State Revenue Projections Adjusted Upward

In January, the Governor estimated that the state would face a modest budget deficit of $2.9 billion in FY 2026-27. This was in contrast to a larger deficit of $18 billion projected by the Legislative Analyst’s Office (LAO) in November 2025. In February 2026, the LAO revised its revenue estimates, predicting that revenues from the state’s three largest taxes (income, corporation, and sales) are likely to come in ahead of the Governor’s assumptions for current year 2025-26 and are about in line with the Governor’s assumptions for budget year 2026-27. However, the LAO still cautions that the risk of a revenue downturn in the next year or so is still too great to ignore, with income tax collections boosted by a roaring stock market that has doubled since 2020 and is up 70% in the last three years alone. Jason Sisney, the Assembly Speaker’s chief budget consultant, estimates that an upward revenue adjustment of between $10 billion and $30 billion could be possible across the two fiscal years of 2025-26 and 2026-27.

The Governor and the LAO estimate ongoing structural deficits of between $22 billion and $35 billion beginning in FY 2027-28. As such, this week the Governor shared that he will propose additional budget cuts at the May Revision despite revenue increases, to address the structural deficit in his final year as Governor.

If the Governor and Legislature recognize additional revenues, there will likely be an increase in funds available for TK-12 and community colleges under the Proposition 98 Minimum Guarantee. What remains to be seen is how they will treat an increase to Proposition 98 in the current year 2025-26. In January, the Governor estimated an increase of constitutionally-guaranteed Proposition 98 funding to $121.5 billion, but he proposed to appropriate only $115.9 billion in FY 2025-26 and defer payment of $5.6 billion to TK-14 to future years, creating a “settle-up” obligation. This proposed settle-up obligation could increase if 2025 tax revenues come in above the January projections. Education management groups oppose creation of a settle-up payment and are urging the state to fully fund TK-14 education. The LAO raised concerns with creating a settle-up payment that would need to be repaid in future years that face looming structural deficits. Instead, the LAO recommends fully funding the Proposition 98 Minimum Guarantee, but depositing some of the additional funding into the Proposition 98 reserve. Increases in one-time funding provide a potential source for priorities such as deferred maintenance.

Legislative Budget Subcommittees Discuss CCC Facilities Funding Proposals

The Governor’s budget includes the following proposals in FY 2026-27 for community college facilities funding:

• Capital Outlay: $736.9 million (Proposition 2 bond funds), including:
  • $27.8 million for the design phase (Preliminary Plans and Working Drawings) of 10 new projects worth $399 million in State funding through construction
  • $709 million for construction of 29 continuing projects
• Deferred Maintenance: $120.7 million (one-time Proposition 98 General Fund) for the Scheduled Maintenance and Instructional Support Program.

The Assembly Budget Subcommittee No. 3 on Education Finance discussed these proposals on April 21, 2026. Regarding the capital outlay program, the LAO noted that the budget proposal is a “reasonable starting point,” but stated that the Legislature could choose to adjust how much funding it provides in FY 2026-27. If more projects were authorized, they could avoid construction cost escalation in future years. Alternatively, if fewer projects were funded, then resources would be available for high-priority projects, including life safety projects, that could emerge in the next few years. Additionally, the LAO raised the idea of directing the Chancellor’s Office to adjust the scoring system to address issues such as allocating a larger share of funding toward modernization projects, limiting each campus to one Proposition 2 project across all years, or capping the share of funding going toward “campus completion” projects. Chris Ferguson, Executive Vice Chancellor of Finance and Strategic Initiatives at the California Community Colleges Chancellor’s Office, indicated that they did an in-depth review of the scoring system, which was updated in 2020, after the LAO raised questions about the projects proposed for funding in FY 2025-26.

The Department of Finance noted that there will be approximately $249 million remaining in Proposition 2 bond authority for future new projects if the Governor’s budget is adopted.

CCFC Budget Position and Advocacy

CCFC has adopted the following budget positions for FY 2026-27:

• Capital Outlay Projects – CCFC supports the Governor’s January budget proposal to provide $736.9 million in Proposition 2 General Obligation bond funds, including $27.8 million for the design phase of 10 new capital outlay projects and $709 million for the construction phase of 29 continuing projects.
• Deferred Maintenance – CCFC supports the Governor’s January budget proposal to provide $120.7 million (one-time Proposition 98 General Fund). We request an increase to this funding if economic conditions allow for additional one-time investments. We also request trailer bill language to eliminate the statutory project funding caps for architectural barrier removal and seismic retrofit projects, which are currently capped at $1,103,000.

We expressed these positions during public comment in the Assembly Budget Subcommittee hearing. Additionally, we recommended that any potential changes to scoring methodology should be prospective, applying only to projects funded by a future bond, as districts have already prepared their applications using the scoring methodology currently in place.

Next Steps

Final decisions will be made on the community college capital program and deferred maintenance as part of the final negotiated FY 2026-27 budget. The Governor will release his May Revision budget, updated with revenues from April tax revenues, by May 14. The Legislature must adopt a balanced budget by June 15.

Rebekah Kalleen
CCFC Executive Director

AB 1754 (Pacheco) – State General Obligation Bond Requirements

This bill creates new accountability requirements for state general obligation bonds approved by voters after January 1, 2027. It requires future state bonds to include specific goals, purposes, and objectives that the bond expenditure is intended to achieve, and to specify detailed performance indicators and data collection requirements. Additionally, the head of the agency administering the bond would be required to provide a notification on its website with accountability information about bond-funded projects, and to provide a written report to the Administration and Legislature evaluating the efficiency and outcomes of the bond. This bill is sponsored by Elevate California. AB 1754 was passed by Assembly Governmental Organization Committee and is pending in Assembly Appropriations Committee. CCFC adopted a “Watch” position on this bill and plans to provide information to policymakers about the existing accountability practices for community college construction projects and the state capital outlay program.

AB 1809 (Fong) – Job Order Contracting

Currently, K-12 school districts and community colleges have the authority to utilize job order contracting (JOC), and this authority is set to sunset on January 1, 2027. AB 1809 would remove the sunset and make the authority permanent. JOC is an alternative procurement method to deliver smaller projects, allowing for award of contracts to the lowest responsible bidder based on prices for specific construction tasks rather than bids for specific projects. Contractors are prequalified and bid an adjustment factor to the preset unit prices. To use JOC, community colleges must have a Project Labor Agreement that will apply to all public works awarded through JOC, and to all other public works of the district – regardless of delivery method – that exceed a monetary threshold set by the district. AB 1809 is sponsored by Los Angeles Unified School District. CCFC adopted a “Watch” position on this bill, which was passed by the Assembly Education Committee and is pending in the Assembly Higher Education Committee.

SB 1154 (Reyes) – Best Value Procurement

This bill establishes a new delivery method, authorizing community college districts to use best value procurement for construction projects that exceed $1 million. This is an extension of a new authority provided to K-12 school districts in 2025. The authority would sunset on December 31, 2030, in alignment with the sunset for K-12. Under best value, the bidder would be selected on the basis of objective criteria, where the resulting selection represents the best combination of price and qualifications. SB 1154 requires the use of a skilled and trained workforce or Project Labor Agreement. A community college district that uses this procurement option must submit an independent third-party report to the Legislature on the use of the best value procurement method. This bill is sponsored by San Bernardino Community College District. CCFC adopted a “Watch” position on this bill, which is pending in Senate Education Committee.

DIR & Prevailing Wage Monitoring

AB 1838 (Berman) – Contractor Disclosure of Wage-and-Hour Violations

This bill updates the Public Contract Code to require a contractor to disclose a history of wage-and-hour violations when submitting a bid to a local agency. This disclosure would include violations within the past five years related to unpaid wages, overtime, meal or rest break violations, or misclassification of employees or independent contractors. The contractor would be required to provide documents that the violations have been corrected or resolved. Failure to provide the required disclosures and supporting materials may result in disqualification of the bid. This bill is sponsored by the California-Nevada Conference of Operating Engineers and the District Council of Iron Workers. CCFC adopted a “Watch” position on this bill, which was passed by the Assembly Labor and Employment Committee and is pending on the Assembly Floor.

AB 1859 (Ortega) – Joint-Labor Management Committees

This bill requires a public agency owner to allow representatives of a joint-labor management committee (JLMC) to have “reasonable access” to active public works job sites to monitor compliance with prevailing wage and apprenticeship requirements. “Reasonable access” means access that is consistent with job site safety and security requirements, including the use of personal protective equipment, that does not disrupt performance of work and includes access to workers during non-work hours. A court shall award a prevailing JLMC a civil penalty of $1,000 for each occasion that reasonable access was denied. This bill is sponsored by the International Union of Operating Engineers, the District Council of Iron Workers, and Building Trades. CCFC taken an “oppose unless amended” position and is working in partnership with a coalition of other public agencies, including cities, counties, and special districts, to address our concerns. CCFC is concerned about safety and worker protections, and we are also concerned about placing responsibility to provide “reasonable access” on the public agency, when contractors are legally given control of an active construction site. AB 1859 was passed by Assembly Labor and Employment Committee and is pending in Assembly Judiciary Committee.

SB 1241 (Smallwood-Cuevas) – Skilled and Trained Requirements

This bill would make various changes to skilled and trained workforce requirements. It expands the type of authorizing mechanism that can trigger compliance with existing skilled and trained workforce laws, going beyond “statute and regulation” to include other mechanisms, such as rules, resolution, ordinance, and public contract. Practically, this could affect a public agency that voluntarily adopts some skilled and trained workforce provisions when a project is not legally required to do so, triggering compliance with the full statutory requirements in Public Contract Code. For the purpose of penalty determinations, SB 1241 expands the definition of a “substantial compliance plan” to include remedying prior skilled and trained workforce violations by exceeding minimum apprenticeship graduate requirements on future projects. The bill also requires the Labor Commissioner to accept and investigate complaints from a Joint Labor-Management Committee alleging that a contractor or subcontractor failed to use the appropriate skilled and trained workforce. The bill is sponsored by the California State Association of Electrical Workers, the California State Pipe Trades Council, and the Western States Council of Sheet Metal Workers. CCFC is working with a coalition of other public agency groups to continue researching and analyzing this bill. SB 1241 was passed by the Senate Labor, Public Employment, and Retirement Committee and is pending in Senate Appropriations Committee.

Student Housing

AB 1732 (Alvarez) – Student Housing CEQA Exemption

This bill extends an existing infill housing CEQA exemption created by AB 130 [2025] to public higher education projects, including student housing. This would be done by updating the language that authorizes the exemption to include a project that is consistent with a “public higher education land use plan.” The existing exemption includes the following labor standards:

• Projects that are 100% affordable housing must pay prevailing wage.
• Projects with buildings over 85 feet must use a skilled and trained workforce.

CCFC adopted a “Watch” position on this bill, which is pending in the Assembly Natural Resources Committee and the Assembly Housing and Community Development Committee.

Regional Housing Needs Allocation

The Legislature continues its focus on housing affordability. As such, there were multiple bills introduced to incorporate community college student housing facilities into the Regional Housing Needs Allocation (RHNA), a state-mandated process that requires cities and counties to plan for future housing needs across all income levels. Under this system, the California Department of Housing and Community Development (HCD) determines the total regional housing need, and regional planning agencies distribute that need to local jurisdictions.

CCFC is watching the following bills:

• AB 1623 (Davies) – This bill requires local jurisdictions to count the “number of certain types of student housing quarters,” as determined by HCD, that are built within the jurisdiction toward their share of the lower income regional housing needs allocation. The student housing units would count even if the project was approved by the Division of State Architect and was not reviewed by the local planning agency. AB 1623 is pending in Assembly Housing and Community Development Committee and Assembly Local Government Committee.
• AB 2295 (Johnson) – This bill authorizes a local government to enter into a voluntary agreement with another local government to allow new housing development projects with very low- and low-income units to count toward each locality’s share of the regional housing needs allocation. AB 2295 is pending in Assembly Housing and Community Development Committee and Assembly Local Government Committee.
• AB 2400 (Wallis) – This bill would require the city or county to include the number of suite-style student housing quarters in their annual report on housing element to HCD. AB 2400 is pending in Assembly Housing and Community Development Committee and Assembly Local Government Committee.

