- The budget act addresses a projected $12 billion deficit through a combination of shifts between funds, withdrawals of reserve funds, program reductions, borrowing, and deferrals
- Community college funding is largely protected from the volatility in the overall state budget
- A 2.30% COLA will be applied to the Student-Centered Funding Formula and several categorical programs
- COLA will not apply to Strong Workforce or the Student Equity and Achievement programs
- Enrollment growth funding of $140 million will be applied across the 2025-2025 and 2025-2026 fiscal years, a combined 2.35% in growth funding
- The Part-time Faculty Office Hours Program increases reimbursements to Districts from 50% to 90%, based on available funds and participating districts
- A $60 million one-time Student Support Block Grant will be funded to provide a variety of focused student support programs
- A $20 million one-time emergency financial assistance grant program for students is funded
- Dreamer Resource Liaisons funding is increased by $15 million for one year
- Rising Scholars Network funding increases from $25 million to $35 million
- Credit for Prior Learning funding includes $5 million ongoing and $15 million in one-time funds
- $25 million one-time is allocated to establish the California Career Passport Program
- $12 million one-time is allocated to expand use of e-Transcript California
- Final Budget Overview
The months long negotiations on the final state budget were concluded in late June, resulting in Governor Newsom signing the budget bill on June 27th. The state had to address an estimated $12 billion deficit between projected expenses and revenues in the bill, which was accomplished through a variety of accounting mechanisms, reductions in funding to several programs, and use of reserve funds. Public education, particularly K-12 and community college, was largely spared from any negative impacts due to Proposition 98 and other legal protections. One of the mechanisms used to manage the deficit is deferrals of current year funding for community colleges to the next fiscal year. This means state funding we should receive as part of our 2025-2026 fiscal year will be delayed until 2026-2027. Due to our efforts to rebuild a sound general fund reserve, this should not negatively impact our District as we have the cash reserves necessary to manage our expenses through the delayed payment of state funding.
There were significant changes in the Governor’s January budget proposal, the May Revision to the January proposal, the budget adopted by the Assembly and Senate, and the final adopted budget. The January budget proposal included significant one-time investments in statewide technology projects and did not fund prior and current year enrollment growth in excess of the 0.5% growth funding provided in the 2024-2025 budget. Increases to prior and current year growth funding were a central point in our District’s advocacy in Sacramento, and we are grateful to the Governor and legislature for investing $140 million in growth funding for 2024-2025 and 2025-2026.
The May Revision brought an unexpected change that required immediate advocacy with the proposal to shift nearly $500 million from community colleges to fund transitional kindergarten (TK) by moving funds from the 2023-2024, 2024-2025, and 2025-2026 fiscal years. The final budget restored community college funding for 2023-2024 and 2024-2025, providing significant revenues to invest in growth funding as described above, a $60 million flexible block grant to help Districts manage federal funding disruptions and environmental disasters, and $20 million for emergency student financial aid assistance.
Ultimately, the 2025-2026 budget provides community colleges with resources to plan for continued economic uncertainty and federal higher education policy, an excellent outcome in a difficult financial year for the state. A fully-funded 2.30% COLA provides additional resources to manage cost escalations. The COLA and additional growth funding will allow Districts to continue investing in enrollment growth and new programs. The flexible block grant provides resources to support students and programs impacted by federal funding and policy changes. Additional one-time investments ensure work in areas such as credit for prior learning continue without disruption.
Local Impact
Overall, the final budget is welcome news for the San Diego Community College District. The 2.30% COLA will ensure we have additional revenues to cover increases in employee salaries and benefits and operational expenses. The growth funding will ensure we can continue increasing enrollment opportunities for our local communities.
SCFF and Categorical COLAs
The 2.30% COLA to the SCFF will add an estimated $7.59 million to the District’s base revenue under the SCFF. Growth funding will add an estimated $3.2 million to 2024-2025 SCFF revenues. The additional revenue will be distributed in accordance with the Resource Allocation Formula (RAF).
The COLA will apply to categorical programs including Adult Education, EOPS, DSPS, Apprenticeship, and CalWORKs, but does not apply to Strong Workforce or SEAP.
Federal Update
In early July, the Department of Education notified educational institutions across the country that approximately $6.2 billion in funding for a variety of education programs would not be distributed in an action called “impoundment”. Impoundment is a presidential authority to temporarily hold funds appropriated by Congress. The action starts a 45-day period in which Congress must approve the request to rescind the funding or the funds must be released. The state of California, along with 19 other states, has filed a lawsuit to have the funds immediately released. The College of Continuing Education is directly impacted by this action with approximately $1.4 million in WIOA funds currently being held. We are preparing contingency plans for a delay in receiving the funds or having the funds permanently withdrawn.
In Conclusion
The final budget demonstrates the state’s commitment to funding public education. Concerning trends in the world, U.S., and state economy continue to require caution and planning for more challenging financial conditions that could impact community college funding negatively in the years ahead. Prudent planning and action over the past five years has prepared us to better manage economic volatility as our general fund reserves remain approximately 20% of expenses while continuing to make investments in programs, positions, salaries, and benefits.