Understanding CCC Budget and Reporting Part II

Transcription

1 Understanding CCC Budget and Reporting Part II (Exhibit C, Fifty Percent Law, and FON) primary author: Ron Gerhard SPRING 218

2 Table of Contents PREFACE SEM Operational Definition SEM Framework BACKGROUND DESCRIPTION IMPACT... 7 STRATEGIES AND PRACTICES PRACTICAL APPLICATIONS ANCILLARY MATERIALS AND REFERENCES ASK-SEM RESOURCE GUIDE SERIES UNDERSTANDING CCC BUDGET AND REPORTING PART II 2

3 Preface A Brief Look at the History of SEM. The practice of strategic enrollment management (SEM) began with the four-year universities in an effort to manage the student enrollment and success continuum from inquiry to completion. Beginning in the late 197s through about the late 198s, the focus of SEM was primarily on marketing and recruitment efforts. Toward the end of this period, a dean of admissions at Boston College, Jack McGuire, wrote a pioneering article in the college s newspaper about enrollment, and coined the term Enrollment Management to describe the college s efforts to attract and retain students. Sometime later, during the early 199s through the early 2s, the focus of SEM began shifting to greater institution-wide efforts; structurally, the efforts shifted from activities that were somewhat disjointed to a more integrated, planned, and strategic approach. SEM was no longer solely focused on recruitment and retention; it became more interconnected across the academy in efforts to attract, retain, and move students through to successful completion, while maintaining fiscal viability. SEM efforts were often grouped into a single central hub or department that was responsible for linking and monitoring SEM strategies and practices across the institution. At one time, enrollment management was depicted as a funnel of critical activities or steps in the enrollment to completion process, with heavy emphasis on marketing, recruitment, and admissions efforts. Soon, this morphed into a more student centered approach to SEM. In 24, Bob Bontrager, then Assistant Provost for Enrollment Management at Oregon State University, proposed a SEM framework that focused less on the strategies and interventions tied to recruitment and admissions, and more on the whole student experience. (See Figure 1.) Unlike earlier SEM models, this framework considers diverse student populations and their specific needs and goals. Moreover, this expanded focus of SEM includes the whole student experience, as well as additional intervention points where colleges may influence enrollment and student success. Bontrager s model of SEM incorporates strategic concepts of integrated planning, the leveraging of technology, incorporation of alternative course scheduling practices, revised registration policies and procedures, and more extensive use of data-informed decision-making, all of which align with the mission of community colleges today. Figure 1. Bontrager s SEM Framework Recruitment/ Marketing Admissions Orientation Classroom Experience STUDENT S COLLEGE CAREER Financial Support Academic Support Co-curricular Support Retention Attain Degree/ Goal UNDERSTANDING CCC BUDGET AND REPORTING PART II 3

4 OPERATIONAL DEFINITION The following operational definition of SEM was created by the Core Project Team and the Advisory Committee for ASK-SEM (Applied Solution Kit for Strategic Enrollment Management). This definition, along with the SEM Organizing Framework, was thoroughly researched and vetted to key constituent groups across the state to ensure relevancy. The ASK-SEM Operational Definition is designed to provide guidance for developing the resource and tools within the Institutional Effectiveness Partner Initiative (IEPI) ASK-SEM, and to assist colleges and districts as they develop and implement SEM strategies and practices. ASK-SEM OPERATIONAL DEFINITION As open-entry institutions, California Community Colleges serve a diverse student body with wide-ranging educational goals. We must regularly adapt our programs and services to meet the changing needs of our students, and to facilitate the achievement of students educational goals. At the same time, we must maintain our fiscal viability to ensure that we can support our communities now and into the future. Strategic enrollment management is a holistic concept and a process that enables the fulfillment of an institution s mission and its students educational goals 1. While grounded in the current operating environments, SEM includes a future-oriented vision and is adaptable to the changing environment. Within California Community Colleges, SEM is a shared responsibility. Student success is central to all related planning, practices, and processes. The purpose of SEM is to: Establish comprehensive student enrollment goals aligned with the college s mission and strategic plan. Promote student success by improving access, engagement, persistence, and completion. Ensure fiscal stability and viability by optimizing enrollments and integrating SEM into financial planning, budgeting, and allocation processes. Offer quality and relevant programs with clear educational pathways, course offerings, and appropriate student support. Implement strategies that lead to equitable access and outcomes. Create a data-rich environment to inform decisions and evaluate strategies. Design and implement communications and marketing with internal and external stakeholders to increase understanding of SEM and to meet SEM goals. Increase collaboration among departments across the campus to support the enrollment program. 1 Adapted from: Bontrager, B., and K. Pollock. 29. Strategic enrollment management at community colleges. Applying SEM at the Community College. Washington, DC: American Association of Collegiate Registrars and Admissions Officers. UNDERSTANDING CCC BUDGET AND REPORTING PART II 4