Rebekah Kalleen
CCFC Executive Director

The prior day, Governor Newsom highlighted some of the themes addressed in the budget during his State of the State Address. This is Governor Newsom’s final budget proposal before he is termed out at the end of 2026. The Governor utilized this budget presentation to take a victory lap, emphasizing the progress California has made on key initiatives addressing homelessness, disaster recovery, technology regulation, crime, and more. He championed meaningful gains for TK-12 public education resulting from the “California for All Kids” investments in universal Transitional Kindergarten, before and after care, and more. 

The proposed budget includes $348.9 billion in total spending, including $248.3 billion General Fund and $23 billion in total reserves. Mr. Stephenshaw indicated that the Governor’s budget is a “workload budget” that funds cost increases to baseline services and programs but does not include significant new adjustments. The Governor plans to monitor changes in revenues and spending over the next few months and will update his budget proposal at the May Revision accordingly. 

The Governor anticipates a modest deficit of $2.9 billion, in contrast to the Legislative Analyst’s Office estimated $18 billion deficit. The difference is explained by the Governor’s higher revenue forecast for the Big Three (Personal Income Tax, Corporations Tax, Sales and Use Tax), which is $28.8 billion – or 4.7% - higher than LAO’s forecast. Mr. Stephenshaw noted that economic and revenue risks include stock market volatility and declines, uncertainty about Federal policy, and elevated inflation with subsequent restrictive monetary policy. The budget also indicates that significant Federal policy changes in H.R. 1 are projected to increase state costs by $1.4 billion General Fund in 2026-27 ($1.1 billion for Medi-Cal and nearly $300 million for CalFresh).

The Proposition 98 Minimum Guarantee is up to $125.5 billion in 2026-27, and Mr. Stephenshaw noted that this is up from $78.5 billion in 2018-19 and is an all-time high for the Minimum Guarantee. The revised Proposition 98 levels represent an increase of approximately $21.7 billion over the three-year period of 2024-25 through 2026-27, relative to the 2025 Budget Act. The Governor’s budget proposes $15.4 billion in General Fund and property taxes for the community colleges in 2026-27. The budget indicates that California Community College enrollment levels have recovered from pandemic-related enrollment declines, with 2.2 million students in 2024-25 and further growth anticipated in 2025-26 and 2026-27.

Capital Outlay

The Governor’s budget includes $736.9 million in Proposition 2 bond funds for 10 new projects and 29 continuing projects at the community colleges.

Click here for a list of the projects.

Deferred Maintenance

The Governor’s budget includes a one-time increase of $120.7 million in Proposition 98 General Fund to address deferred maintenance needs at community colleges. There were no funds provided for community college deferred maintenance in the adopted 2025-26 budget.

Student Housing

The Governor’s budget highlights the recent investments that have been made in student housing, and acknowledges previously shifting roughly $2 billion in prior and planned General Fund support for UC, CSU, and CCC affordable student housing grants to different sources, including state-issued lease revenue bonds under the State Public Works Board for approved CCC projects. The Governor’s budget refers to the Administration’s “commitment” to these projects, and states that “For the CCCs, more than 5,800 new beds are expected to be available to students by 2029, of which more than 4,800 are projected to be subsidized as part of the program’s statutory requirements.” The budget does not appear to include a commitment of new funds for affordable student housing.

Master Plan for Career Education

In April 2025, the Administration released the state’s first Master Plan for Career Education, with the goals of:

1. Aligning state education and workforce development programs with the needs of the future economy
2. Better coordinating and streamlining programs regionally and across state agencies
3. Ensuring that the state’s students and adult learners have affordable access to the educational and career preparation opportunities needed to navigate to and obtain good paying jobs that lead to sustained career pathways. 

The 2025 Budget Act included investments to begin implementation of the Master Plan. The governor’s budget proposal for 2026-27 includes the following new investments to implement key provisions of the Master Plan:

• $100 million one-time Proposition 98 General Fund to increase access to college and career pathways for high school students, including expanding access to dual enrollment.
• $37 million Proposition 98 General Fund, of which $2 million is ongoing, to further support and expand the Credit for Prior Learning Initiative.

Other CCC Issues

The Governor’s budget includes the following proposals:

• Payment of 2025 Budget Act Deferrals – A one-time increase of $408.3 million to fully repay deferrals for the Student-Centered Funding Formula (SCFF) in 2026-27.
• CCC Apportionments Cost-of-Living Adjustment (COLA) and Growth – An increase of $240.6 million Proposition 98 General Fund to provide a 2.41 percent COLA for SCFF apportionments, and an increase of $30.6 million Proposition 98 General Fund for a 2.41 percent COLA for select categorical program. It also includes $31.9 million Proposition 98 General Fund for 0.5 percent enrollment growth, and an increase of $55.3 million Proposition 98 General Fund for additional enrollment growth of 1 percent in 2025-26.
• Student Support Block Grant – A one-time increase of $100 million Proposition 98 General Fund for a flexible block grant for the community college system.
• Common Cloud Data Platform – An increase of $41 million Proposition 98 General Fund, $5 million of which is ongoing, for further scaling of the common cloud data platform across the community college system.
• Calbright College – An increase of $38.1 million Proposition 98 General Fund to support and provide stable funding for Calbright College (the online college) for “base operations as it transitions out of its startup capacity.”
• California Healthy School Food Pathways Program – An increase of $14.3 million Proposition 98 General Fund for community colleges to support the California Healthy School Food Pathways Program, which strengthens the school food service workforce through apprenticeship and training programs.
  
  

Next Steps

The Governor’s budget is a starting point for negotiations between the Administration and the Governor. The Legislature will review the Governor’s budget proposal, holding budget subcommittee hearings over the coming months. The Governor will update his budget proposal in May to reflect updated revenue projections based on 2025 income tax receipts. The Legislature will work to meet a constitutional deadline of adopting a budget by June 15. CCFC will provide additional information as it becomes available during this process.

Rebekah Kalleen
CCFC Executive Director

Below is an update on bills and policy issues of interest to CCFC.

Signed by the Governor

AB 538 (Berman) – Certified Payroll Records

AB 538 is sponsored by the International Union of Operating Engineers, Cal-Nevada Conference. Under current law, certified payroll records are required to be made available upon request by the public through the Division of Labor Standards Enforcement (DLSE) or the awarding body, and the contractor has 10 days to provide the record after a written request. AB 538 specifies that the awarding body must request the records from the contractor or subcontractor when the awarding body is not in possession of them. If the contractor or subcontractor fails to comply within 10 days, the awarding body shall notify DLSE, who may initiate existing penalties against the contractor or subcontractor. CCFC has a “watch” position on this bill. AB 538 was signed into law by the Governor.

AB 648 (Zbur) – Local Zoning Exemption for Housing

AB 648 is sponsored by Santa Monica College, Los Angeles Community College District, and two housing organizations, with the goal of removing barriers to quickly build student housing. The bill states that student and faculty/staff housing projects are not required to comply with the zoning ordinances of a city or county when the project is both:

• On property owned or leased by the community college district;
• Within a one-half mile radius of the main campus or a satellite campus that existed before July 1, 2025.

If the project includes faculty/staff units, the community college district shall ensure that a portion of the units are “made available at affordable rents to extremely low-income faculty and staff and to lower income faculty and staff.” CCFC has a “watch” position on this bill. AB 648 was signed into law by the Governor.

Vetoed by the Governor

AB 699 (Stefani) – Ballot Label Reform

CCFC is disappointed to report that AB 699 (Stefani) was vetoed by the Governor on October 1. CCFC strongly supported AB 699, which aimed to address the negative effects created by AB 195 (Obernolte, 2017). The bill was sponsored by the Non-Profit Housing Association of Northern California. Current law 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 some schools and community colleges to pass local bonds or place them on the ballot.

AB 699 provided the option to include an alternative fiscal disclosure directing voters to an enhanced Voter Guide for more information. The bill provided three options for the alternative fiscal disclosure based on the repayment source. Most community college district local bonds utilizing the alternative statement would use the phrase “See county voter guide for how property taxes repay bonds.”

The Governor vetoed the bill due to concerns about transparency. This action coincided with the Governor’s significant efforts to pass Proposition 50, the November 2025 ballot measure on Congressional redistricting.

Other Bills

AB 48 (Alvarez) – Higher Education Bond

AB 48 would place a higher education bond bill on the ballot in 2026. The bond would fund capital outlay projects at UC, CSU, and community colleges. The total dollar amount, as well as the split between higher education segments, is still to be determined. CCFC has a support position on this bill, as it provides recognition of need for additional state funding for community college capital outlay projects. However, we remain concerned about inclusion of the authorization to use bond proceeds for student housing, as the dollar amount will likely not be high enough to meet core educational facility needs as well as student housing.

This bill is pending in the Senate Rules Committee. The Legislature is considering multiple potential bond measures for the November 2026 ballot, including a $10 billion affordable housing bond [AB 736 (Wicks) and SB 417 (Cabaldon)] and a $23 billion scientific research bond [SB 607 (Wiener)].

AB 90 (Jackson) – Overnight Student Parking Program

AB 90 was “held” on the Senate Appropriations Committee suspense file and did not meet the deadline to continue moving forward in 2025. AB 90 requires the governing board of each community college district to include, as part of the annual campus safety plan, a plan of action to establish a student overnight parking program in designated parking lots on each campus. The governing board would be required to vote on whether to establish the overnight parking program. The plan should address campus security, access to bathroom and shower facilities, and the number of parking spots to be designated. CCFC opposes AB 90 due to impacts on facilities and because it mandates one specific approach to address housing insecurity.

Rebekah Kalleen
CCFC Executive Director

Below is an update on bills and policy issues of interest to CCFC.

Note: This article will be updated after Sept. 12 to specify final outcomes in the Legislature. 

9/15/25 Note: This article has been updated to show the final actions by the Legislature as of September 15, 2025.

Legislation

AB 48 (Alvarez) – Higher Education Bond

AB 48 would place a higher education bond bill on the ballot in 2026. The bond would fund capital outlay projects at UC, CSU, and community colleges. The total dollar amount, as well as the split between higher education segments, is still to be determined. CCFC has a support position on this bill, as it provides recognition of need for additional state funding for community college capital outlay projects. However, we remain concerned about inclusion of the authorization to use bond proceeds for student housing, as the dollar amount will likely not be high enough to meet core educational facility needs as well as student housing. Additionally, CCFC cautions this should only be added if polling indicates it is supported by California voters.

This bill is pending in the Senate Rules Committee and is unlikely to move forward in 2025. This is consistent with the process used for recent bond measures, which were parked in Rules Committee in the second house until the Legislature was ready to finalize the details for a specific election.

AB 90 (Jackson) – Overnight Student Parking Program

We are pleased to report a positive outcome on AB 90, which was “held” on the Senate Appropriations Committee suspense file and did not meet the deadline to continue moving forward in 2025. AB 90 requires the governing board of each community college district to include, as part of the annual campus safety plan, a plan of action to establish a student overnight parking program in designated parking lots on each campus. The governing board would be required to vote on whether to establish the overnight parking program; recent amendments limited that to a one-time (rather than annual) vote. The plan should address campus security, access to bathroom and shower facilities, and the number of parking spots to be designated. CCFC opposes AB 90 due to impacts on facilities and because it mandates one specific approach to address housing insecurity.

AB 538 (Berman) – Certified Payroll Records

AB 538 is sponsored by the International Union of Operating Engineers, Cal-Nevada Conference. Under current law, certified payroll records are required to be made available upon request by the public through the Division of Labor Standards Enforcement (DLSE) or the awarding body, and the contractor has 10 days to provide the record after a written request. AB 538 specifies that the awarding body must request the records from the contractor or subcontractor when the awarding body is not in possession of them. If the contractor or subcontractor fails to comply within 10 days, the awarding body shall notify DLSE, who may initiate existing penalties against the contractor or subcontractor. CCFC has a “watch” position on this bill. It is pending on the Senate floor.

9/15/25 Update: AB 538 was passed by the Legislature and is now awaiting the Governor’s action.

