Legislature and Governor Announce Final Budget Agreement – Capital Outlay and Student Housing

Legislative leaders and the Governor announced they have arrived at a final budget agreement. Today the Senate and Assembly Budget Committees reviewed two bills that amend previously-approved budget bills and 27 trailer bills to implement the budget. AB/SB 178 is the “Budget Bill Junior” that will amend SB 154, the 2022 placeholder budget bill that was passed by the Legislature on June 13. The Legislature is expected to take AB/SB 178 and some or all of the trailer bills up for a vote on the floor later this week. Note that there are Assembly Bill and Senate Bill versions of each bill, with identical content; we don’t yet know which version of each will be passed and sent to the Governor.

The budget includes total spending of just over $300 billion, including $234.4 billion General Fund, and total reserves of $37.2 billion. The centerpiece of the budget agreement is a $17 billion inflation relief package, which includes tax refunds to millions of Californians, suspension of the state sales tax on diesel, and additional funds to help people pay their rent and utility bills. It also includes $47 billion over multiple years for infrastructure and transportation investments, helping to keep the state below the State Appropriations Limit (aka Gann Limit).

Significant items for community colleges are included in the higher education trailer bill, AB/SB 183. 

Below are items of significance for community college facilities in the final budget agreement.

Capital Outlay Funding

The final budget includes the community college capital outlay funding that was approved in SB 154. This includes $403 million for 22 community college capital outlay projects, including the construction phase of 19 projects anticipated to complete design by Spring, the working drawings and construction phase for 1 project, and the design phase of 2 projects. This is the next installment of the $2 billion available to CCCs under Proposition 51.

Note that the final budget does not include a General Fund appropriation for the community college capital outlay program in FY 22-23. Members of the Legislature have announced that they do not plan to advance a bill to place a school bond on the November 2022 ballot, as the final budget includes $4.2 billion General Fund (through 2025) for K-12 school facilities. CCFC requested $2.6 billion General Fund for the community college capital outlay program in FY 22-23.

Student Housing

The budget includes an additional $2 billion between now and 2024-25 for student housing projects at UC, CSU, and CCC, bringing the total amount of student housing funding to $4 billion. Of the additional $2 billion, $200 million is scored to 2021-22, $900 million is scored to 2023-24, and $900 million is scored to 2024-25. Additionally, the agreement includes:

Grant Funding – Funding for all projects deemed eligible by the Department of Finance from the first round of the Higher Education Student Housing Grant Program. The budget includes $1.43 billion to fund these projects, including $542.1 million to fund all 12 of the community college projects (including one intersegmental project) deemed eligible in the first round by the Department of Finance. It also includes $17.9 million for 70 community college planning grants.

Program Revisions – Revisions to the Higher Education Student Housing Grant Program. Revisions include, but are not limited to:

• Identifying the Chancellor’s Office as the program’s administering agency. For future application rounds, community colleges shall submit applications to the Chancellor’s Office.
• Projects deemed ineligible in the 2021 application round may submit revised applications. These applications may receive expedited consideration in the next funding round.
• Incorporate the Legislative Analyst’s Office recommendations to address cost overruns and require contingency plans. Community college projects receive a 10% construction cost contingency. Applicants shall cover costs above those identified in their state application using other fund sources. Applicants may not apply for a grant to reimburse costs that have already been incurred.
• The ranking methodology has been updated to provide specificity on how projects will be evaluated, including metrics such as state funding per bed and rent relative to the statutory rent cap.
• Additional reporting requirements.

Revolving Loan Fund – An agreement to create the California Student Housing Revolving Loan Fund with Legislative intent to provide $900 million in the 2023 Budget Act and $900 million in the 2024 Budget Act to fund the loan. This will require future legislation to implement.

Deferred Maintenance

The budget includes $840.7 million General Fund for deferred maintenance for community colleges. The funds shall be available for encumbrance or expenditure until June 30, 2027. Eligible projects include:

• Scheduled maintenance and special repairs of facilities.
• Hazardous substances abatement, cleanup, and repairs.
• Architectural barrier removal projects that meet the requirements of the Federal
• Americans with Disabilities Act and seismic retrofit projects limited to $929,000.
• Water conservation projects.
• Energy efficiency projects.
• Replacement of instructional equipment and library materials.

Additional Items

The budget includes:

• CCC COVID Recovery Block Grant – $650 million (one-time Proposition 98) to assist with basic needs, mental health needs, professional development opportunities for faculty and student services professionals, investments to close the digital divide, and other COVID-19 related support. 
• Student Centered Funding Formula (SCFF) Hold Harmless Changes – Creates a new funding floor based on districts’ hold harmless level at the end of 2024-25. 
• CCC Cybersecurity Initiatives – $75 million (one-time Proposition 98) to CCC for security network upgrades, general security software, and anti-fraud technology.
• CCC Appropriations for Specific Local Initiatives – Various one-time appropriations worth $156.6 million for a variety of community college projects, including construction and improvements to support various programs. 

Next Steps

We anticipate action in the Senate and Assembly this week to pass AB/SB 178 and various trailer bills to implement the budget. Stay tuned!

Rebekah Cearley
CCFC Legislative Advocate