Proposition 92 - Community College Set Aside

What it does

Proposition 92 makes major changes to the California Constitution and to state laws affecting California Community Colleges.

Among other changes, Prop. 92 would change the current set-aside for education funding required by 1988’s Proposition 98 into two separate requirements: one for K-12 schools — kindergarten through high school — and one for community colleges, under which community colleges would receive 10.46 percent of the education set-aside. Prop. 92 also proposes to reduce community-college education fees from $20 per unit to $15 per unit, and significantly limits the state’s authority to increase fees in future years. The proposition also would establish in the state constitution an independent system of community colleges with expanded authority and a larger state governing board.

Funding: Prop. 92 alters the state public-education funding set-aside installed by Proposition 98, which California voters adopted in 1988. Under Prop. 98, state K-14 education — that is, the school system from kindergarten through two-year community colleges —is guaranteed at least 39 percent of the state’s General Fund, and that funding grows each year based on state revenues, personal income and K-12 attendance. In only one year did K-14 education receive as little as 39 percent of General Fund expenditures. In recent years, these schools have received closer to 45 percent of the General Fund. Community-college enrollment is not a factor in determining the level of state funding for K-14 education.

Under Proposition 92, funds for the California Community Colleges would be separated from those for K-12 schools, and community colleges would receive a minimum of about 10 percent of the Prop. 98 school-funding pool. Overall funding would be based on demographic and economic factors, such as the total number of residents in the state between 17 and 25 years of age, regardless of how many of those people actually enroll in a community college. The measure also includes an additional provision for a funding increase in any year in which the state’s unemployment rate exceeds 5 percent. However, the measure would cap the total growth at no more than 5 percent in any year.

Fees: Proposition 92 sets the fees that can be charged, reducing them from the current $20 per unit to $15 per unit. That means that a full-time student would pay approximately $450 per year, instead of the $600 the same student would pay today. This fee-reduction would apply to all students, regardless of income. Today, community colleges waive the fees of many lower-income students.

The reduction in fees would reduce community-college system revenues by about $70 million per year. Student fees offset less than 10 percent of system costs. Prop. 92 contains a provision for increasing the fees, but the terms of the proposal make it unlikely that any such increase would occur, as the increase requires high inflation, and the permissible fee increase is rounded down to the nearest dollar.

Governance: The CCC system includes 109 colleges operated by 72 districts throughout California, serving 2.5 million students each year. Elected boards of trustees govern each district and have autonomy to determine course offerings, manage district property, and hire staff. At the statewide level, there is a Board of Governors that sets standards such as minimum graduation requirements, coordinates among the local districts and appoints a chancellor in charge of day-to-day operations. The BOG has 17 members who are appointed by the governor, of which five of the members are selected from lists of people approved by specified stakeholders of the community-college community, such as faculty and staff. The state constitution makes little mention of the community colleges as a system, unlike its references to the University of California and California State University systems.

Prop. 92 makes a number of changes to governance that increase the direct power of the system. It would change the state constitution to formally recognize the California Community Colleges system as part of the state’s public-school system, made up of districts governed locally. It also increases the membership of the Board of Governors to 19 and requires the state governor to appoint members to the BOG from lists that are provided by specific community-college organizations. It removes the power from the governor to appoint and set compensation levels for executive officers, and turns that power over to the BOG.

Through establishing the community colleges as a distinct system, Prop. 92 would also change the way funding is allocated. Under Prop. 92, there would be formula to allocate funding to each community-college district. This is a change from today, when the districts receive funds through the state General Fund budget process.

Why it is on the ballot

The Community College League of California, an advocacy organization for the California Community Colleges, paid for the gathering of voter signatures to put the measure on the ballot by initiative. The league argues that K-12 student population is decreasing in the state in the short run while the population of young adults and potential community-college students is increasing at a rapid rate. Under current funding formulas, K-12 education receives the vast majority of public education funds. Prop. 92 is meant to address shortfalls in funds for community colleges.

The Regents of the University of California and the California State University Chancellor’s Office oppose Prop. 92. They argue that Prop. 92 would directly hurt UC and CSU funding based on future competition from the community-college system. All three systems draw from the discretionary portion of the state’s General Fund, which is only 8 percent of total state spending. In recent years, student fees at the other state higher-education systems, UC and CSU, have increased dramatically, while Prop. 92 would reduce fees at Community Colleges.