5 SEM FRAMEWORK The SEM Framework is an organizing mechanism designed to guide the development of tools and resources for the IEPI ASK-SEM. The SEM Organizing Framework depicted in Figure 2 evolved out of extensive research including a literature review of SEM in higher education and primary research into current SEM practices in the California Community Colleges. The Framework exemplifies a holistic approach to SEM, and contains three core dimensions: Foundation, Approach, and Strategies. Each of these dimensions contains multiple components of SEM that, together, define the essential elements or conditions of excellence for SEM. Figure 2. SEM Organizing Framework The SEM Organizing Framework was used to define five groupings of tools, resources, and services for the SEM-ASK that could support SEM initiatives and practices: 1. Assessments and Evaluations: Self-assessments, inventories, checklists, and rubrics. 2. Data Resources and Tools: Existing data resources used for SEM planning, as well as research from other agencies and from the ASK-Data Disaggregation. 3. Models and Exemplars: Models, frameworks, and templates for enrollment forecasting, SEM planning, and scheduling. 4. Professional Development: Resource guides that provide content for SEM training, webinars, workshops, and train-the-trainer materials. 5. Promising Practices: Case summaries that describe effective practices for practical application in the various areas of SEM. UNDERSTANDING CCC BUDGET AND REPORTING PART II 5

6 Background The core mission of the community college system of California is serving students seeking to reach educational goals. On the financial side, students are college districts main source of funding. The total measurable hours of contact by the student forms the primary metric used by the state to provide the dollars necessary to operate California s community colleges. Very simply put, colleges report the number of contact hours of students attendance and the state compensates each college based on their reported hours. The metric employed in the reporting of attendance is called FTES or full-time equivalent students. As reflected in the SEM Core Purpose statement, college districts ensure fiscal stability and viability by optimizing enrollments and integrating SEM into their college financial planning, budgeting, and allocation processes. From a budget perspective, districts annually identify a target FTES they seek to achieve to optimize their revenue, within the confined framework of the state s funding model. They also identify the resources needed to generate the target FTES. It takes many resources to generate FTES; however, one significant resource is the faculty hours providing instruction in the classroom. Called faculty contact hours, the hours are often translated to a percentage of a full-time load called Full-time Equivalent Faculty or FTEF. Colleges develop class schedules to meet student needs and generate FTES. Colleges must ensure both the academic integrity of their course offerings and optimize the allocation of the resources needed. Colleges use measures of productivity or efficiency to track and monitor how resources are optimized to produce FTES. Historically, the metric Weekly Student Contact Hours to Full-time Equivalent Faculty or WSCH/FTEF has been used. However, the more direct measure of Full-time Equivalent Students to Full-time Equivalent Faculty or FTES/FTEF is becoming more common. Monitoring and evaluating the impact of the schedule on student completion and success is important. Monitoring and evaluating enrollments, student interest and demand, and efficiency as it relates to helping the college maintain its fiscal viability, are important too. Responses to a system-wide survey of California Community Colleges, completed in 217, revealed an interest in having resources describing how FTES, FTEF, productivity, and other scheduling metrics are calculated and used in SEM. This guide was developed to help meet that need. This guide builds upon previous guides in that it translates WSCH/FTES into dollars. Using methods provided in previous resource guides on how to account student contact hours and how to calculate FTES, we now turn our attention to using this data to arrive at Total Computational Revenue for a district. As budgeted, the revenue is determined. Districts then can begin to build expenditure budgets supporting the FTES targets sought. Expenditure budgets include FTEF (embedding compliance with FON and 5% law), classified support professionals, administration, supplies, other operating, and capital equipment. All together these budgets support the main operations of the district. UNDERSTANDING CCC BUDGET AND REPORTING PART II 6