AB 648 (Zbur) – Local Zoning Exemption for Housing

AB 648 is sponsored by Santa Monica College, Los Angeles Community College District, and two housing organizations, with the goal of removing barriers to quickly build student housing. The bill states that student and faculty/staff housing projects are not required to comply with the zoning ordinances of a city or county when the project is both:

• On property owned or leased by the community college district
• Within a one-half mile radius of the main campus or a satellite campus that existed before July 1, 2025.

Recent amendments require that if the project includes faculty/staff units, the community college district shall ensure that a portion of the units are “made available at affordable rents to extremely low income faculty and staff and to lower income faculty and staff.”

CCFC has a “watch” position on this bill. AB 648 was passed by the Senate and is now pending on the Assembly floor for a final vote to concur with recent amendments.

9/15/25 Update: AB 648 was passed by the Legislature and is now awaiting the Governor’s action.

AB 699 (Stefani) – Ballot Label Reform

AB 699 aims to address the negative effects created by AB 195 (Obernolte, 2017). The bill is sponsored by the Non-Profit Housing Association of Northern California and supported by CCFC. Current law 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 some schools and community colleges to pass local bonds or place them on the ballot.

AB 699 provides the option to include an alternative fiscal disclosure directing voters to an enhanced Voter Guide for more information. Recent amendments provide three options for the alternative fiscal disclosure based on the repayment source. Most community college district local bonds choosing the alternative statement would use the phrase “See county voter guide for how property taxes repay bonds.”

AB 699 is pending on the Senate floor. If passed, it will return to the Assembly for a final vote to concur with recent amendments.

9/15/25 Update: AB 699 was passed by the Legislature and is now awaiting the Governor’s action.

Budget Bill Junior – Student Housing and Community College Projects

End-of-session “Budget Bill Junior” AB/SB 105 was introduced on September 8, 2025 and proposes amendments to the 2025-26 Budget Act adopted in June. This Budget Bill Junior includes the following community college provisions:

• Cabrillo Community College District/UCSC Intersegmental Student Housing Project – Provides $87.5 million from state school bond Proposition 2 for the Design-Build project, which was previously approved under the SB 169 program with financing from the University of California.
• Fire Academies – Provides $5 million in one-time funding for fire academy projects, including $4 million for the Mendocino College Fire Academy and $1 million for the Santa Rosa Junior College Fire Academy Training Tower.

AB/SB 105 still needs to be passed by both houses of the Legislature by September 12.

9/15/25 Update: SB 105 was passed by the Legislature and is now awaiting the Governor’s action.

Select Committee on Community Colleges – Student Housing Hearing

The Legislature remains interested in student housing at community colleges, as they pursue solutions to the broader issue of housing affordability in California.

On August 27, 2025, Senator Eloise Gomez Reyes chaired a well-attended hearing of the Senate Select Committee on Community Colleges focused on “Leveraging Community College Housing for a Vibrant Community.” California Community Colleges Chancellor Sonya Christian spoke about the connection between housing insecurity and student outcomes, and the role that student housing projects can play in regional economic development. Three community college district leaders, including Willy Duncan, Superintendent/President of Sierra College and former Chair of CCFC, spoke about their efforts to advance affordable student housing projects and provided suggestions to improve the SB 169 Higher Education Student Housing Grant Program.

Senator Reyes asked what the Legislature can do right now to assist community colleges with their student housing goals given the constrained state budget picture. During public comment, CCFC Legislative Advocate Rebekah Kalleen suggested that the Legislature can help ensure the success of previously-authorized SB 169 projects. One way to do this is to utilize an estimated $218.2 million in authorized but unallocated lease revenue bond authority to supplement projects that need additional funding as a result of the long and complex SB 169 program implementation process.

Rebekah Kalleen
CCFC Executive Director

The final budget includes $228 billion in state General Fund expenditures in 2025-26, plus an estimated $89 billion in special fund spending and $4 billion in spending from bond accounts. 2024-25 revenues came in about $1 billion more than estimated, resulting in more resources for the General Fund, including for public schools and community colleges. The final budget uses $7.1 billion (about 40% of the remaining balance) of the state’s Rainy Day Fund and about $6.5 billion from other cash reserves to help balance the budget while mitigating some of the proposed cuts to safety net programs. The final budget uses cap-and-trade auction proceeds and Proposition 4 climate bond funds to offset General Fund costs for natural resources and environmental protection. The final budget did not include the Governor’s proposed cuts to University of California and California State University, but it did defer some payments to these systems. Policymakers cautioned that potential Federal policy changes and economic uncertainty could significantly impact California and potentially necessitate a reopening of the budget in the coming months.

There were few changes between the Legislature’s Version (see here for more information) and the final budget on issues that may impact community college facilities. Overall, the budget maintains core funding for community colleges.

Community College Capital Outlay Projects

The final budget adopted the Governor’s budget proposal (as amended at the May Revision), providing $54.7 million (Proposition 2 bond funds) to fund 29 new community college capital outlay projects for the preliminary plans and working drawings phases (and in one case for performance criteria). The final budget also provides $13.8 million (Proposition 51 bond funds) for the construction phase of one continuing project: Peralta Community College District, College of Alameda: Aviation Complex Replacement. CCFC advocated in support of this proposal and is pleased to see all projects recommended by the Governor included in the budget. 

Click here to see the list of projects included in the FY 2025-26 budget. 

Student Housing

The final budget does not include any new investments for student housing. SB 101 includes a technical local assistance item providing $2.5 million to support payment of lease revenue bond debt service, as provided for in the schedule submitted by the Public Works Board.

Other Community College Provisions

• COLA – $217.4 million (ongoing Proposition 98 General Fund) to support a 2.3% COLA for Student Centered Funding Formula apportionments. Provides a 2.3% COLA for select categorical programs.
• Enrollment growth – $100 million (one-time Proposition 98 General Fund) in 2024-25 and $139.9 million (ongoing Proposition 98 General Fund) in 2025-26 to support 2.35% enrollment growth.
• Block Grant – $60 million (one-time Proposition 98 General Fund) for a student support block grant.
• Proposition 98 funding split – Includes the Legislature’s modified version of the Governor’s proposal to fund Transitional Kindergarten (TK) outside of the TK-12/California Community Colleges Proposition 98 funding split, shifting $492.4 million from community colleges to TK-12 to support TK expansion. This adjustment to the split would occur beginning in 2025-26, maintaining $259 million at the community colleges for the prior and current fiscal year.
• Deferrals – Defers $408.4 million Proposition 98 General Fund from 2025-26 to 2026-27. Reappropriates $135 million (Proposition 98 General Fund) from FY 2024-25 funding for the part-time faculty health insurance program to help reduce the 2025-26 deferral. Pays back the 2024-25 deferral.
• LA County Fires – $5 million (one-time Proposition 98 General Fund) to develop a grant program for community colleges that are members of the Los Angeles Regional Consortium to assist with workforce recovery efforts and career technical workforce development associated with recovery from the Palisades and Eaton fires.

Rebekah Kalleen
CCFC Executive Director

SB 101 includes $232 billion in General Fund expenditures. The Governor and Legislature appear to agree on the size of the budget problem to be solved. The Legislature’s Version includes $12.3 billion in budget solutions, which aligns with the Governor’s estimate of a $12 billion deficit in FY 2025-26. These solutions include a mix of spending reductions ($3.5 billion in FY 2025-26), revenue/borrowing ($7.8 billion), and other solutions like fund shifts, deferrals, and delays ($1.0 billion). The Legislature’s Version rejects a number of the Governor’s proposals, including cuts to safety net programs and UC and CSU. It includes provisions aimed at housing affordability and emergency relief for local governments to address wildfire recovery in Los Angeles and transit challenges in the Bay Area. The Legislature’s Version cautions that the overall budget picture includes significant uncertainty tied to the economy and potential Federal policy actions.

The Legislature’s Version of the budget includes the following provisions that may affect community college facilities.

Community College Capital Outlay

We have good news to report! The Governor’s January budget proposed $51.5 million (one-time Proposition 2 bond funds) for 29 new community college capital outlay projects for the preliminary plans and working drawings phases (and in one case for performance criteria). The Governor’s May Revision made minor changes to this proposal, to remove one new project (Grossmont-Cuyamaca CCD, Grossmont College – Gymnasium) and to add one new project (Los Rios CCD, American River College – Davis Hall), maintaining the total of 29 new projects at $54.7 million in FY 2025-26 (worth approximately $775 million through construction). The Governor also proposes to fund the construction phase for one continuing project worth $13.8 million (one-time Proposition 51 bond funds): Peralta CCD, College of Alameda – Aviation Complex Replacement.

As the Legislature considered the capital outlay proposal during budget subcommittees, the Legislative Analyst’s Office raised concerns, including that the share of funding allocated for modernization projects could be too low, and that nearly one third of the projects are gymnasiums (9 out of 29). See this prior CCFC update for more information.

CCFC advocated in support of the Governor’s January budget, with the adjustments made at the May Revision. We urged that any changes to the scoring system used to select state-funded projects should be done through a robust stakeholder engagement process, and should be applied prospectively to future funding rounds (not the FY 2025-26 funding round). We offered for CCFC to serve as a resource and partner in any such process to update the scoring criteria.

The Legislature’s Version of the budget adopts the Governor’s January budget proposal, as amended at the May Revision, without making changes to the selected projects. While not final until the Governor and Legislature reach agreement on the full FY 2025-26 budget, it is a good sign that they appear to be in alignment.

Click here to see the list of projects proposed for funding by the Governor. 

California Environmental Quality Act (CEQA)

The Legislature remains very focused on ways to improve housing production and affordability in California. As such, the Legislature’s Version of the budget includes a plan to adopt trailer bill language to amend the CEQA process for infill housing and other infrastructure projects. CCFC has not seen any details on this, but we have received indications that schools and community colleges could be included.

Student Housing

The Legislature’s Version of the budget does not include any new investments for student housing, in alignment with the Governor’s budget proposals. SB 101 includes a technical local assistance item providing $2.5 million to support payment of lease revenue bond debt service, as provided for in the schedule submitted by the Public Works Board.

Two colleges have indicated they are no longer moving forward with SB 169 affordable student housing projects, worth a total of $136.9 million. Additionally, there is $81.3 million in unspecified lease revenue bond authority within the SB 169 program. The Legislature’s Version of the budget does not appear to make any changes to these associated lease revenue bond authorizations (i.e. does not rescind the authority) or to any other statutory provisions of the SB 169 program, in alignment with the Governor’s proposals.

Other Community College Provisions

-        Student Centered Funding Formula (SCFF) – the Legislature’s Version approves the Governor’s May Revision proposal to provide $217.4 million (ongoing Proposition 98 General Fund) to support a 2.3% cost-of-living adjustment for SCFF apportionments.

-        Proposition 98 Funding Split – the Legislature’s Version modifies the Governor’s proposal to fund Transitional Kindergarten outside of the TK-12/California Community Colleges Proposition 98 funding split. Instead of applying that split in FY 2023-24 and FY 2024-25, the Legislature’s Version would commence this proposal in 2025-26, maintaining $260 million at the community colleges for the prior and current fiscal year. This issue is related to “rebenching” the Minimum Guarantee to reflect implementation of universal Transitional Kindergarten at the K-12 level.

-        Deferral – the Legislature’s Version modifies the Governor’s May Revision proposal to defer $531.6 million (Proposition 98 GF) in SCFF funding from 2025-26 to 2026-27. Instead, the Legislature’s Version defers $377.5 million.

-        Student Support Block Grant – the Legislature’s Version includes $80 million (one-time Proposition 98 General Fund) to support a student support block grant.

-        Technology Systems – the Legislature’s Version approves the Governor’s May Revision proposals to:

o   Withdraw the proposal for the Collaborative Enterprise Resource Planning Project – to achieve $168 million in Proposition 98 savings.

o   Reduce the investment in the Common Cloud Data Platform to $12 million (one-time Proposition 98) – to achieve $150.5 million in Proposition 98 savings.

Next Steps

It is important to emphasize that the work to pass California’s FY 2025-26 budget is still not complete. The Governor now has twelve days to sign, veto, or line-item veto SB 101. There will almost certainly be additional budget bills to amend SB 101 and reflect the final negotiated agreement. Additional trailer bills to implement budget policy changes will likely be forthcoming in the coming days and weeks, and again in August when the Legislature returns from summer recess. Stay tuned for additional information from CCFC on any significant changes to the provisions highlighted above in the final negotiated budget for FY 2025-26.

