Proposition 92

Community Colleges. Funding. Governance. Fees
 
Support
 

Association of California Community College Administrators
Long Beach Chamber of Commerce
Sacramento Metro Chamber
 
Oppose
 

California Chamber of Commerce
Assembly Speaker Fabian Nunez
California Teachers Association
 
Background
 

The California Community College system is made up of 109 colleges operated by 72 districts throughout the state and provides instruction to about 2.5 million students annually. The CCC system spends over $8 billion in public funds annually. About two-thirds of the funding that supports community college programs comes from the state General Fund and local property taxes. The remaining one-third comes from other sources such as student fee revenue and federal funds.

Currently the state must provide at least a minimum level of funding for K-14 education. This requirement, adopted by voters in 1988 through Proposition 98, is met using both state General Fund and local property tax revenues.
 

Each year, the Proposition 98 formula calculates a new K-14 minimum amount of financial support by adjusting the previous year’s level based on changes in the economy and K-12 attendance. An additional requirement specifies that K-14 education must receive at least a specified percentage (about 40 percent) of General Fund revenues each year. On average, in recent years community colleges have received between 10 percent and 11 percent of total Proposition 98.
 

Summary
 
Proposition 92 would replace the single funding requirement, enforced by Proposition 98 with two requirements: one for K-12 education, one for community colleges
 

The new K-12 funding formula would include a new growth factor. This population growth factor uses the greater of two population growth rates: (1) state residents between 17 and 21 years of age or (2) state residents between 22 and 25 years of age. The growth factor is further increased in any year that the state’s unemployment rate exceeds 5 percent. (The state unemployment rate exceeded 5 percent in 13 of the past 15 years.) However, the measure limits the total community college population growth factor to no more than 5 percent in any year.
The measure would not change the existing requirement that roughly 40 percent of General Fund revenues be spent on K-14 education. Consequently, Proposition 92’s new funding formulas would not apply in years when K-14’s share of General Fund spending was less than this level. In these years, the existing single minimum funding requirement would apply and the state would continue to have discretion over how to allocate funds between K-12 schools and community colleges.
 

This measure would reduce student fees to $15 per unit beginning in fall 2008. Thus, total annual fees for a student taking a full-time load of 30 units during the 2008‑09 academic year would be $450, which is $150 less than the current level. The measure also significantly limits the Legislature’s authority to increase fees in subsequent years. Any fee increase would require a two-thirds vote of both houses. In addition, the measure limits annual fee increases to the lower of: 10 percent or the percentage change in per capita personal income in California (which typically averages about 4 percent).
 

Fiscal Effects
 

From 2007‑08 through 2009‑10, it is estimated the initiative would require the state to spend more for K-14 education than under current law—an average of around $300 million per year. This is primarily because the measure’s student population growth factor under the new CCC funding requirement (the state’s population of young adults) is forecast to grow faster than K-12 attendance.
 

The revenue impact of a fee reduction under this measure would depend on the fee level that would have existed without this measure. If the fee level would have otherwise remained at its current amount ($20 per unit)the community colleges would collect about $70 million less in annual student fee revenue as a result of this measure.
 

Board of Governors
 

The Board of Governors (BOG) of the California Community Colleges would also be amended. Currently the BOG consists of 17 members (16 voting and 1 nonvoting). The Governor appoints these members to terms of either two or six years. Currently, the Governor is required to select 5 of the 17 members from lists of persons approved by specified community college organizations. Prop 92 amends the Constitution to increase the number of members to 19 (all with voting rights). In addition, the measure amends statute to require the Governor to appoint all BOG members from lists provided by specified community college organizations.
 

Prop 92 would also give BOG more control over its staff and its budget. For example, it authorizes BOG (rather than the Governor) to appoint and set compensation levels for executive officers. Moreover, the measure gives BOG “full power” over how to spend funds appropriated for its administrative expenses in the annual budget.
 
Pros
 

Prop 92 reduces student fees to $15 per unit. Reducing fees helps give every Californian a chance to go to college.
 

In 2004 when fees were raised to $26 per unit, 305,000 students fewer students than expected enrolled.
 

By making college education even more affordable, it will create higher skilled workers ready to create and work in higher paying jobs.
California needs 3.2 million new college-educated workers––nurses, teachers, engineers and others––to keep our competitive edge and community colleges can help meet that need. 
 

In order to keep California’s competitive edge over the next 20 years, almost 40 percent of the workforce will need to be college educated.
Proposition 92 would not change how K-12 is funded and would not negatively impact the funding of K-12. However, it would require minimum levels of state funding for community colleges and take budget politics out of the equation. It would calculate the minimum community college funding guarantees based on community college growth, instead of being tied to the K-12 population. Unlike the K-12 system which provides that every student enrolled is automatically funded – Proposition 92 uses a new formula based on eligible population.
 
Cons

 

Proposition 92 would amend California’s constitution to lock in a huge new state   funding mandate for community colleges; politicians would be left to decide how to cover the costs. This could lead to politicians to raise income or sales tax or cut funding to other government funded entities.

The California Legislative Analyst’s Office estimates the increased spending created by Proposition 92 will reach nearly a billion dollars in the first three years.
 

Proposition 92 increases state bureaucracy by creating an expanded state board to set salaries and other benefits for additional bureaucrats and administrators
 

There are no guarantees that the money will be useful under Prop 92, and there is a chance it is wasted on bureaucracy, administration and “overhead.”  
 

Proposition 92 requires no public audits and contains no penalties for misusing the funds. 
 

Contact Kerri Ginis, the Chamber's Government Affairs Manager for more information at (559) 495-4818 or kginis@fresnochamber.com