7 d Description This guide provides an overview of the Community College Funding Model (SB 361) and how enrollment drives the flow of funding. It includes information on how data from the Community College Financial Statement (CCFS) 32 Apportionment Attendance Report is used to calculate a district s Total Computational Revenue. The collection of SEM-ASK materials available at ( includes several complementary guides that address how student contact hours are generated, how full-time equivalent students (FTES) is calculated, and how these data are then reported to the California Community College s Chancellor s Office to be used for funding. The resources include: The Basics of Community College Funding Understanding CCC Budget and Reporting Part I (F32 Report) Developing and Managing the Class Schedule The Chancellor s Office communicates a district s funding allocations through Exhibit C. This document is published multiple times throughout the fiscal year. This guide walks users through this Exhibit C and provides examples of how the figures it contains are calculated. Note that Exhibit C was reformatted in late February 218. While this change affected the look of the document, the core mechanisms on how to read, understand, and calculate critical data elements remains the same. The new format of Exhibit C is discussed later in more detail in a subsection of this guide. Impact Understanding how to determine total resources available to a district is critical to ensure/ maintain fiscal stability and to be able to appropriately fund institutional strategic planning and support the mission of the district. Further, a firm understanding of the variables and drivers of the funding model allows stakeholders and users to engage in grounded discussion and institutional planning at higher levels that ultimately improve operations and support student success. UNDERSTANDING CCC BUDGET AND REPORTING PART II 7

8 Strategies & Practices Districts report FTES to the state using the Community College Financial Statement 32 Attendance Apportionment report. This report is then used to derive Total Computational Revenue. The two central reports used by the state to calculate and communicate Total Computational Revenue are Exhibit C the Principal Apportionment Report and Exhibit E the Recalculation Apportionment Report. Exhibit C reports are released three times during the fiscal year: Advance Report Released in July First Principal Apportionment Report Released in February Second Principal Apportionment Report Released in June Each report is used by districts to monitor and adjust budgets during the course of the fiscal year. Exhibit E the Recalculation Apportionment Report is published in February of the subsequent fiscal year and is used to communicate to districts how they finished the fiscal year. Figure 3. The Fiscal Year At A Glance 7/1 New fiscal year 4/2 P2 submitted for previous fiscal year 1/15 P1 Due 4/2 P2 Due 6/3 Fiscal year end 7/15 P3 Due 11/1 Recalc Due 4/1 5/1 6/1 7/1 8/1 9/1 1/1 11/1 12/1 1/1 2/1 3/1 4/1 5/1 6/1 7/1 8/1 9/1 1/1 11/1 12/1 1/1 2/1 7/1-1/31 Monthly apportionment payments based upon prior year P2 Advanced Apportionment, Exhibit C 6/1-6/3 New monthly apportionment based upon P2 Second Principal Apportionment, Exhibit C 2/1-5/31 New monthly apportionment based upon P1 First Principal Apportionment, Exhibit C 2/1 Recalculation Apportionment Exhibit E Exhibit C is comprised of three main sections: summary of workload measures, calculation of Total Computational Revenue, and Basic Allocation Calculation. UNDERSTANDING CCC BUDGET AND REPORTING PART II 8