Rebekah Kalleen
CCFC Executive Director

AB 48 (Alvarez) – Higher Education Bond

AB 48 would place a higher education bond bill on the ballot in 2026. The bond would fund capital outlay projects at UC, CSU, and community colleges. The total dollar amount, as well as the split between higher education segments, is still to be determined. Assembly Member Alvarez is the chair of the Assembly Budget Subcommittee No. 3 on Education Finance and recently dedicated an entire hearing to the state’s higher education facilities needs (for more information, click here for a recent CCFC update). CCFC has a support position on this bill, as it provides recognition of the need for additional state funding for community college capital outlay projects. Recent amendments include:

• Removal of problematic provisions related to K-12 developer fees and local bonding capacity increases, after CCFC raised significant concerns.
• Authorization to use bond proceeds for student housing. While this may help meet state and local policy goals, CCFC cautions that this should only be added if polling indicates it is supported by California voters.

AB 48 was passed by the Assembly and is now pending committee assignment in the Senate.

AB 90 (Jackson) – Overnight Student Parking Program

AB 90 requires the governing board of each community college district to include, as part of the annual campus safety plan, a plan of action to establish a student overnight parking program in designated parking lots on each campus. The governing board would be required to vote to establish the overnight parking program, and a vote would be conducted annually until the parking program is established at each campus. The plan should address campus security, access to bathroom and shower facilities, and the designation of at least one parking lot and at least 50 parking spots. Students should have access to the program until they are provided a sustainable alternative that provides stable housing for more than three weeks. CCFC is opposed to this bill due to impacts on facilities and because it mandates one specific approach to address housing insecurity. Recent amendments removed CSU from the bill and it now pertains only to community colleges. AB 90 was passed by the Assembly and is now pending committee assignment in the Senate.

AB 538 (Berman) – Certified Payroll Record Requests

AB 538 is sponsored by the International Union of Operating Engineers, Cal-Nevada Conference. Under current law, certified payroll records are required to be made available upon request by the public through the Division of Labor Standards Enforcement (DLSE) or the awarding body, and the contractor has 10 days to provide the record after a written request. AB 538 specifies that the awarding body must request the records from the contractor or subcontractor when the awarding body is not in possession of them. If the contractor or subcontractor fails to comply within 10 days, the awarding body shall notify DLSE, who may initiate existing penalties against the contractor or subcontractor. CCFC currently has a “watch” position on this bill but is following it closely. AB 538 was passed by the Assembly and is now pending committee assignment in the Senate.

AB 648 (Zbur) – Local Zoning Exemption for Housing

AB 648 is sponsored by Santa Monica College, Los Angeles Community College District, and two housing organizations (Abundant Housing LA, Student Homes Coalition), with the goal of removing barriers to quickly build housing for students. The bill exempts student and faculty/staff housing projects from “local zoning regulations” of a city or county when constructed on property owned or leased by a community college district. Recent amendments limit the exemption to parcels within a one-half mile radius of the main campus or a satellite campus that existed before July 1, 2025. Some legislators, as well as cities and counties, have raised concerns about a blanket exemption that bypasses the input of local jurisdictions. CCFC has a “watch” position on this bill. AB 648 was passed by the Assembly and is now pending committee assignment in the Senate.

AB 699 (Stefani) – Ballot Label Reform

AB 699 aims to address the negative effects created by AB 195 (Obernolte, 2017). The bill is sponsored by the Non-Profit Housing Association of Northern California and supported by CCFC. Current law 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 some schools to pass local bonds or place them on the ballot.

AB 699 provides the option to include an alternative fiscal disclosure directing voters to an enhanced Voter Guide for more information. Recent amendments were taken in Assembly Elections Committee to modify the alternative ballot label statement to “See County voter guide for detailed tax rate information.” AB 699 was passed by the Assembly and is now pending committee assignment in the Senate.

AB 905 (Pacheco) – Bond Oversight and Accountability

The first version of AB 905 created detailed reporting and disclosure requirements for local bonds that would be duplicative of the accountability and transparency mechanisms required by Proposition 39 (2000), which include annual independent financial and performance audits and Citizens’ Oversight Committees. CCFC adopted an “Oppose Unless Amended” position and requested an amendment to exempt community colleges. After CCFC worked with the author’s office, the bill was amended to no longer address local bonds and instead focus on goals, objectives, and performance indicators for state bonds. While the bulk of CCFC’s opposition was addressed, we still remained concerned about potential pitfalls and duplication of effort for state bonds. AB 905 was ultimately held on the suspense file in Assembly Appropriations Committee and will not move forward at this time.

Rebekah Kalleen
CCFC Executive Director

Today, the Governor released his May Revision budget update for FY 2025-26, which includes $321.9 billion in total spending (including $226.4 billion in General Fund).

The Governor opened his press conference by discussing the climate of “deep uncertainty” that California faces as a result of Federal policy changes. He highlighted that California is currently the fourth largest economy in the world, with $4.1 trillion per year in output. As such, the Governor indicated that tariffs and other Federal policy changes have had a “disproportionate” impact on California. The Governor said he does expect cuts from the Federal government, but this assumption has not been built into the May Revision presented today. The May Revision does not forecast a traditional recession, but it does reflect changing national conditions that “economists consider to be a ‘growth recession’ – marked by a substantial slowdown in Gross Domestic Product growth combined with lower job growth and higher unemployment.”

The Governor shared that revenue from January to April 2025 exceeded budget expectations by $7.9 billion. However, the May Revision now estimates a $16 billion deficit over the next two years, including $12 billion in FY 25-26, due to reduced capital gains, weaker corporate taxable profits, and lower wages and Personal Income Tax withholdings, which the Governor attributed to the Federal policy changes. The Governor emphasized that the size of this problem is mild compared to prior years, calculating that the estimated deficit represents 5.8% of the General Fund budget. The May Revision includes solutions such as spending reductions, internal borrowing, and fund shifts. It maintains a planned withdrawal of approximately $7.1 billion in reserves from the Budget Stabilization Account and maintains a total reserve balance of approximately $15.7 billion at the end of FY 25-26.

Community College Capital Outlay

The Governor’s January budget proposed to begin implementation of Proposition 2, the state school bond passed by voters in November 2024. This included $80.1 million General Obligation bond funds for 31 community college capital outlay projects. Of that, $51.5 million (one-time Proposition 2 bond funds) would be provided to 29 new community college capital outlay projects for the preliminary plans and working drawings (and in one case for performance criteria) phases.  

The Legislature has been reviewing this proposal. For more information, see this recent CCFC update: Legislature Reviews the Governor's Prop 2 CCC Capital Outlay Budget Proposal

The May Revision does not include significant changes to this proposal. However, we are hearing there are a few adjustments to a handful of individual projects, with additional information to be available in the coming days.

Update 5/15/25: In the “Joint Analysis – Governor’s 2025-26 May Revision” document, the Chancellor’s Office reports the addition of one new project (Los Rios, American River College – Davis Hall – Total Cost $81,143,000). They also report the removal of one new project (Grossmont-Cuyamaca CCD, Grossmont College – Gymnasium) and one continuing project (Coast CCD, Golden West College: Fine Arts Renovation) at the districts’ request.

Student Housing

The Governor’s January budget did not include any additional investments for student housing. The Chancellor’s Office has requested an additional $1.1 billion for affordable student housing projects using the statewide lease-revenue bond approach adopted in the 2024 state budget. The Administration is continuing to work with community colleges to successfully implement projects that received funding awards in prior budgets, and we are awaiting additional detail from the Governor’s May Revision trailer bill proposals for any other proposed changes.

Update 5/15/25: On the evening of 5/14/25, the Chancellor’s Office released the “Joint Analysis – Governor’s 2025-26 May Revision” document, which states: “Since the implementation of the enacted budget, two student housing projects at College of the Canyons and San Diego City College are no longer moving forward as originally considered. The College of the Canyons has rescinded its plans, while San Diego City College has indicated its plans to utilize an alternative financing structure. In response to these changes, the May Revision rescinds its $136.9 million allocation to support these affordable student housing projects. In addition, the $81.3 million in unspecified appropriation provided in the 2023-24 State Budget for affordable housing has also been rescinded.”

Additionally, the Chancellor’s Office has shared in an email sent on the evening of 5/14/25 that, “in response to California’s fiscal condition, the Department of Finance has indicated that colleges with Higher Education Student Housing Construction Statewide Lease Revenue Bond funding will not receive additional state funding and will need to address cost overruns locally and/or build the project to the current budget.” 

CCFC is in the process of verifying this information, as it was not included in the Governor’s May Revision documents that are made available to the public, including the May Revision summary and proposed trailer bill language that was posted by the Department of Finance as of noon on 5/15/25.

The Governor’s January budget did not include any support for deferred maintenance and instructional support. The May Revision does not appear to make any change to this.

Proposition 98

The revised Minimum Guarantee for TK-14 schools is calculated to be $98.5 billion in 2023-24, $118.9 billion in 2024-25, and $114.6 billion in 2025-26. These revised Proposition 98 levels represent an increase of approximately $2.9 billion over the three-year period relative to the 2024 Budget Act, which is a decrease of approximately $4.6 billion from the Governor's January Budget. 

The May Revision proposes to appropriate the 2024-25 Guarantee at $117.6 billion, instead of the currently calculated level of $118.9 billion. This is generally consistent with the Governor’s January Budget, however the difference between the appropriated and the calculated levels is less than at the Governor's January Budget, at $1.3 billion instead of $1.6 billion. This proposal is due to the “inherent risk in revenue projections.”

The Proposition 98 Minimum Guarantee is “rebenched” to reflect continued implementation of universal Transitional Kindergarten at the K-12 level and property tax backfills related to the January 2025 fires in the county of Los Angeles. The May Revision indicates that over the three-year budget window, this has resulted in $492.4 million in increased resources for community colleges. The May Revision shifts the full TK expansion funding to the TK-12 education side of the Proposition 98 budget, reducing by a like amount from community colleges. 

Additional Community College Issues

• Student Centered Funding Formula (SCFF) Growth Adjustment, Deferral, and Reserves – An ongoing increase of $109.5 million to fund 2.35 -percent enrollment growth in the SCFF in 2025-26, which is an increase from the Governor’s January Budget proposal of 0.5 percent. To fully fund the SCFF and maintain the level of 2025-26 apportionments, the May Revision proposes deferring $531.6 million in SCFF funding from 2025-26 to 2026-27. Budgetary deferrals of $243.7 million for the CCCs from the 2024 Budget Act are fully repaid in the three-year budget window. To fully fund the SCFF, the May Revision uses $59 million from the Proposition 98 Rainy Day Fund to support SCFF costs in 2025-26.
• CCC Categorical Program COLA – To reflect a change in the cost-of-living adjustment from 2.43 percent to 2.3 percent, the May Revision includes an ongoing decrease of $12.9 million Proposition 98 General Fund for the SCFF and an ongoing decrease of $122,000 Proposition 98 General Fund for select categorical programs and the Adult Education Program.
• Reductions to January Proposals – The May Revision includes reductions to the following proposals in the Governor’s January budget:
  • Collaborative Enterprise Resource Planning (ERP) Project – Withdrawal of a one-time investment of $168 million one-time Proposition 98 General Fund for the Collaborative ERP Project, which would have funded the procurement of an ERP platform to upgrade outdated systems that aimed to standardize student and staff experience throughout the CCC system.
    
  • Common Cloud Data Platform – A $150.5 million reduction to a one-time investment of $162.5 million, of which $29 million was ongoing, for the Common Cloud Data Platform, which will leverage existing local districts’ student data systems to provide near real-time data reporting. When accounting for this reduction, the May Revision provides $12 million one-time Proposition 98 General Fund for this initiative.
  • Career Passport and Credit for Prior Learning – The May Revision reduces the Career Passport proposal from $50 million to $25 million one-time and the Credit for Prior Learning proposal from $50 million to $15 million one-time and from $7 million to $5 million ongoing. These proposals are part of the Administration's investments in the Master Plan for Career Education.