Pros

Arguments in favor of the measure:

• California Community Colleges account for more than 70 percent of all public higher-education enrollment in the state and deserve additional funds to serve a growing population.
• Strengthening community colleges is vital to the economic future of California. Post-secondary education, including the certificates granted by community colleges, substantially increases lifetime earnings. That, in turn, will increase overall economic growth and the tax base for the state, yielding an ample return on the investment of additional funds to community colleges.
• Separating the funds for community colleges from K-12 education and basing the funding level on the population of young adults will ensure that resources for the community colleges will reflect the population demand for those colleges and may provide new resources to make the schools more attractive to that population.
• This measure will increase revenue for community colleges without directly decreasing funds for K-12 education.
• Reducing student fees could increase enrollment, as shown by a recent reduction of fees from $26 to $20. This reflects the fact that for most community-college students, the cost of attending is a major consideration. In 2004, when student fees were increased, enrollment dropped by more than 300,000 statewide.

Cons

Arguments against the measure:

• Prop. 92 is a set-aside for community colleges that would bring the system $1 billion over three years without any specific identified source of funds. This would put community colleges in direct competition with other state programs, particularly public higher education — the UC and CSU systems — that do not have their own dedicated funding stream. This is because UC and CSU draw their budget from the discretionary portion of the state’s General Fund, which is only 8 percent of state spending.
• The measure would increase funding to the CCC system regardless of how many students actually are served. That is, the CCC system would get an increase in funding based on the number of young people in the state or the unemployment rate, not the actual number of the young people who attend community colleges. This suggests that the system could receive funds beyond what it needs to operate.
• This measure reduces the unit fee from $20 to $15 for all students regardless of need, a move that reduces revenue by at least $71 million. It also makes it highly unlikely that the fee could increase, as it is tied to inflation but “rounds down” to the nearest dollar. Since this would be fixed in the state constitution, this fee could be changed only by a vote of the people.
• The changes in governance do not solve any current problems, and as part of a constitutional measure the changes would be difficult to reverse. It would diminish the governor’s authority to name members of the Board of Governors. This seems to be a power play by the Community College League, which represents local boards of trustees but not the statewide Board of Governors.
• While all set-asides decrease the discretion of elected officials to determine budgetary priorities and are fiscally irresponsible, Prop. 92 does not adhere to any principles for responsible budget set-asides. The measure identifies no new funding source to accompany the set-aside, has no time limit or sunset clause, and does not require the California Community Colleges to meet any specific outcomes.

SPUR’s analysis

Prop. 92 is a measure that uses popular policies such as reduced fees and increased revenues as a carrot for garnering greater political support among all segments in the California Community College system. However, it has proven to be politically unpopular with other segments of education, particularly California State University and University of California systems, as it is perceived as increasing competition for a shrinking source of funding for public higher education.

The measure is fiscally irresponsible because it not only reduces revenue to the community-college system, through a fee reduction, but also sets aside a higher portion of overall education funds to community colleges without identifying any new funding sources. This will inevitably result in cuts to other areas of education, particularly public higher education. In recent years, students at both CSU and UC systems have shouldered massive increases in fees. While community colleges are often the first step for many to enter a CSU or UC school, the pathway to higher education for one system should not place greater fiscal strain on another. The lack of support from these institutions is evidence that the politics of Prop. 92 focused on securing support internally from community colleges and ignored other historic “allies.”

While SPUR believes that community colleges are fundamental to our state’s economy and promise of opportunity, we see this measure as flawed. It is troubling for us to be so critical of a measure that will result in a larger number of students attending community colleges and thus increasing their skills and earning potential. We just don’t think this ought to be done on the backs of other priorities in the state particularly as the state faces a $14 billion budget deficit. Tying the hands of legislative bodies is the popular way to win victories for one’s priorities, and SPUR even has proposed some of our own that do this. The difference with this measure is that it does not identify a funding source for this new set-aside. We would hope that the California Community College system would rethink this measure and return with one that builds more grassroots support across the many advocates of education and economic opportunity.

SPUR recommends a “No” vote on Prop. 92.