9 Table 1. Summary of Workload Measures Workload Measures Base Funding Marginal Funding Base FTES Growth FTES Restored FTES Stability FTES Total Funded FTES Unfunded FTES Actual FTES Credit FTES 5, , , , ,21.65 Noncredit FTES 3, , (61.45) CDCP FTES 5, , (92.25) Total FTES 8, , ,15.87 An example of the summary of workload measures is presented in Table 1, above. This section of Exhibit C presents the following information: Base Funding and Marginal Funding Base funding represents per FTES funding, not adjusted for Cost of Living Adjustment (COLA). Marginal Funding represents per FTES funding adjusted for COLA. In the example above, no COLA was funded. The individual rates for credit, non-credit, and career development and college participation (CDCP or often referred to as enhanced non-credit) are provided respectively. Base FTES Is typically the total funded FTES from the prior fiscal year carried forward for each type of FTES. Growth FTES Is the potential funded growth available for each type of FTES. calculated as the respective Base FTES multiplied by the funded growth rate. Districts can find their respective funded growth rate in subsection IV of the Exhibit. Restored FTES Represents the FTES restored as part of the Base FTES within the past immediate 3 fiscal years. Stability FTES Represents the reduction of FTES experienced within the current fiscal year (discussed more, later in resource guide). Total Funded FTES Total Funded FTES equals: Base FTES + Growth FTES + Restored FTES Stability FTES. Unfunded FTES Represents the amount of FTES generated that is greater than Total Funded FTES. Actual FTES Total Funded FTES + Unfunded FTES. UNDERSTANDING CCC BUDGET AND REPORTING PART II 9

10 Calculation of Total Computational Revenue The next section of Exhibit C shows the calculations for Total Computation Revenue. An example is presented in Table 2, below. Table 2. Total Calculation Revenue I Base Revenues +/- Restore or Decline I A. Basic Allocation B. Revised Base FTES Revenue 1. Credit Base Revenue 2. Noncredit Base Revenue 3. Career Development College Prep C. Current Year Decline Total Base Revenue Less Decline $37,717,856 $1,647,847 $2,59,765 $6,3,494 $41,425,468 $47,428,962 II Inflation Adjustment A. Statewide Inflation Adjustment B. Inflation Adjustment Current Year Base Revenue + Inflation Adjustment % $47,428,962 III Basic Allocation & Restoration A. Basic Allocation Adjustment B. Basic Allocation Adjustment COLA C. Stability Restoration Total Basic Allocation & Restoration $4,9,266 $4,9,266 IV Growth A. Target Growth Rate B. Funded Growth Rate C. Funded Credit Growth Revenue D. Funded Noncredit Growth Revenue E. Funded Noncredit CDCP Growth Rev. Total Growth Revenue.5% 6.29% $3,488,65 ($184,97) ($461,78) $227,279 $2,841,315 $2,841,315 V Other Revenue Adjustments A. Misc. Revenue Adjustments B. Full-Time Faulty Hiring Adjustments C. Base Increase FON D. Base Increase Non-FON Total Revenue Adjustments $86,98 $7,224 $724,26 $818,338 UNDERSTANDING CCC BUDGET AND REPORTING PART II 1

11 Table 2. Total Calculation Revenue (Continued) VI Stability Adjustment I VII Total Computational Revenue Sum of II, III, IV, V, & VI $55,988,881 VIII District Revenue Source A1. Property Taxes A2. Less Property Taxes Excess B. Student Enrollment Fees C1. State General Apportionment C2. Full-Time Faculty Hiring D. Estimated EPA Available Revenue E. Revenue Shortfall Total Revenue Plus shortfall 1. $17,118,425 $2,68,6 $27,553,67 $552,144 $8,84,699 $55,988,881 $55,988,881 IX Other Allowance and Total Apportionments A. State General Apportionment B. Statewide Average Replacement Cost Number of Faculty Not Hired Full-time Faculty Adjustment Net State General Apportionment $28,15,751. $28,15,751 X Unrestored Decline as of July 1st of Current Year A. 1st Year B. 2nd Year C. 3rd Year Total $4,9,266 $4,9,266 UNDERSTANDING CCC BUDGET AND REPORTING PART II 11