Next Steps

Over the next few weeks, the Senate and Assembly will continue to review the Governor’s budget proposals, working toward a constitutional deadline of June 15 to pass the budget for FY 2025-26. The Legislature and Governor will also develop trailer bills that contain policy changes to enact the budget.

Rebekah Kalleen
CCFC Executive Director

The Governor’s January Budget proposed to fund 29 new community college capital outlay projects, providing $51.5 million in Proposition 2 bond funds for preliminary plans and working drawings (and in one case for performance criteria). These projects are worth approximately $700 million through construction. 

These projects were selected using the scoring metrics developed by the Chancellor’s Office and adopted by the Board of Governors in September 2020, intended to align capital outlay priorities with the Vision for Success. The update collapsed priority funding categories from 6 to 3 and revised the metrics used to determine priority points. Additionally, the distribution of funding across categories was modified as follows:

• Category A – Life and Safety Projects – Receive up to 50% of total available funding
• Category M – Modernization Projects – Receive 65% of remaining total funding
• Category G – Growth Projects – Receive 35% of remaining total funding.
  
  

Proposition 2 is the first major funding source to utilize the new scoring process.

The Legislative Analyst’s Office (LAO) reviewed the Governor’s budget proposal and raised a number of issues for consideration by the Legislature in a recent report, including:

• The share of funding allocated for modernization projects could be too low. LAO acknowledged that at the time the new scoring system was adopted in September 2020, the allocation of funding between modernization and growth projects generally reflected the system’s identified capital outlay needs. However, in the most recent five-year capital outlay plan, modernization projects account for about 80 percent of the capital outlay needs (in dollars) identified for 2025-26 through 2029-30. LAO indicated that the increase in online education reduces the need for colleges to add new space.
• Nearly one-third of the selected projects are gymnasiums (9 out of 29 proposed new projects). LAO explained that under the old scoring system, gymnasiums and other facilities for activities such as performing arts and child development were in a separate category capped at 15 percent of available funding (the former “campus completion” category). However, under the new scoring system, gymnasiums compete with all other types of facilities and are treated the same as other academic space. LAO asked the Legislature to consider the trade-offs between funding gymnasiums or other facilities that “more directly support instruction.”
• Rationale for certain scoring metrics is unclear. LAO raised questions about two scoring metrics, including additional points for projects on a campus with more FTE students and for projects located in “Regions of High Need” (the Central Valley, Sierras, Inland Empire, and Far North). 
  
  

LAO suggested that the Legislature could direct the Chancellor’s Office to adjust its scoring system to address these issues. 

Both houses of the Legislature have discussed this issue in detail during budget subcommittee hearings. On Tuesday, May 6, the Assembly Budget Subcommittee No. 3 on Education Finance discussed this during a broader hearing on funding needs for higher education facilities. LAO presented their report and raised the questions highlighted above. These concerns seemed to resonate with the subcommittee members, including Subcommittee Chair David Alvarez and Assembly Member Mike Fong, co-author of AB 247 (which placed Proposition 2 on the ballot) and chair of Assembly Higher Education Committee. Chris Ferguson (Executive Vice Chancellor of Finance and Strategic Initiatives, Chancellor’s Office) assured the subcommittee that gymnasiums house academic programming, and that more gyms are prioritized now because prior bonds weren’t able to fund them. This was an information-only hearing that did not include any action, but the subcommittee did find the argument that too few resources were directed to modernization projects to be compelling.

CCFC is advocating in support of the Governor’s budget proposal to fund 29 new capital outlay projects using the proceeds of Proposition 2. During the recent subcommittee hearing, CCFC Legislative Advocate Rebekah Kalleen testified in support of the Governor’s proposal. While members of the Legislature and their staff were asking important questions to ensure effective distribution of the funding, it would be highly disruptive to change the criteria used to evaluate project proposals well after they have been submitted. If the Legislature chose to go back to the drawing board and direct the Chancellor’s Office to develop new scoring criteria before funding any Prop 2 projects, this would likely create years of delay – meaning fewer projects would ultimately be funded by the $1.5 billion provided to community colleges due to cost escalation. 

Next Steps – The Governor will release his May Revision budget update by May 14, reflecting tax revenue information through April. The Legislature will review the May Revision and work toward adopting a budget by the constitutional deadline of June 15. 

Click here for a list of the projects included in the Governor’s January budget proposal.

Click here for LAO’s recent report on this issue.

Rebekah Kalleen
CCFC Executive Director

Members of the Legislature introduced over 2,500 new bills for consideration in the 2025 legislative session. Below is an update on a selection of priority bills that may impact community college facilities.

AB 48 (Alvarez) – Higher Education Bond

AB 48 would place a higher education bond bill on the 2026 primary ballot. The bond would fund capital outlay projects at UC, CSU, and community colleges. The total dollar amount, as well as the split between higher education segments, is still to be determined. Assembly Member Alvarez is the chair of the Assembly Budget Subcommittee No. 3 on Education Finance. CCFC has a support position on this bill, as it provides recognition of the need for additional state funding for community college capital outlay projects. The bill is scheduled to be heard in Assembly Higher Education Committee on April 22.

AB 90 (Jackson) – Overnight Student Parking Program

AB 90 is a reintroduction of a bill to address community college student housing insecurity. Prior efforts in 2018 and 2024 stalled in the Legislature. In this version, AB 90 would require the governing board of each community college district to include, as part of the annual campus safety plan, a plan of action to establish a student overnight parking program in designated parking lots on each campus. The governing board would be required to vote to establish the overnight parking program, and a vote would be conducted annually until the parking program is established at each campus. The plan should address campus security, access to bathroom and shower facilities, and the designation of at least one parking lot and at least 50 parking spots. Students should have access to the program until they are provided a suitable alternative, such as a grant to secure housing, a hotel voucher, or rapid rehousing referral services. CCFC is opposed to this bill due to impacts on facilities and because it mandates one specific approach to address housing insecurity. AB 90 was passed by Assembly Higher Education Committee and is pending in Assembly Appropriations Committee.

AB 538 (Berman) – Certified Payroll Record Requests

AB 538 is sponsored by the International Union of Operating Engineers, Cal-Nevada Conference. Under current law, certified payroll records are required to be made available upon request by the public through the Division of Labor Standards Enforcement (DLSE) or the awarding body, and the contractor has 10 days to provide the record after a written request. AB 538 specifies that the awarding body must request the records from the contractor or subcontractor when the awarding body is not in possession of them. If the contractor or subcontractor fails to comply within 10 days, the awarding body shall notify DLSE, who may initiate existing penalties against the contractor or subcontractor. CCFC currently has a “watch” position on this bill but will be following it closely. AB 538 was passed by Assembly Labor and Employment Committee and is pending in Assembly Appropriations Committee.

AB 648 (Zbur) – Local Zoning Exemption for Housing

AB 648 is sponsored by Santa Monica College, Los Angeles Community College District, and two housing organizations (Abundant Housing LA, Student Homes Coalition). The bill exempts student and faculty/staff housing projects from “local zoning regulations” of a city or county when constructed on property owned or leased by a community college district. AB 648 was recently heard and passed by the Assembly Higher Education Committee, and it is now pending in Assembly Local Government Committee. The author indicated that projects can be stalled for years as a result of the onerous local rezoning process, and, with so many housing insecure students, the state should remove barriers to quickly increase the housing supply. He also argued that the bill would extend to community colleges the same authority that UC and CSU already have to build housing regardless of how their property is zoned. During the committee discussion, legislators raised concerns about a blanket exemption or bypassing local jurisdictions. CCFC has a “watch” position on this bill.

AB 699 (Stefani) – Ballot Label Reform

AB 699 is a new bill aimed at addressing the negative effects created by AB 195 (Obernolte, 2017). The bill is sponsored by the Nonprofit Housing Association of Northern California and supported by CCFC. 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 some schools to pass local bonds or place them on the ballot. 

AB 699 provides the option to take an alternative path. In lieu of providing the ballot label information required by AB 195, AB 699 allows local bonds and tiered taxes to include the statement “See voter guide for measure information statement” on the 75-word ballot label. It creates additional financial disclosures in the voter guide’s measure information statement, such as a plain language description of why rates may change year to year. AB 699 is scheduled for its first hearing on April 9 in the Assembly Elections Committee.

AB 905 (Pacheco) – Bond Oversight and Accountability

The first version of AB 905 created detailed reporting and disclosure requirements for local agencies, including community colleges, that issue local bonds. The bill required the governing body to develop and publicly disclose specific information about a general obligation bond within 90 days after the bond’s approval by voters, including the goals and objectives of the bond, detailed performance indicators, and data collection and baseline measurements. The bill required specific information to be posted on the public body’s website, including an overview of the programs to be funded, accountability criteria, and detailed information about the bond. Additionally, AB 905 required a public body to provide a written report to various state entities regarding the outcomes of the bond expenditures. CCFC adopted an “Oppose Unless Amended” position and requested an amendment to exempt community colleges. This is because AB 905 was duplicative of the accountability and transparency requirements for school bonds authorized pursuant to Proposition 39 (2000), including annual independent financial and performance audits and Citizens’ Oversight Committees. After working with the author’s office, the bill was amended on March 28, 2025. It no longer requires this information and reporting for local bonds, and it instead now focuses the disclosure and reporting requirements on state bond measures. CCFC will continue to engage with the author’s office on this important issue. 

Rebekah Kalleen
CCFC Executive Director

Below is a selection of bills and their final outcomes in the legislative process.

Procurement & Contracting

AB 2192 (Juan Carrillo) – CUPCCAA Bid Limits
Status: Signed by Governor
CCFC Position: Watch

AB 2192 updates the CUPCCAA bid limits, which are set in statute and may be adjusted every five years based on a recommendation from the California Uniform Construction Cost Accounting Commission (Commission). AB 2192 makes the following changes:

• Force account/negotiated contract/purchase order limit – increase from $60,000 to $75,000
• Informal bid limit – increase from $200,000 to $220,000

AB 2192 also expands the Commission’s authority to review potential violations when an “interested party presents evidence,” adding potential violations related to bid splitting or exceeding the CUPCCAA bid limits. AB 2192 does not provide details on what this proceeding would look like, such as whether the local agency would be able to address the Commission to provide an explanation of its contracting decisions. AB 2192 also adds “installation” to the definition of a public project under CUPCCAA. Prior versions of the bill proposed to add a new limit for projects performed by negotiated contract or purchase order, but the final version of the bill did not include this new limit category.

SB 984 (Wahab) – PLAs for State-Funded Projects
Status: No longer pertains to community colleges; vetoed by Governor
CCFC Position: Neutral (previously Oppose Unless Amended)

SB 984 required a Project Labor Agreement (PLA) for “major state construction projects.” The original version of this bill applied to community college projects funded by state bonds. CCFC requested and received an amendment to remove community colleges from the bill, due to concerns that this bill could inhibit the participation of some colleges in the state capital outlay program, and potential effects on student housing projects. The final bill required the Judicial Council and CSU to select a minimum of 3 major construction projects to require a PLA. The Governor vetoed the bill due to concerns that it could result in additional cost pressures that were not accounted for in this year’s budget.

SB 1325 (Durazo) – Best Value Procurement
Status: Died on Assembly Appropriations Committee suspense file
CCFC Position: Watch

SB 1325 permitted a state or local agency to use best value procurement for the purchase of equipment with a base value of $250,000 or more. SB 1325 specified that a contract award could be determined by objective criteria related to price, quality, and other qualifications including environmental, community, and job quality benefits. SB 1325 intended to simplify the patchwork of best value authorizations and allow for consideration of values such as high-quality job creation.

Energy & Climate

SB 1374 (Becker) – Energy Generation for Customers with Multiple Meters
Status: Vetoed by Governor
CCFC Position: Support

SB 1374 attempted to address inequities in the Net Billing Tariff Aggregation that make it difficult for energy generation projects to pencil out. Currently, based on a recent Public Utilities Commission (PUC) action, non-residential customers (including community colleges) with multiple meters have to sell the power they generate back to the utility at low prices and immediately buy it back at higher retail prices. SB 1374 required the PUC to update its tariffs for non-residential utility customers with multiple meters to give credit for self-consumption similar to the tariff for residential/single meter customers. While this bill faced an uphill battle in the Legislature, the Governor ultimately vetoed it due to concerns that SB 1374 would shift costs to residential ratepayers.

