May 14, 2021CCFC Budget Update: Governor’s May Revision Proposes Student Housing, Deferred Maintenance Funding

Funded by the state's surplus and over $25 billion in Federal relief, the Governor is proposing a $100 billion 'California Comeback Plan,' with broad strategies and investments to speed the state's recovery, address long-standing challenges, and provide opportunity for every California family.

The May Revision recognizes $17.7 billion in additional spending for K-14 schools, bringing the total Proposition 98 funding to a record $93.7 billion. It also includes $24.4 billion in reserves. In a unique twist, the Governor estimates that for the first time since 1989 California will hit the State Appropriations Limit ('Gann Limit'). This limit caps the amount of revenues from tax proceeds that can be appropriated by the state. The May Revision estimates that the limit for the 2020-21 and 2021-22 fiscal years will be exceeded by $16.2 billion, and allocates this evenly between K-14 schools and taxpayer refunds, per Gann Limit requirements. The supplemental payment of approximately $8 billion is scheduled to be allocated to schools in 2022-23.

Capital Outlay Bond Program Funding

In his January budget proposal, the Governor proposed to fund preliminary plans and working drawings for 1 new capital outlay project in FY 21-22, and to fund 17 continuing projects. We are in the process of verifying whether the May Revision includes any changes to this proposal. The Governor's May Revision summary is silent on the capital outlay program, but we are hearing there may be additional capital outlay project funding included. We'll follow up with additional information once it is available.

Deferred Maintenance

The May Revision includes an increase of $314.1 million (one-time Proposition 98 General Fund) and $250 million (one-time American Rescue Plan Act of 2021) to address deferred maintenance at community colleges.

COVID-19 Response Block Grant

The May Revision includes an increase of $50 million (one-time Proposition 98 General Fund) to support grants to assist community colleges with responding to the COVID-19 pandemic and transitioning back toward in-person education.

Student Housing

The May Revision includes $4 billion (one-time General Fund), split evenly between FY 2021-22 and 2022-23, to establish a low-cost affordable student housing program. The program would include:

• Authorizing the California School Finance Authority to award grants to UC, CSU, and CCC to build new student housing or to acquire commercial properties that would be transformed into student housing.
• Substantially reducing rent for students by relieving the segments from having to build in construction and/or acquisition costs into rental and meal plan charges.
• Prioritizing grants for the conversion of commercial properties that would be transformed into student housing.
• Prioritizing access to newly available units for low-income and under-represented students to support and improve equity.
• Requiring student tenants to take an average of 15 degree-applicable units per semester to facilitate timely degree completion and to further reduce their overall cost of completing college.

Advancing Workers in a Post-COVID Economy

The May Revision includes proposals to advance workers as California recovers from the pandemic:

• Learning-Aligned Employment - $1 billion (one-time General Fund) split evenly between FY 2021-22 and 2022-23 to establish the Learning-Aligned Employment Program, to promote learning-aligned, long-term career development for UC, CSU, and CCC students.
• Education and Training Support Grants for Displaced Workers - $1 billion (one-time American Rescue Plan of 2021 funds) for the Student Aid Commission to establish a one-time grant program to support displaced workers seeking reskilling and up-skilling, educational opportunities, or to support some of the costs to start a business.
• Regional K-16 Education Collaboratives - $250 million (one-time General Fund) to award grants to between five and 8 regional collaboratives, with at least one institution from all three segments. Collaboratives must: include consideration of regional workforce needs; focus on streamlining occupational pathways that lead to high-paying, in-demand jobs; align higher education with workforce needs.

Child Savings Accounts

The May Revision includes $2 billion (one-time Federal American Rescue Plan Act of 2021) in FY 2021-22, and $170 million ongoing (General Fund), to create college savings accounts for low-income and underrepresented students enrolled in K-12 public schools. This includes a $500 base deposit for students from low-income families, English learners, and foster youth, and a $500 supplemental deposit for foster and homeless youth. The Governor indicated that these funds are intended to be used for college, workforce training/trade school, or starting their own business.

Broadband

The May Revision includes a $7 billion investment over three years (various Federal and state sources) to expand broadband infrastructure, increase affordability, and enhance access to broadband for all Californians.

Additional Items

Below is a selection of additional items of interest in the proposed CCC budget.

• Apportionments Cost-of-Living Adjustment - An increase of $185.4 million (ongoing Proposition 98 General Fund) to reflect a compounded cost-of-living adjustment of 4.05 percent. This represents a 2020-21 COLA of 2.31 percent and a revised 2021-22 adjustment of 1.7 percent.
• Apportionment Deferrals - An increase of approximately $326.5 million (one-time Proposition 98 General Fund) to fully retire deferrals from FY 2021-22 to FY 2022-23.
• Dual Enrollment - An increase of $75 million (one-time Proposition 98 General Fund) to expand new and existing College and Career Access Pathways agreements between school districts and community colleges.
• Retention and Enrollment Strategies - An increase of $100 million (one-time Proposition 98 General Fund) to support efforts to bolster CCC student retention rates and enrollment.
• Student Basic Needs - An increase of $30 million (ongoing Proposition 98 General Fund) for colleges to establish basic needs centers and hire basic needs coordinators.
• Work-Based Learning - An increase of $10 million (one-time Proposition 98 General Fund) to develop work-based learning opportunities in cloud computing and zero emissions and supply chain fields.

Next Steps

The Assembly and Senate will review the Governor's revised budget proposal and close out action on individual proposals within their respective houses in the next few weeks. The two houses will negotiate together and with the Governor on areas of disagreement, working to pass the budget out of the Legislature by the constitutional deadline of June 15.

Rebekah Cearley
CCFC Legislative Advocate

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