12 This section contains ten sub-sections, as follows: I. Base Revenues +/- Restore or Decline Includes the district s Basic Allocation (discussed below) plus the revenue derived from taking the Base FTES (discussed above) multiplied by the Base Funding rates. If the district is experiencing an FTES decline in the current year, the Stability FTES multiplied by the Base Funding rate is subtracted from this amount to arrive at a Total Base Revenue Less Decline figure. For example, we see from the Summary of Workload Measures section that the base funding rate for credit FTES is $5,5.75 and the base credit FTES is 7, Multiplying these two figures equals $37,717,856. The same calculations are performed for each type of FTES generated. After performing these calculations, we see that the total Revised Base FTES Revenue is $41,425,468. II. III. IV. Inflation Adjustment Refers to any Cost of Living Adjustment (COLA) funded by the state. In the example above, this is zero. If, for example, the state-funded COLA is at 1.56 percent, then this figure would be reflected in row A and the inflation adjustment (row B) would reflect $739,892, rounded. The figure reflected in row B is then added to the total Revised Base FTES Revenue to arrive at Current Year Base Revenue + Inflation Adjustment. Basic Allocation & Restoration Incorporates any restored FTES the district has generated from enrollment declines experienced within the previous three fiscal years. In this example, the district has restored credit FTES in the current fiscal year. Multiplying this by the Marginal Funding rate equals $4,9,266, rounded. Growth Includes target and funded growth rate and funded revenue. Funded Credit Growth Revenue (row C) is derived by multiplying the credit base FTES plus any restored FTES by the Funded Growth Rate. So, in this example, 7, credit FTES plus restored FTES (8, ) multiplied by 6.29%, yields FTES. In this example, the district elected to shift base FTES from noncredit and CDCP to credit FTES. This difference between and FTES is a result of this shift. Also related to this shift, rows D and E are negative. These figures are the result of multiplying the marginal funding rates by the negative growth FTES figures shown in the Summary of Workload Measures section. The net sum totals $2,841,315 in funded growth for the district. V. Other Revenue Adjustments Includes revenue adjustments, including but not limited to: special designated unrestricted revenue base augmentations such as full-time faculty allocations, pension benefit cost increases, and other postemployment benefits. VI. Stability Adjustment Reflects the amount of stability revenue, based upon stability FTES shown in the Summary of Workload Measures, adjusted for COLA and Other Revenue Adjustments. Stability is discussed in greater detail later in this resource guide. UNDERSTANDING CCC BUDGET AND REPORTING PART II 12

13 VII. Total Computational Revenue Is the sum of the previously discussed sections (I through VI) VIII. District Revenue Source Outlines the particular source of funds that will comprise the calculated Total Computational Revenue. Sources of funds include local property taxes, student enrollment fees, state general apportionment (to include base augmentations such as full-time faculty hiring), and educational protection account (EPA). IX. Other Allowance and Total Apportionments Summarizes the amount received in the form of state general apportionment. Additionally, this section provides, as an informational item, the statewide average faculty replacement cost. If the district is found not to be compliant with the faculty obligation number (FON), the FON deficiency is displayed as the number of faculty not hired as well as the fiscal impacts. X. Unrestored Decline as of July 1st Under the current state funding model (SB 361), should a district incur enrollment losses, the district has three years to restore the enrollment loss without reducing their base FTES. This subsection tracks the three-year window of time in which the district has to restore. In this example, we see that the district experienced an enrollment decline in the previous fiscal year. This is identified in the Summary of Workload Measures section by virtue of restored FTES of FTES. (Had they not experienced a loss of enrollment, there would be no FTES to restore, which can be verified by viewing the Exhibit C/E of the previous fiscal year). Later, in section III Basic Allocation & Restoration, we see that the district restored $4,9,226 (monetary equivalent to FTES) back to their base. Now in section X, we see $4,9,266 displayed in the 1st Year row. This indicates that as of July 1 of the current fiscal year, the district had available to them $4,9,266 in restoration. Putting these two sections together, the district experienced an enrollment reduction in the previous fiscal year (Summary of Workload Measures section). At the beginning of the subsequent year, the dollar value of this enrollment reduction, FTES, was available to the district in the form of restoration (section X). By the date that this Exhibit C was published, the district had restored this enrollment (section III). UNDERSTANDING CCC BUDGET AND REPORTING PART II 13