Student Housing

 AB 1818 (Jackson) – Student Overnight Parking on Campus
Status: Died on Senate Appropriations Committee suspense file
CCFC Position: Watch

AB 1818 was a reintroduction of a concept from AB 302 (Berman) [2019], which previously stalled in the Legislature. AB 1818 created a pilot program at 20 community college campuses to allow overnight parking in a campus-owned or controlled parking lot or structure by a student enrolled at one of its campuses. The college could not cite the student if the student used the vehicle for housing and had a valid parking permit issued by the campus. CCFC did not have a formal position on the bill but we did have concerns about impacts to facilities, such as restrooms/showers, maintenance, security, custodial, and more.

AB 2076 (McCarty) – Student and Workforce Revolving Loan Fund
Status: Died on the Senate Appropriations Committee suspense file
CCFC Position: Watch

AB 2076 required the Controller to transfer $200 million from the Pooled Money Investment Account to the Student Housing Revolving Loan Fund in FY 2024-25, to allow the program to be funded using internal state borrowing. The RLF program would provide low-interest loans for student and workforce housing projects at community colleges, UC, and CSU. The FY 24-25 budget eliminated planned funding for the RLF program, including pulling back $300 million (one-time General Fund) previously intended to be appropriated each year from 2024-25 through 2028-29, and reverting $194 million of $200 million that was appropriated in 2023-24.

AB 2567 (Mathis) – Annual Student Housing Data Reporting
Status: Signed by Governor
CCFC Position: Watch

AB 2567 expands existing annual student housing data reporting to specify how many students in each category are veterans. This data reporting applies to campus-owned, campus-operated, or campus-affiliated student housing facilities, and includes information such as how many enrolled students are veterans, and how many students on campus housing waiting lists – or have removed themselves from these waiting lists – are veterans.

Other

SB 986 (Seyarto) – State and Local Ballot Label Language
Status: Died in Senate Elections and Constitutional Amendments Committee
CCFC Position: Watch

SB 986 required the ballot label for state and local bond measures to include a specific fiscal impact statement that identifies the principal and interest on the bonds and the annual payment amount. This would be done with a specific 27-word (or more) statement and would be in addition to the fiscal disclosure information that is already required by AB 195 (chaptered 2017), which requires local bonds to state the rate, duration, and amount expected to be raised annually for a proposed tax measure. The bill failed in its first committee before CCFC was able to take a formal position, however we had significant concerns that the bill could exacerbate voter confusion about bond measures while reducing the space available to explain how bond proceeds would be used to benefit the community.

Rebekah Kalleen
CCFC Executive Director

You can help support Prop 2! CCFC is asking our community college district members to pass a Board resolution in support of Prop 2. Resolutions help communicate the importance of the bond for local communities and the students they serve. The campaign is working to develop a broad coalition of supporters, including community colleges.

Click here for a sample Board of Trustees Support Resolution Template

Please email a copy of your resolution to Jessica Contreras at jcontreras@m-w-h.com.

For more information about efforts to support Prop. 2, please see the CCFC Issues Committee webpage.

Thank you for your support!

In an odd twist, both Governor Newsom and Lieutenant Governor Kounalakis are out of the state today.  As such, Senate Pro Tem Mike McGuire is serving as the acting Governor.  He signed both AB 247 and SB 867, which places a $10 billion climate bond on the November 2024 ballot.

Additionally, the Legislature passed and the (acting) Governor signed AB 440, which stipulates the order of measures on the November ballot.  Per AB 440, the school bond will be shown on the ballot as the first of multiple measures passed by the Legislature, with a number of Proposition 2! 

Click here for the full text of AB 247.  The bond will fund the current community college capital outlay program, with the addition of new accountability provisions.  These include an independent performance audit and a required public hearing before the governing board approves a project that seeks state bond funding. 

CCFC thanks the Legislature for their leadership on this important issue, especially during a challenging fiscal year.  Stay tuned for more information in the coming days on ways your district or organization can support the successful passage of the bond in November!

Rebekah Kalleen
CCFC Executive Director

The negotiated agreement is now in print in AB 247 [click here to view]. There are no significant changes to the community college capital outlay program, with one exception: new accountability provisions that apply to both K-12 and community colleges. These include an independent performance audit and a required public hearing before the governing board approves a project that seeks state bond funding.

Next Steps: AB 247 will be heard in Senate Education Committee today at 1:00 p.m., after which it will head to the Senate floor for a planned vote on Wednesday, July 3. After the Senate votes, the bill will return to the Assembly for a concurrence vote, also planned for July 3, and then head to the Governor for his signature. CCFC Executive Director Rebekah Kalleen will serve as one of the two lead witnesses in support of the bill at the Senate Education Committee hearing this afternoon.

The Legislature is also planning to act on a $10 billion climate bond for November 2024 along this same timeline, which has been amended into SB 867. The bond will fund drinking water, wildfire prevention, drought preparedness, and clean air programs.

While this bond will not meet all our many needs, it will go a long way toward building new educational and job training spaces, as well as facilities to meet basic needs and ensure student success. CCFC is grateful to be included in the school bond and we thank our legislative leaders and the Governor for recognizing the importance of community college facilities.

Rebekah Kalleen
CCFC Executive Director

The Legislature indicates that the budget protects and strengthens school funding, while preserving key social services and housing programs, which was a key point of contention between the Legislature and Governor in reaching a final agreement. The budget closes a shortfall in FY 2024-25 of over $45 billion, $17 billion of which was dispensed with through early action in April 2024. The Legislature emphasizes this deficit resulted primarily from an overstatement of the projected surplus in the 2022 Budget Act, coupled with the IRS delay of the 2022 tax filing deadline from April to November 2023. The budget includes total General Fund expenditures of $211.5 billion in FY 2024-25. The primary solutions include (but are not limited to) $16 billion in program reductions (i.e. spending cuts), $13.6 billion in additional revenues, $6 billion in reserves, and $6 billion in fund shifts. Revenue solutions include a three-year suspension of medium-sized and large businesses’ use of net operating loss (NOL) deductions and tax credits, beginning in 2024. The budget is balanced for both FY 2024-25 and FY 2025-26, while leaving approximately $11 billion in the Rainy Day Fund reserves for future use.

Proposition 98

The budget includes a modified version of a recent proposal to suspend Proposition 98. The Legislature indicates that the state budget cannot currently cover all Proposition 98 obligations over the two-year period beginning in 2022-23. As such, the budget accrues $6.2 billion that was previously appropriated to schools for 2022-23 over several years beginning in FY 2026-27 – meaning those funds will be accounted for in the “General Fund accounting ledgers” over several future years, instead of the year in which they were appropriated.

Proposition 98 is suspended in FY 2023-24 at a reduced level of $98.5 billion, creating over $8 billion of “maintenance factor” (a higher percentage of future growth than normal until the maintenance factor is paid and built back into the Proposition 98 base). Use of $8.4 billion from the Proposition 98 reserve helps to protect classroom spending despite the suspension.

Proposition 98 is funded at $115.3 billion in FY 2024-25, with an overall increase of $1.9 billion over a three-year period beginning in 2022-23 as compared to the May Revision. The budget also includes $3.6 billion in deferrals from 2023-24 to 2024-25, as well as $246 million from 2024-25 to 2025-26.

Community College Provisions

The budget includes (but is not limited to) the following provisions for community colleges:

• 1.07% cost-of-living adjustment for apportionments and select categorical programs.
• 0.5% enrollment growth.
• Deferral of $446.4 million (Proposition 98 General Fund) associated with apportionments from FY 2023-24 to FY 2024-25. Deferral of $246.7 million (Proposition 98 General Fund) from FY 2024-25 to FY 2025-26. Uses $545.9 million (Proposition 98 General Fund) from the Public School System Stabilization Account (PSSSA) to support apportionment costs in FY 2023-24, and uses $241.8 million (Proposition 98 General Fund) from PSSSA to support a repayment of the FY 2022-23 categorical program deferral in FY 2023-24.
• An expansion of nursing programs, providing $60 million each year for five years, beginning in FY 2024-25, within Strong Workforce program funding. Includes trailer bill language to develop a grant program to distribute the funding.
• Provides $20 million (one-time Proposition 98 General Fund) to increase support for the Financial Aid Administration categorical program to support students completing the FY 2024-25 FAFSA form.
• Supports the construction phase of the Siskiyou Joint Community College District, College of the Siskiyous Remodel Theater and McCloud Hall project.

The higher education trailer bill is AB/SB 155.

Student Housing

Higher Education Student Housing Grant Program

AB/SB 155 creates the statewide lease revenue bond to support 13 community college student housing projects that will convert from a cash grant to state financing (see page 37 of the bill). While complex, this proposal appears consistent with how other state lease revenue bond programs have operated. AB/SB 155 authorizes the State Public Works Board to issue up to $804.7 million in state lease revenue bonds to support the 13 identified projects. It requires specified lease agreements between the state and districts to support the projects. AB/SB 155 requires operating agreements between the State Public Works Board, Board of Governors, and participating community college that include, among other things, performance expectations of the parties related to the acquisition, design, and construction/renovation of the project.

CCFC requested additional language in the trailer bill to explicitly identify the financing framework, including the required leases and subleases. While the trailer bill was not updated to include this, CCFC has received assurance from the Department of Finance that these details should be included in the operating agreement between the parties.

Here is an overview of the financing framework, as presented by the Department of Finance at a recent Assembly Budget Subcommittee #3 on Education Finance hearing:

• The proposed state lease revenue bond program would shift the financing from General Fund support to bond financing for the college projects.
• The state lease revenue bond program will necessitate a project construction delivery agreement between the State Public Works Board (SPWB), the Chancellor’s Office, and the community college district. The college will grant a ground lease and easements to the Chancellor’s Office.
• Once the housing project is completed, the SPWB will lease the site and project from the Chancellor’s Office. The SPWB will lease back to the Chancellor’s Office, and the Chancellor’s Office will sublease it to the college. Lease payments made by the Chancellor’s Office (under the SPWB lease to the Chancellor’s Office) will secure the SPWB bonds.
• Before issuing the bonds, the SPWB will obtain interim financing for the projects. Any projects that received a funding allocation in the 2022 Budget Act will use that allocation until the SPWB can obtain interim financing, in order to cover the project’s cash flow requirements.
• Colleges will return unused funds from the 2022 allocation plus funds from the interim financing to cover the Education Code Section 17201 obligation. (This is the primary section of existing law that governs the Higher Education Student Housing Grant Program.)

Here are some of the key items included in AB/SB 155:

• Deed restriction on affordability – AB/SB 155 requires a deed restriction on the property to enforce affordability restrictions for the life of the facility. These affordability restrictions are contained in the existing SB 169 statute. CCFC asked to limit the deed restriction to the term of the state lease revenue bond repayment, but the trailer bill was not amended to do so.
• Division of the State Architect (DSA) and State Fire Marshal review – AB/SB 155 confirms that the plan review by DSA is permissive/optional, in alignment with AB 358 (chaptered in 2023), and that State Fire Marshal review is required.
• Scope adjustments – AB/SB 155 allows the SPWB to approve a reduction in a project’s bed count. A scope reduction in excess of 10% shall be reported by the SPWB to the Joint Legislative Budget Committee.
• Cash grant repayment – AB/SB 155 clarifies that colleges that already received cash for a student housing project that are subject to the state lease revenue bond conversion will not be required to revert the funding until after the community college receives proceeds from the SPWB financing program.

Revolving Loan Fund

The Legislature’s budget approves the Governor’s proposal to eliminate funding from the Student Housing Revolving Loan Fund and forego planned future funding, pending legislation to allow the program to be funded through internal state borrowing. Assembly Member McCarty is authoring AB 2076, which would transfer $200 million in FY 2024-25 from the Pooled Money Investment Account (which is administered by the State Controller) to the Student Housing Revolving Loan Fund for the purpose of funding loans to student and workforce housing projects at community colleges, UC, and CSU. These loans would be repaid at a 3% interest rate, and the principal and interest must be fully repaid by June 30, 2035. The bill is pending in Senate Appropriations Committee.

