Legislative Update: State School Bond Advances & Legislature Considers Student Housing

This is a major deadline week in the Legislature. Bills with a possible fiscal impact must pass out of their policy committees by the end of this week. Below is an update on a few key bills, as well as the Higher Education Student Housing Grant Program.

AB 247 – State School Bond

Today, Assembly Higher Education Committee heard and passed state school bond bill AB 247, marking another step in the process to place a K-14 state school bond on the 2024 ballot. On behalf of CCFC, Rebekah Kalleen served as one of two lead witnesses at today’s hearing in support of AB 247, alongside David O’Brien, Vice Chancellor of Government Relations for the California Community Colleges Chancellor’s Office. AB 247 is co-authored by Assembly Member Mike Fong, who is chair of the Assembly Higher Education Committee, as well as Assembly Members Al Muratsuchi (Chair, Assembly Education Committee) and Lori Wilson. Assembly Member Muratsuchi presented the bill, and Chair Fong spoke in strong support as a former trustee for the Los Angeles Community College District.

AB 247 does not yet include a specific dollar amount for the bond; we expect that to be added by the time the bill moves out of the Assembly Appropriations Committee, which considers state cost impacts. Bills must pass out of Appropriations Committee by May 19 in order to continue moving through the legislative process this year. The bill does not yet specify whether the bond will be heard on the primary ballot in March 2024 or the General Election ballot in November 2024. It would fund the existing community college capital outlay program and does not currently propose any changes to that process. CCFC strongly supports AB 247.

SB 532 – Local Bond Ballot Labels

SB 532 is aimed at addressing the negative effects created by AB 195 (Obernolte), chaptered in 2017. AB 195 requires local bonds and other tax measures to state on the ballot label the rate, duration, and amount anticipated to be raised annually. This information is challenging to provide for bonds and creates voter confusion, making it more difficult for community colleges and other local agencies to pass local bonds or place them on the ballot.

SB 532 was passed by both the Senate Governance and Finance Committee as well as the Senate Elections and Constitutional Amendments Committee. It was significantly amended in the latter committee due to Chair Senator Glazer’s concerns regarding transparency. SB 532 now exempts the above fiscal disclosures from the 75-word cap on the ballot label. This will allow additional space on the ballot label to explain both the fiscal disclosures and how the revenues would be spent in the community. While this is not a comprehensive solution to the issues created by AB 195, it is an incremental improvement that takes a step in the right direction. The bill previously exempted bonds and tiered taxes from the ballot label requirement, with inclusion of a statement directing voters to the Voter Guide for more information. The bill will next be heard in the Senate Appropriations Committee. CCFC has a support position on SB 532.

Budget Updates: Higher Education Student Housing Grant Program and Deferred Maintenance

The Legislature continues to review details of the Governor’s January budget proposal. Last Thursday, the Senate Budget Subcommittee No. 1 on Education reviewed the Governor’s affordable student housing proposal. The Governor proposes to delay $250 million of a planned $750 million investment for affordable student housing construction grants by one year, from FY 2023-24 to FY 2024-25. The Governor’s budget also proposes to delay funding for the zero-interest Revolving Loan Fund (RLF), providing no funds in FY 2023-24, $650 million in FY 2024-25, and $1.15 billion in FY 2025-26. CCFC supports the construction grant program and is neutral on the RLF.

Subcommittee Chair John Laird expressed opposition to both of the proposed student housing delays, expressing a sense of urgency to address housing needs. Michelle Nguyen (Department of Finance) indicated that the Governor remains committed to student housing and that the proposed delays are due to the current revenue outlook. Paul Steenhausen (Legislative Analyst’s Office) indicated that funding for both programs could be removed from the budget and revisited when the budget situation improves. The subcommittee agenda and background documents showed the 21 applications in order of ranking by the Chancellor’s Office, and the subcommittee discussed which projects would be potentially be funded in different budget scenarios. They also discussed if the construction of student housing is the best use of finite state resources, or if other housing programs would be a more impactful use of funds to address the state’s housing affordability and homelessness crisis. The subcommittee and panelists acknowledged that the RLF would not generate deeply affordable rents for community college students when compared to the construction grants.

The subcommittee also reviewed the Governor’s proposal to cut $213 million of $841 million provided in the current budget year (FY 2022-23) for the Physical Plant and Instructional Support Program (i.e. deferred maintenance). The Governor proposes to divert $200 million to support enrollment and retention strategies. Paul Steenhausen indicated that the LAO recommends rejecting the cut, noting that community college districts have already done a lot of work to implement the current year budget funding, and he questioned a trailer bill proposal that would add all child care facilities as an allowable use of deferred maintenance funds, as the state does not typically subsidize nonacademic, self-supporting facilities. Lizette Navarette (Interim Deputy Chancellor, Chancellor’s Office) expressed concern with diverting funds from deferred maintenance to enrollment strategies, and suggested providing flexibility for districts to decide how to utilize those funds.

Rebekah Kalleen testified on behalf of CCFC, opposing the $250 million construction grant delay and urging the Legislature to maintain its commitment to fund student housing. She also expressed opposition to the deferred maintenance cut. Both items were held open and will be revisited after the Governor releases his May Revision budget update in mid-May. The Legislature is working toward a June 15 deadline to pass the FY 2023-24 budget.