14 Basic Allocation Calculation The third and final section in Exhibit C displays the mechanics of determining the district s basic allocation (Table 3). Under the current state funding model (SB 361), each community college district receives an annual allocation based on the number of colleges and comprehensive centers within the district. Table 3. Basic Allocation Before Current Year COLA College/Center Base Funding Rates (Current Year FTES Thresholds) Single College District Funding Rates: Total FTES Multi-College District Funding Rate: Total FTES >2 $6,3,494 >1 $4,82,795 <=1 $3,62,96 Rural $1,145,692 >2 $4,82795 >1 $4,22,446 <=1 $3,62,96 FTEs: 1 Total Colleges 1 Revenue: $4,82,795 Total Colleges Revenue $4,82,795 State Approved Center: Funding Rates 1 $1,2,699 Total State Approved Centers 1 Total Approved Center Revenue $1,2,699 Grandfathered or Previously Approved Center: Funding FTES Levels >1 $1,2,699 >75 $9,524 >5 $6,349 >25 $3,175 <=1 $15,87 Number of Grandfathered or Previously Approved Total FTES Total Grandfathered or Previously Approved Centers Total Basic Allocation Revenue $6,3,494 Number of Grandfathered or Previously Approved Centers Revenue Total Grandfathered or Previously Approved Centers Continuing with the example used thus far, this district is comprised of a single accredited college having funded FTES (adjusted base) of 1, Based on these factors, a 1 is listed under the column heading > 1 and related revenue is listed as $4,82,795 in the top left of this section. This is the portion of the basic allocation attributed to the college itself. Further, we see that the district also operates a (1) state approved center (see State Approved Center: Funding Rates in the report). The recognition of this center adds basic allocation funding of $1,2,699. In total, the district will receive $6,3,494 in basic allocation due to the recognized accredited college ($4,82,795) and the state-approved center ($1,2,699). The $6,3,494 in basic allocation is then reflected in subsection I, row A of the Calculation of Total Computational Revenue section discussed above. Stability Funding A critical element in the state funding model is how districts are treated when they experience reductions in FTES. Given the counter-cyclical nature of community college funding, combined with a funding model primarily based upon FTES, without mechanisms to protect against UNDERSTANDING CCC BUDGET AND REPORTING PART II 14

15 volatile economic swings districts would be exposed to significant risk and therefore jeopardize their fiscal stability and ability to serve students. Two provisions that provide fiscal stability are Stability and Restoration. When a district experiences a reduction in enrollment (FTES), the corresponding reduction in funding occurs in the subsequent fiscal year, should enrollment not increase in that year. The fiscal year in which the reduction in enrollment occurs and funding remains at pre-enrollment reduction level is referred to as in stability. This stability period provides districts with a narrow window of time to: 1) develop and engage strategies to restore enrollments, and 2) develop a fiscal plan that ultimately balances the budget and restores fiscal stability. Should enrollment not restore to the level experienced prior to entering into stability, then the district s revenue will be reduced commensurately. If enrollment does not restore within the stability period, districts have a three-year window of time to increase enrollment to levels experienced prior to the reduction. Failure to restore to this level within this timeframe causes the funded base FTES to be re-benched to this new lower level of enrollment. The three years following the reduction in enrollment are referred to as the restoration period. The only way to increase the funded base FTES subsequent to the restoration period is through growth funding. Exhibit C Format Update With the release of the P1 report on February 23, 218, the format of Exhibit C has changed significantly. Previously one page, the new format spans over two pages. The first page is entitled Total Computational Revenue and Revenue Sources. The remaining pages contain supporting schedules (I, II and III) that contain data used to calculate and arrive at revenue figures shown on the first page. Although the format has changed, the mechanics of performing the calculations described above remain the same. The section previously labeled as the Summary of Workload Measures is now referred to as Schedule II: FTES Revenue and is split into two sub-sections, FTES Summary and FTES Type. The data in this section is used in the same manner as described above to calculate Base FTES Revenue, Stability Adjustments, COLA, and Growth, as previously demonstrated. An example of the new layout can be found at the following link: P1_22218.pdf The Fifty Percent Law The Fifty Percent Law is a state compliance requirement stipulating that each fiscal year, each fiscal year, each district is to spend 5 percent of the current expense of education for the payment of salaries and benefits of classroom instructors. Codified in Education Code Section and California Code of Regulations Section 592, the intent of the requirement is to limit class size and contain the relative growth of administrative and non-instructional costs. 2 2 California Community Colleges, Budget and Accounting Manual 212 Edition. UNDERSTANDING CCC BUDGET AND REPORTING PART II 15