A Note on the State School Bond*

We understand that negotiations are underway for a November 2024 state school bond, with conversations occurring through the weekend and into today. The Legislature’s budget documents refer to a planned November 2024 school bond as justification for certain facility spending cuts on the K-12 side. The deadline to pass and sign a bill placing a measure on the November ballot is this Thursday, June 27. CCFC will provide additional information when it becomes available – stay tuned!

*Update 6/25/24 – We received word today that the deadline to pass and sign a bill placing a measure on the November ballot is now Wednesday, July 3, due to coordination between the Legislature and Secretary of State.

Rebekah Kalleen
CCFC Executive Director

The Legislature’s budget plan includes $211.3 billion in General Fund spending in FY 2024-25 (click here to view the Legislature’s budget plan). We are hearing that major sticking points include the Governor’s proposed cuts to housing programs and other social services, and proposed increases in prison spending. The Legislature indicates their plan includes approximately $5 billion more in General Fund revenues than the Governor’s plan, allowing for more school spending and restoration of some social services, health, and housing program spending. The Legislature states that their plan solves the budget problems in both FY 2024-25 and FY 2025-26, but projects deficits in later years.

The Legislature’s budget plan includes a modified version of a recent proposal to suspend Proposition 98. The Legislature indicates that the state budget cannot currently cover all Proposition 98 obligations over the two-year period beginning in 2022-23. As such, the Legislature’s budget accrues $6.2 billion that was previously appropriated to schools for 2022-23 over several years beginning in FY 2026-27 – meaning those funds would be accounted for in the General Fund over several future years, instead of the year in which they were appropriated.

The bills that the Legislature passed include:

• AB 107 – Budget Act of 2024 – Reflects the “joint legislative budget plan.”
• SB 154 – Suspends Proposition 98 minimum guarantee for school districts and community colleges in FY 2023-24. This creates an estimated $8.314 billion in maintenance factor, which will be repaid to schools and community colleges in future years. The first maintenance factor repayment is estimated at $4 billion in FY 2024-25. (Use of $8 billion from the Proposition 98 reserve helps protect classroom funding despite the proposed suspension.)
• SB 167 – Revenue and taxation – The bill includes statutory changes necessary to implement the Legislature’s Budget Act of 2024, including a business credit cap, Net Operating Loss deduction suspension, and more.

The joint legislative budget plan includes (but is not limited to) the following provisions for community colleges:

• 1.07% cost-of-living adjustment for apportionments and select categorical programs.
• 0.5% enrollment growth.
• Deferral of $231.7 million Proposition 98 General Fund to the 2025-26 fiscal year.
• A modified expansion of nursing programs. The Governor proposed $60 million (one-time Proposition 98 General Fund), and the Legislature instead creates the program within the 2024-25 Strong Workforce program funding. The Legislature’s budget includes placeholder trailer bill language to develop a grant program to support ADN, ADN-to-BSN programs, and community colleges BSN programs if the policy is approved through the legislative process.
• Capital Outlay – approves the Governor’s Budget proposal to support the construction phase of the Siskiyou Joint Community College District, College of the Siskiyous Remodel Theater and McCloud Hall project.

Additionally, the Legislature rejects proposals made in the Governor’s May Revision to provide $12 million (one-time Proposition 98 General Fund) to support the development of e-transcript in California, and $12 million (one-time Proposition 98 General Fund) to support a common cloud data platform demonstration project.

Student Housing

Higher Education Student Housing Grant Program/State Lease Revenue Bond – The Legislature’s budget includes “placeholder” trailer bill language to create a statewide lease revenue bond to support community college student housing grants. This action establishes a commitment to the program and the intent to further develop the details. As part of the May Revision, the Department of Finance released draft trailer bill language to implement this program; key policymakers, legislative staff, and stakeholders are analyzing and discussing the proposal. CCFC has provided feedback on multiple items; see this prior update for more information. The final language could be completed within the next few days or weeks, but it also may not be finalized until August.

Revolving Loan Fund – The Legislature’s budget approves the Governor’s proposal to eliminate funding from the Student Housing Revolving Loan Fund and forego planned future funding, pending legislation to allow the program to be funded through internal state borrowing. Assembly Member McCarty is authoring AB 2076, which would transfer $200 million in FY 2024-25 from the Pooled Money Investment Account (which is administered by the State Controller) to the Student Housing Revolving Loan Fund for the purpose of funding loans to student and workforce housing projects at community colleges, UC, and CSU. These loans would be repaid at a 3% interest rate, and the principal and interest must be fully repaid by June 30, 2035. The bill is pending in Senate Appropriations Committee.

Rebekah Kalleen
CCFC Executive Director

June 27 is the final date to pass and sign a bill to place a school bond on the November 2024 ballot. The Legislature and Governor need to hear directly from community colleges that our system supports the school bond and should be included.

The last successful state school bond was Proposition 51, which was passed by voters in 2016 and provided $2 billion to community colleges. CCFC supports AB 247 (Muratsuchi), which would place a $14 billion TK-14 bond on the November 2024 ballot. AB 247 would fund the existing community college capital outlay program, though the specific dollar amount for community colleges is still to be determined.

It is important to show a groundswell of support for the school bond. CCFC is asking our community college members to contact the Legislature in one of two ways:

• Support Letter – Draft and submit a letter in support of AB 247. See below for directions and a letter template. Please submit letters as soon as possible.
  

• Call/Email Your Legislator – Contact your legislator directly to urge their support for the state school bond and AB 247. You can call their office, or submit brief comments using the “Contact Me” feature on their personal website. If you already have a good relationship with someone in your legislator’s office, reach out to that person!
  • If you need assistance identifying your legislator, click here to use the “Find Your California Representative” Legislator Look-Up Tool. The tool will direct you to the personal website of your Senator and Assembly Member.

FYI – There is a second bond bill still alive in the legislative process: SB 28 (Glazer), which would place a $15.5 billion TK-University bond on the ballot. CCFC does not support this version of the bond. Our primary goal is to have a viable bond that will be passed by voters. SB 28 includes provisions that contributed to the defeat of Proposition 13 in March 2020, such as the inclusion of UC and CSU and controversial policy changes to the K-12 program.

Please note, once the bond is officially on the ballot, we will request Board resolutions supporting the specific proposition number. Stay tuned!

How to Submit a Letter to the Legislature

Submit your letter directly through the California Legislature Position Letter Portal, available here. Letters should be directed to the Senate Appropriations Committee, because that is the current location of AB 247 (check the box for Senate Appropriations, as well as for any author staff listed). Please reach out to Jessica Contreras if you need assistance. Jessica can also assist with cc’s to your own legislators.

Click here for an AB 247 Support Letter Template (.docx)

It is vital to send a copy of your letter by email to:

• CCFC: jcontreras@m-w-h.com
• Governor’s Office: Nichole.Murillo@gov.ca.gov

For your reference, click here to view CCFC’s support letter on AB 247.

Thirteen community college student housing projects are proposed to be financed by the state lease revenue bond program. Nine of these projects received a General Fund appropriation in the 2022 Budget Act, and four received authorization to proceed under the new state lease revenue bond program in the 2023 Budget Act. Additionally, three projects were identified as not fitting within the state lease revenue bond approach, and will instead utilize General Fund dollars from the 2023 Budget Act (Santa Rosa Junior College, Napa Valley College, and Imperial Valley College). For three additional intersegmental projects, UC will issue the bonds for the full project cost (Cabrillo College/UC Santa Cruz, Riverside City College/UC Riverside, Merced College/UC Merced).

Please click here for the full text of the proposed trailer bill to implement the state lease revenue bond program. This proposal was developed by the Department of Finance and the Administration, and the Legislature is now reviewing the language.

Additionally, the Department of Finance provided the following overview of the proposed state lease revenue bond program at a recent Assembly Budget Subcommittee #3 on Education Finance hearing:

• The proposed state lease revenue bond program would shift the financing from General Fund support to bond financing for the college projects.
• The state lease revenue bond program will necessitate a project construction delivery agreement between the State Public Works Board (SPWB), the Chancellor’s Office, and the community college district. The college will grant a ground lease and easements to the Chancellor’s Office.
• Once the housing project is completed, the SPWB will lease the site and project from the Chancellor’s Office. The SPWB will lease back to the Chancellor’s Office, and the Chancellor’s Office will sublease it to the college. Lease payments made by the Chancellor’s Office (under the SPWB lease to the Chancellor’s Office) will secure the SPWB bonds.
• Before issuing the bonds, the SPWB will obtain interim financing for the projects. Any projects that received a funding allocation in the 2022 Budget Act will use that allocation until the SPWB can obtain interim financing, in order to cover the project’s cash flow requirements.
• Colleges will return unused funds from the 2022 allocation plus funds from the interim financing to cover the Education Code Section 17201 obligation. (This is the primary section of existing law that governs the Higher Education Student Housing Grant Program.)

While complex, this proposal is consistent with how former state lease revenue bond programs have operated. As such, CCFC believes this structure should work for most if not all of the student housing projects that are proposed for conversion to the state lease revenue bond program. However, this financing framework does not appear to be included in the proposed trailer bill language. As such, CCFC is requesting for the financing structure to be added to the trailer bill language or other written documentation, such as a template of the state/college agreement.

Here are some of CCFC’s initial thoughts on the proposed trailer bill language:

• Deed restriction on affordability – The trailer bill requires a deed restriction on the property to enforce affordability restrictions for the life of the facility. These affordability restrictions are contained in the existing SB 169 statute. CCFC has asked if it is possible to limit this deed restriction to the term of the state lease revenue bond repayment, rather than indefinitely, or to remove the deed restriction entirely and instead include the affordability restriction in the state-college agreement. While the affordability requirements would still exist in statute for the life of the facility, including them in the deed restriction could ultimately limit the potential flexible use of the facility to meet the needs of communities 50-plus years in the future.
• Division of the State Architect (DSA) and State Fire Marshal review – The trailer bill appears to confirm that plan review by DSA is permissive (i.e. it is optional), in alignment with AB 358 (chaptered in 2023). However, it specifies that State Fire Marshal review is required.
• Scope adjustments – The trailer bill allows the SPWB to approve a reduction in a project’s bed count by up to 10%. Scope reductions in excess of 10% shall be reported by the SPWB to the Joint Legislative Budget Committee. This is a great recognition of the cost increase that colleges have experienced since submitting their initial applications. Given that we have seen construction cost increases of approximately 20% over 2022 and 2023 (after most of the applications were submitted), CCFC has asked to adjust the Budget Committee reporting requirement to scope changes in excess of 20% of the project’s beds.
• Funding adjustments – The trailer bill gives the SPWB the ability to pay for costs in excess of the statutorily-identified project cost amount, as long as the total program costs don’t exceed the total bond authorization amount of $804,725,000. This appears to provide a mechanism to target up to $81.3 million in additional funding to mitigate cost escalation for individual projects.
• Non-LRB projects – It appears that the three projects that are not proposed to convert to state lease revenue bond financing (Napa, Santa Rosa, Imperial Valley) would be funded by the 2023 housing support funding allocation, which is revised to $50.5 million General Fund in the trailer bill language (this is the exact amount of those three projects). CCFC has indicated that it may be helpful to include language to clarify that those three projects are funded by the General Fund allocation and not subject to the state lease revenue bond program.

Next Steps

The Legislature is poised to adopt their own version of the budget in the coming days. This sets up the conditions for final negotiations between the Legislature and the Governor, working to adopt a final budget for FY 2024-25 by the constitutional deadline of June 15. Work may continue after that date to refine details of the budget.

Rebekah Kalleen
CCFC Executive Director

The May Revision modifies the Governor’s January budget proposal using updated revenue projections based on income tax receipts. (Click here for CCFC’s report on the Governor’s January budget proposal.) The Governor indicated that his May Revision is a two-year proposal, containing solutions for both FY 2024-25 and FY 2025-26 to address the ongoing budget problem.

