AB 247 School Bond Passes Assembly & Status of Budget Negotiations

This is a busy time of year, as final budget negotiations occur while bills face the June 2 deadline to pass out of their house of origin. Below is an update on the status of budget negotiations, including conversations regarding student housing and deferred maintenance, as well as 2024 state school bond efforts.

State School Bond AB 247 Passes Assembly

On May 25, the Assembly passed AB 247 (Muratsuchi) off the Assembly floor with a vote of 66:0 (14 abstentions). The bill will now go to the Senate for consideration. AB 247 would place a $14 billion bond for K-12 and community colleges on an unspecified 2024 ballot. Some specifics are still subject to development and negotiation, such as the election date and how much community colleges would receive. CCFC strongly supports AB 247.

SB 28 (Glazer) also passed off the Senate floor with a vote of 33:4 (3 abstentions) and will now go to the Assembly for consideration. This bill would place a $15.5 billion bond on the March 2024 ballot to fund K-12, community colleges, UC, and CSU. CCFC is neutral on this bill. SB 28 contains the following key provisions that are not included in AB 247:

• Inclusion of UC and CSU
• For the K-12 program [does not apply to CCDs]: quarterly processing by priority points to change how projects are ranked and funded
• Increases local bonding capacity limits

Now that both bond bills have crossed over to the second house, we anticipate discussions to heat up on reconciling the differences between the two bills. Additionally, while the Department of Finance has publicly indicated that the Governor is interested in discussing a possible 2024 state school bond, we do not yet know what priorities he may bring to the table. Stay tuned!

FY 2023-24 State Budget Negotiations: Student Housing and Deferred Maintenance

The Governor issued his May Revision budget update on May 12, kicking off the final weeks of budget negotiations between the Legislature and Administration [click here for more information about the May Revision and the community college facilities proposals]. The Governor recognized lagging revenues and a growing deficit, and proposed to defer or reduce previously-promised one-time investments for various programs. Both the Senate and Assembly have adopted their own versions of the budget, after months of in-depth review of the Governor’s proposals. They will now work to reconcile their differences and pass the FY 2023-24 budget bill by the constitutional deadline of June 15. Nothing is final yet and everything is subject to change depending on the outcome of these negotiations.

Deferred Maintenance

The FY 2022-23 budget provided $840.7 million for community college scheduled maintenance (i.e. deferred maintenance) projects. The Governor’s May Revision budget proposed a total cut in the current fiscal year of $452 million, leaving $388.7 million for deferred maintenance.

The Senate and Assembly have both adopted similar positions in response to the Governor’s proposal. Instead of a straight cut to deferred maintenance, they are proposing to create a block grant for three programs that received one-time funding in FY 2022-23: deferred maintenance, recruitment and retention initiatives, and the COVID-19 block grant. They would provide flexibility to allow districts to spend the current year funds as they choose for these three purposes. It is unclear at this time is how much funding would be associated with this block grant. The Senate indicates they would provide $753.6 million. The Assembly’s documents do not identify the total number, but it appears to be lower than the original funding amount provided across the three separate programs as the Assembly approved the Governor’s May Revision proposal to reduce funding for deferred maintenance by $452 million.

There are many questions about how this would work logistically, including issues related to FUSION as well as potential repayment of funds that have already been disbursed (and in some cases already spent). CCFC opposed the cut to deferred maintenance.

Student Housing

We do not yet know which student housing construction projects from the January 2023 filing round will be funded in the FY 2023-24 budget, or how much funding will be allocated.

At the May Revision, the Governor proposed $450 million (one-time General Fund) in FY 2023-24 and $95.4 million (one-time General Fund) in FY 2024-25 for community college student housing projects. This proposal would fulfill the promise made in prior budgets to dedicate 50% of the planned $2.2 billion student housing construction grant investment to community colleges. CCFC believes this is a very positive improvement in the Governor’s position but would like to see all $545 million allocated in FY 2023-24.

The Senate adopted the Governor’s May Revision proposal. Neither the Governor or Senate have publicly identified which specific projects they propose to fund, though this will need to be done in the budget.

The Assembly prefers a somewhat different approach to allocating the proposed $450 million for FY 2023-24. They propose to provide $360.7 million in FY 2023-24 to fund five specific projects at the following districts: Riverside CCD, Merced CCD, Cabrillo CCD, Cerritos CCD, and San Mateo CCD. This proposal bypasses two projects that were ranked higher by the Chancellor’s Office (Redwoods CCD and San Diego CCD). The Assembly appears to prefer prioritizing intersegmental projects and those that maximize the number of new beds. The Assembly also proposes to move the remaining $89.3 million of the proposed $450 million to the student and workforce housing Revolving Loan Fund, increasing the total investment for that program.

The final deal on student housing is still being negotiated between the Governor, Senate, and Assembly, and we hope to have more clarity on which projects will receive funding by June 15, the deadline to pass the state budget.

The Legislature often adopts budget adjustments and accompanying trailer bills later in the summer. Given the uncertainty of the state’s revenue picture, we expect budget work to continue even after the June 15 deadline.

Rebekah Kalleen
CCFC Executive Director