16 Title 5 Section 5924 defines salaries of classroom instructors as that portion of salaries paid for purposes of instruction of students by full-time and part-time instructors employed by a district and all salaries paid to classified district employees who are: (a) assigned the basic title of Instructional Aide or other appropriate title designated by the governing board that denotes that the employees duties include instructional tasks, and (b) employed to assist instructors in the performance of their duties, in the supervision of students, and in the performance of instructional tasks. District calculations demonstrating compliance with the 5 Percent Law are included in the Community College Financial Statement 311A and are audited annually as part of the required state contracted district audit manual used by external auditors in the performance of the institution s annual financial statement audit 3. Full-Time Faculty Obligation (FON) The Full-Time Faculty Obligation (FON) is the number of full-time faculty a district is required to employ to maintain compliance with Title 5 Section Originating from the passage of Assembly Bill 1725 in 1988, the bill established a goal of reaching 75 percent of instructional hours taught by full-time faculty. The baseline standard for full-time faculty levels was established in From this baseline, the compliance standard is proportionately increased with the growth of funded credit FTES. Important milestones include: September Advance FON established for subsequent fall (fiscal year) November Board of Governors determines adequacy of funds to support changes in FON and districts submit current year FON numbers June P2 FON and compliance FON provided to district for subsequent fiscal year (Fall) The FON is calculated twice during the year: the first time as part of the Advance Apportionment; the second time based on FTES reported by districts at P2. The compliance FON, or the FON that districts must meet in a given reporting year, is the lower of the two calculations. The consequences of not meeting the FON requirement has fiscal implications. Should a district not meet the compliance requirement, the penalty is determined by multiplying the number of full-time faculty positions deficient by the statewide average replacement cost for a full-time faculty position. The penalty, once determined, is subtracted from funds the district would have otherwise received in the form of apportionment (monthly apportionment payment schedule). There is no non-compliance waiver. 3 California Community Colleges, Contracted District Audit Manual, UNDERSTANDING CCC BUDGET AND REPORTING PART II 16

17 Governor s Proposed Student-Centered Funding Proposal In the January 218 Budget Proposal, the governor proposed a new funding model for fiscal year that, if implemented, would mark a significant shift in how California Community Colleges have historically been funded. Rather than being primarily FTES driven (as previously discussed), the new model determines funding by looking at several factors: FTES, students ability to obtain Promise and Pell grants, and students ability to successfully obtain a degree or certificate. According to the governor, this new formula encourages access for underrepresented students, provides additional funding in recognition of the need to provide additional support for low-income students, rewards colleges progress on improving student success metrics, and improves overall equity and predictability so that community college districts may more readily plan and implement instruction and programs. 4 Note that at the time of this publication, the new model is still under development. However, for purposes of illustration, an example of the application of the old funding model compared to new model, as initially proposed by the governor, is presented below. Old model (FTES-Based) Basic Allocation: An initial funding amount based upon number of colleges and comprehensive centers within the district Resident Credit FTES: Credit FTES x funding rate ($5,32) Non-credit FTES: Non-credit FTES x funding rate ($3,323) CDCP non-credit FTES: CDCP FTES x funding rate ($5,32) New model (5% FTES, 25% Student Financial Need, 25% Success Factors) 5% Base Basic Allocation: An initial funding amount based upon number of colleges and comprehensive centers within the district Resident Credit FTES: Credit FTES x funding rate ($5,32 x 45.2%, or $2,44.64) Non-credit FTES: Non-credit FTES x funding rate ($3,323 x 45.2%, or $1,51.99) CDCP non-credit FTES: CDCP non-credit FTES x funding rate ($5,32 x 45.2%, or $2,44.64) 4 State of California, Trailer Bill. FocusedApportionmentsFormula.pdf UNDERSTANDING CCC BUDGET AND REPORTING PART II 17