In January, the Governor estimated a $37.9 billion budget deficit. In April, the Legislature and Governor adopted an Early Action budget plan with $17.3 billion in solutions. The May Revision identifies an additional $7 billion shortfall since January, with a total remaining budget deficit of $27.6 billion to be solved. While the Governor indicated that these are “tough days,” he said that core services are protected and this problem is “solvable.” The May Revision proposes a mix of solutions, including reserves, efficiencies (i.e. state government solutions), reductions, revenues/borrowing, fund shifts, and delays.

The Governor spoke about the need to right-size expenditures to revenues, given the volatility of our tax system and unprecedented “supercharged” revenues associated with capital gains in recent years. He indicated that we are back in a period of “normalization” for capital gains. The May Revision states that in recent years the economy has “been resilient but behaved in ways that have defied traditional forecasts and historical precedent.” In particular, revenue volatility resulted in “the 2021 and 2022 Budget Acts reflecting higher growth assumptions, which created misalignment between expenditures and revenues in the last two fiscal years that will continue unless corrective action is taken.” Over the four-year period of 2022-23 through 2025-26, revenue estimates are now down $165.1 billion from the estimates originally made in the 2022 Budget Act. The May Revision proposes additional legislation that would require the state to set aside a portion of anticipated surplus funds to be allocated in a subsequent budget act, ensuring that the state does not commit future anticipated revenues until those revenues are realized.

Reserves

The May Revision maintains the Governor’s January budget proposal to draw down from reserves, including $12.2 billion from the Budget Stabilization Account (BSA) and $900 million from the Safety Net Reserve. The May Revision spreads the use of the BSA withdrawal over two fiscal years, including $3.3 billion in FY 2024-25 and $8.9 billion in FY 2025-26. The May Revision also includes withdrawals from the Public School System Stabilization Account of approximately $8.4 billion to “maintain predictable support” for local educational agencies and community college districts.

Proposition 98

The Governor indicated that the COLA is up from 0.76% in January to 1.07% at the May Revision.

Community College Issues

The May Revision includes a reduction of $510 million (ongoing General Fund) for the Middle Class Scholarship Program. Combined with technical support, $100 million in ongoing support for this program would remain.

Additionally, the 2022 Budget Act included a trigger that anticipated expenditures for certain programs in the 2024 Budget Act if revenues could support such spending over the multiyear forecast. Given the negative multiyear projections, some of these investments are not included in the May Revision, including the Cal Grant Reform Act through the California Student Aid Commission and the California Community College Cal Grant Expansion Program.

State School Bond

The Governor was asked by a reporter during the press conference about his receptiveness to bonds on the November ballot. The Governor indicated that the Administration is engaged in conversations with the Legislature regarding three potential bond measures: climate, housing, and schools. Regarding the school bond, he stated that there is still a question as to whether higher education (i.e. UC and CSU) should be included or not. The Governor indicated that the experience of Proposition 1 on the March 2024 ballot will be different than a November experience, though the March election “sobered” a lot of conversations. The Governor did not commit to which of the three bonds and how many of them he would support on the November ballot, though he did indicate that the state received more Federal funding for climate action recently than had been anticipated.

January Proposals

The Governor’s preliminary May Revision documents do not propose any significant changes to the following items which were proposed in the January budget. CCFC will provide additional information if the details of the May Revision, including pending trailer bill language proposals, include any proposed changes to these items.

• CCC Capital Outlay Program – The Governor’s January budget included $29.3 million (Proposition 51 bond dollars) for one continuing capital outlay project at Siskiyou Joint Community College District, College of the Siskiyous: Remodel Theater and McCloud Hall project. The January budget did not include any new start projects.
• Higher Education Student Housing Grant Program – The Governor’s January budget indicated that the Administration “remains committed to a statewide lease revenue bond approach and is developing a proposal for consideration at the May Revision. In addition, for a limited number of projects that do not currently fit within a statewide lease revenue bond approach, the Administration proposes using resources included in the 2023 Budget to support those projects.” CCFC is awaiting the details of the May Revision proposal, which are anticipated to be shared in proposed trailer bill language that has yet to be released.
• Student Housing Revolving Loan Fund – The Governor’s January budget proposed to suspend funding for the Student Housing Revolving Loan Fund Program, including pulling back $300 million (one-time General Fund) previously intended to be appropriated each year from 2024-25 through 2028-29, and reverting $194 million of $200 million (one-time General Fund) that was appropriated in 2023-24.
• Deferred Maintenance – The Governor’s January budget did not include any proposed investments for community college deferred maintenance in FY 2024-25.

Next Steps

Over the next few weeks, the Senate and Assembly will continue to review the Governor’s budget proposals, working toward a constitutional deadline of June 15 to pass the budget for FY 2024-25. Today the Speaker’s top budget consultant Jason Sisney indicated that the Assembly and Senate aim to “unite on a legislative budget plan in late May or early June, to facilitate passage of the constitutionally required legislative budget bill on or before Saturday, June 15.” The Legislature and Governor will also develop trailer bills that contain policy changes to enact the budget.

Rebekah Kalleen
CCFC Executive Director

SB 984 (Wahab) – PLAs for State-Funded Projects

SB 984 requires a Project Labor Agreement (PLA) for “major state construction projects” advertised for bid on or after July 1, 2025 at several state agencies. This requirement would apply to community college projects that are funded by state bonds. The PLA must have community benefit goals such as hiring local workers, women, and people from underrepresented and disadvantaged groups. The bill specifies that the PLA requirement applies to projects over $35 million, however it is unclear if this provision applies to community college projects, meaning the PLA requirement could apply to all community college projects funded by state bonds, regardless of cost. CCFC adopted an “Oppose Unless Amended” position on SB 984, requesting an amendment to remove community colleges from the bill. We are concerned that this requirement could inhibit the participation of some colleges from the state capital outlay program. Additionally, it appears these requirements would apply to student housing projects that go out for bid on or after July 1, 2025 if they are funded by the new state Lease Revenue Bond program.

The bill was scheduled to be heard in the Senate Governmental Organization Committee on April 9; however, we have been told that major amendments are in development and the bill’s hearing has been postponed. CCFC remains hopeful that community colleges will be removed from the bill as part of these revisions.

SB 986 (Seyarto) – State and Local Ballot Label Language

SB 986 requires the ballot label for state and local bond measures to include a specific fiscal impact statement that identifies the principal and interest on the bonds and the annual payment amount. This would be done with a specific 27-word (or more) statement and would be in addition to the fiscal disclosure information that is already required by AB 195 (chaptered 2017), which requires local bonds to state the rate, duration, and amount expected to be raised annually for a proposed tax measure. CCFC had significant concerns with this bill, which could exacerbate voter confusion about bond measures and would reduce the space available to explain how bond proceeds would be used to benefit the community. The bill failed to pass out of the Senate Elections and Constitutional Amendments Committee, receiving only 1 aye vote. Therefore, it is not moving forward at this time.

SB 1374 (Becker) – Energy Generation for Customers with Multiple Meters

SB 1374 addresses inequities in the Net Billing Tariff Aggregation that make it difficult for energy generation projects to pencil out. Currently, based on a recent Public Utilities Commission (PUC) action, non-residential customers (including community colleges) with multiple meters have to sell the power they generate back to the utility at low prices and immediately buy it back at higher retail prices. SB 1374 requires the PUC to update its tariffs for non-residential utility customers with multiple meters to give credit for self-consumption similar to the tariff for residential/single meter customers. The bill is pending in the Senate Energy, Utilities and Communications Committee, though it faces concerns from the committee chair, investor-owned utilities, and others. CCFC supports SB 1374.

AB 2192 (Juan Carrillo) – CUPCCAA Bid Limits

AB 2192 updates the CUPCCAA bid limits, which are set in statute and may be adjusted every five years based on a recommendation from the California Uniform Construction Cost Accounting Commission (Commission). AB 2192 proposes the following changes:

• Force Account limit – increase from $60,000 to $70,000
• Informal bid limit – increase from $200,000 to $220,000
• Create a new limit for projects performed by negotiated contract or by purchase order at $100,000 (currently these are subject to the Force Account limit)

AB 2192 also expands the Commission’s authority to review potential violations when an “interested party presents evidence,” allowing the Commission to review potential violations related to bid splitting or exceeding the CUPCCAA bid limits. AB 2192 also adds “installation” to the definition of a public project under CUPCCAA. AB 2192 does not provide details on what this proceeding would look like, such as whether the local agency would be able to address the Commission to provide an explanation of its contracting decisions. AB 2192 is pending in the Assembly Local Government Committee. CCFC is neutral on AB 2192.

SB 1091 (Menjivar) – Schoolyard Greening Projects

SB 1091 eases path of travel upgrade requirements for “school ground greening projects” which are defined as a project that uses “nature-based solutions and improves pupil or student well-being or learning, or pupil play, and improves the community ecological health and climate resilience.” SB 1091 builds upon a mechanism used by SB 515 (chaptered in 2023), which eased path of travel requirements for free-standing, open-sided pre-check shade structures, limiting the cost of complying to 20% of the adjusted construction cost of the project for projects over the valuation threshold. SB 1091 applies this same cap on access upgrade compliance costs to school ground greening projects on K-12 and community college sites, such as removing impervious pavement and replacing it with soil, trees, native or climate-adapted plantings, supporting outdoor education, or a stormwater project to manage runoff from a school building. The bill was passed by the Senate Education Committee and is pending in the Senate Appropriations Committee. CCFC is neutral on SB 1091.

SB 1325 (Durazo) – Best Value Procurement

SB 1325 permits a state or local agency to use best value procurement for the purchase of equipment with a base value of $250,000 or more. SB 1325 specifies that best value is a “process by which a contract award is determined by objective criteria related to price, quality, and other qualifications” including but not limited to:

• Product performance, productivity, and safety standards
• The supplier’s ability to perform the contract requirements
• Environmental benefits, including the reduction of greenhouse gas emissions
• Community benefits
• Job quality benefits, as determined by a “high road jobs plan policy”

SB 1325 is intended to simplify the confusing patchwork of best value authorizations for state and local agencies, allowing for consideration of values such as high-quality job creation. The author indicates that she is pursuing this bill because “A commitment to climate equity means a commitment to workers.” SB 1325 was passed by the Senate Governmental Organization Committee on April 9 and is pending in the Senate Local Government Committee. CCFC is neutral on SB 1325.

Student Housing Legislation

While the Governor and Legislature are still developing the details of the state Lease Revenue Bond program for projects authorized by the Higher Education Student Housing Grant Program, there are a number of bills that have been introduced that pertain to student housing.

AB 1818 (Jackson) – Student Overnight Parking on Campus

AB 1818 is a reintroduction of a concept from AB 302 (Berman, 2019), which stalled in the Legislature. AB 1818 requires community colleges to allow overnight parking in a campus-owned or controlled parking lot or structure by a student attending its campus. The college may not cite the student if the student uses the vehicle as housing, and the student has a valid parking permit issued by the campus. CCFC does not have a formal position on this bill at this time but does have concerns about the impacts to facilities, such as access to restrooms/showers, maintenance, security, and more. The bill is pending in the Assembly Higher Education Committee, amid concerns from multiple community college organizations.

Data Collection Bills

Policymakers have introduced multiple bills that would increase data collection and reporting requirements related to student housing. AB 2707 (Fong) would require the Legislative Analyst’s Office to study and submit a report to the Legislature by January 1, 2026 to identify issues and barriers to securing housing for students ages 25 and older and those with dependents. AB 2567 (Mathis) would amend existing annual student housing data reporting to specify how many students in each category are veterans. Both bills were recently passed by the Assembly Higher Education Committee. CCFC is neutral on these bills.

A Note on the State Budget

The Legislature is expected to vote on an Early Action Budget Package on Thursday, April 11. This package includes $17.3 billion in budget solutions, representing approximately two-thirds of the budget solutions proposed by the Governor in his January budget for FY 2024-25. The package does not include any items of major significance for community colleges. The package minimizes cuts to core programs such as education, health, and social services, though it warns of probable cuts in those areas at the June budget. The Legislature is taking this step now on the “easy” items so that it can focus over the coming weeks on the “hard” decisions and consider ways to address the structural deficit in future years. The Legislature indicates that this action, plus planned reserve withdrawals, will reduce the remaining budget shortfall to between $9 billion and $24 billion, though negative tax revenue news could worsen this.

Rebekah Kalleen
CCFC Executive Director