroll in a course below transfer level in English, math, or ESL and subsequently complete a college–level course in the same subject within one to two years. (The Chancellor has discretion whether to weight the one–year and two–year measures equally or assign a greater weight to one.) Another 25 percent is based on the district’s share of all BOG fee waiver recipients. The remaining 25 percent is based on a district’s share of basic skills FTE students statewide who are in courses that employ evidence–based practices specified in legislation. (The Chancellor may include other factors and adjustments at his or her discretion.)

Expands Institutional Effectiveness Initiative. The budget augments statewide professional development activities by $8 million, bringing the total for this component of the program to $20 million. The budget also augments technical assistance funding by $2 million, bringing the total for this component of the program to $7.5 million. Budget language requires the Chancellor’s Office to report on the use of program funds by December 1 of each year.

Restores Student Support Programs and Part–Time Faculty Office Hours to Pre–Recession Funding Levels. The 2016–17 budget provides $8.7 million for the Student Services for California Work Opportunity and Responsibility to Kids (CalWORKs) Recipients program, bringing funding for the program to $43.6 million. The budget increases the Fund for Student Success—which supports the Mathematics, Engineering, and Science Achievement; Puente; and Middle College High School programs—by $2.4 million, bringing total funding to $6.2 million. Additionally, the budget provides $3.7 million for part–time faculty office hours, bringing total funding to $7.2 million.

Augments Statewide Outreach and Marketing. The budget adds $2.5 million to the existing “I Can Afford College” campaign, bringing the total to $5.3 million. The new funds are to expand outreach to students from non–English speaking and bilingual households, market the CCC baccalaureate degree pilot programs, and increase awareness of CCC BOG fee waivers.

One–Time Funding

Provides Physical Plant and Instructional Support. The budget includes $185 million that districts may use for scheduled maintenance, special repairs, hazardous substances abatement, architectural barrier removal, seismic retrofit projects up to $656,000, replacement of instructional equipment and library materials, and certain water conservation projects. (The limit for seismic projects previously was $400,000.) The funds are allocated to districts based on their FTE enrollment.

Provides Discretionary/Mandates Backlog Funding. The budget provides $106 million, distributed based on FTE enrollment, that districts may use for any educational or operational purpose. If community college districts have unpaid mandates claims, then the funds must first be applied to those claims. Because only 11 (of 72) districts have outstanding mandates claims—and one district has more than half of all amounts outstanding—the backlog is reduced by only $14 million, leaving an outstanding backlog of $272 million.

Funds Additional Innovation Awards. The 2016–17 budget includes $25 million for community college projects designed to reduce the required time or total cost for students to complete degrees and credentials. Specifically, the legislation authorizes awards for curriculum redesign (such as the implementation of three–year bachelor’s degrees), competency–based programs (such as efforts to award credit for military education and training), and financial aid access (such as increasing the number of students applying for aid). The legislation gives preference to projects that improve outcomes for students from underrepresented groups or use technology in ways that are not common in higher education.

Accelerates Online Education Initiative. The budget provides $20 million to increase CCC students’ access to and success in online courses. The initiative includes an online course exchange, to be piloted in 2016–17, that enables students at any community college to enroll in degree–applicable online courses at other colleges.

Funds Development of Intersegmental Regional Partnerships. The budget provides $15 million for a new grant program to help community college districts establish or expand regional partnerships with school districts and public universities. The general purpose of the partnerships is to improve students’ college preparation, participation, and success. Chapter 434 of 2016 (AB 1741, Rodriguez) establishes the program.

Provides Grants to Develop Zero–Textbook–Cost Degrees. The budget provides $5 million to create these degree pathways, which allow students to complete an associate degree or CTE certificate program entirely by taking courses that use only free, open educational resources. Under this program, colleges will compete for grants up to $200,000 each to offer a zero–textbook–cost degree or certificate. To develop the pathways, colleges will use multimember teams that include faculty, administrators, librarians, instructional designers, and technology experts. Colleges also may use grant funds to secure outside professional development and technical assistance. Trailer legislation prioritizes (1) the development of a zero–textbook–cost degree for existing associate degrees for transfer and (2) the use of existing open educational resources before creating new content. Participating colleges must strive to implement the degrees no later than fall 2018. The Chancellor must report to the Legislature and DOF by June 30, 2019 on the development and implementation of the program. The Chancellor’s Office may transfer up to 10 percent of the funds for a community college district to administer the program, including providing technical assistance to grant applicants and grantees.

Several Additional One–Time Augmentations. The budget includes $7 million to upgrade CCC systemwide technology infrastructure. It also includes $5 million spread over three years for statewide leadership activities, technical assistance, professional development, and program evaluation for adult education consortia. In addition, the budget provides $2.5 million (non–Proposition 98 General Fund) to support the Chancellor’s Office coordination of inmate education partnerships between community colleges and California Department of Corrections and Rehabilitation facilities. Provisional language encourages the Chancellor’s Office to spend no more than $500,000 of the inmate education funds per year, authorizing the use of the funds through June 30, 2021.

Capital Outlay

Reappropriates Construction Funds for Two Projects. Both projects require more time to complete construction due to delays in earlier project phases. The budget reappropriates $33 million for various utility system upgrades at the College of the Redwoods, Eureka campus and $13 million to replace an instructional building at El Camino College’s Compton Center.