18 25% Supplemental Grants Number of students receiving a Promise Grant Fee Waiver x funding rate ($5,32 x 25.7%, $1,333.7) Number of students who receive Federal Pell Grant (based upon cohort data of first-time students in prior year, defined for purposes of computing the Completion Rate/Student Progress and Attainment Rate applicable to the student success scorecard as of 1/1/218) x funding rate ($5,32 x 4.%, or $2,128.) For both criteria above, the state Chancellor s Office shall utilize prior year data for students who receive a Promise Grant Fee Waiver and prior year data for the cohort of students who receive Federal Pell Grants 25% Student Success Grants Number of degrees, certificates, and awards granted by the college in the prior year x funding rate ($5,32 x 14%, or $5,532.8) Number of students who complete a degree, certificate, transfer, or achieve transfer prepared status in three years or less in the prior year (as defined for purposes of computing the Completion Rate/Student Progress and Attainment Rate for the student success scorecard as of January 1, 218) x funding rate ($5,32 x 12.2%, or $6,394.64) Number of Associate Degree for Transfer degrees granted x funding rate ($5,32 x 18.35%, or $976.22) Based upon preliminary simulations released by the California Department of Finance, 34 districts would receive additional funds under this new formula, with increases ranging from $81, to $22.2M (or increases from 1percent to 18 percent) over funding provided in the existing model. Conversely, 38 districts funding would remain flat by virtue of proposed hold harmless provisions. The hold harmless provisions currently in the proposal include: : Level of funding to ensure all community college districts receive a minimum funding level (computational revenue) equal to that received in the fiscal year : Level of funding equal to applicable FTES funding rate received by the district in fiscal year multiplied by the district s new FTES. Level of funding to be adjusted to include a basic allocation based on the number of colleges and comprehensive centers in the district consistent with the basic allocation rates used in the fiscal year (y-rating). UNDERSTANDING CCC BUDGET AND REPORTING PART II 18

19 It is critical to understand that, while in a hold harmless status, a district would be precluded from receiving COLAs. Looking more closely at the proposed new model, it is clear that districts would be incentivized to increase the number of Pell and Promise grant awardees. The district and colleges would need to assess current financial aid practices and processes with the intent of identifying and exploring ways to increase participation of students in these financial aid programs.? Guiding Questions For Discussion 1. What data inputs are used to arrive at a district s Total Computational Revenue? In what ways can a district influence its Total Computational Revenue? 2. What is the 5 Percent Law? What is the intent of this requirement and what variables go into computing the compliance requirement? 3. What is the FON? How did it originate? UNDERSTANDING CCC BUDGET AND REPORTING PART II 19

20 Practical Applications In order to fully apply and utilize the material contained in the guide, it is recommended that users review their respective Exhibit C, located on the State Chancellor s website at: Exhibit_C_217-18_P1_22218.pdf Upon following this link, users will open a file which includes every district s Exhibit C produced at P2 reporting. By scrolling down, users can find their district s report. Once found, users can go back through this resource guide selecting and reviewing each section of their report. In conclusion, resources such as those in the SEM-ASK and the Chancellor s Office are intended to clarify the budgeting processes so that colleges and districts can make the best fiscal decisions when implementing their Strategic Enrollment (SEM) Plans. UNDERSTANDING CCC BUDGET AND REPORTING PART II 2

21 Ancillary Materials and References ANCILLARY MATERIALS The Basics of Community College Funding ACBO Presentation of FON, "The Who, What, Where and When " REFERENCES Student Attendance Accounting Manual (CCCCO) StudentAttendanceAccountingManual.aspx#Attendance_Accounting_/_FTES Budget Accounting Manual Unit/FiscalStandards/BudgetandAccountingManual.aspx California Community Colleges, Contracted District Audit Manual Fourth Attachment titled Contract District Audit Manual FiscalAccountability/ContractedDistrictAuditManual.aspx#CDAM_for_Fiscal_Year_ UNDERSTANDING CCC BUDGET AND REPORTING PART II 21

22 SEM-ASK Resource Guide in the Series A Roadmap for Strategic Enrollment Management Planning Calculating and Understanding FTES and Productivity Data Tools and Metrics for Strategic Enrollment Management Developing and Managing the Class Schedule High Impact Retention, Persistence, and Success Practices for Strategic Enrollment Management Targeted Marketing for Strategic Enrollment Management Understanding CCC Budget and Reporting Part I (CCSF-32 Report) Understanding CCC Budget and Reporting Part II (Exhibit C, Fifty Percent Law, and FON) The Basics of Community College Funding UNDERSTANDING CCC BUDGET AND REPORTING PART II 22