Legislative Analyst's Office Analysis of the 2002-03 Budget Bill

California Community Colleges (6870)

The California Community Colleges (CCC) provides instruction to about 1.6 million adults at 108 colleges operated by 72 locally governed districts throughout the state. The system offers academic and occupational programs at the lower-division (freshman and sophomore) level. Based on agreements with local school districts, some college districts offer a variety of adult education programs—including basic skills education; citizenship instruction; and vocational, avocational, and recreational programs. Finally, pursuant to state law, many colleges have established programs intended to further regional economic development.

Figure 1 shows the budget from all significant sources for community college education for the budget year and the two previous years. As the figure shows, CCC spending from all sources is projected to increase by $104.2 million, or 1.7 percent, above the revised current-year level.

Reversion Account Funding Is Significant. The Proposition 98 amounts shown in Figure 1 are the amounts expended in each fiscal year. These amounts include both new appropriations as well as reappropriations from the Reversion Account in each fiscal year. (The Reversion Account contains unexpended Proposition 98 appropriations from prior fiscal years, and can be used to fund Proposition 98-eligible activities only.) A relatively large amount of Reversion Account funding is provided in the current year and budget year. Figure 2 shows these amounts, and reconciles the Proposition 98 appropriations with the expenditure of these funds. It also shows actual and anticipated savings due to increased property tax receipts.

The CCC's Share of Proposition 98. The Governor's budget includes $4.7 billion in Proposition 98 funding for the community colleges for 2001-02. This is about 75 percent of overall community college funding.

Total Proposition 98 funding (approximately $46 billion in the budget year) is split among K-12 education, CCC, and several other state agencies (such as the Departments of Mental Health and Developmental Services). As proposed by the Governor, CCC would receive 10.2 percent

of total Proposition 98 funding, K-12 education would receive 89.6 percent, and the other state agencies would receive the remaining 0.2 percent. This split is unchanged from the revised current-year estimate.

Major Budget Changes

Figure 3 shows the changes proposed for community college Proposition 98 appropriations (not expenditures) in the budget year. Key changes include:

• Augmentation of $120.2 million for enrollment growth, based on a projected increase of 3 percent in 2002-03.
• Augmentation of $88.8 million to provide a 2.15 percent cost-of-living adjustment (COLA) to apportionments and some categorical programs.
• Augmentation of $91.2 million to replace one-time Proposition 98 reversion account funding in the current year for ongoing program costs.
• Augmentation of $20.2 million for instructional equipment and scheduled maintenance.
• Reduction of $121.7 million in various categorical programs.

Proposition 98 Spending by Major Program

Figure 4 shows Proposition 98 expenditures (including Reversion Account spending) for community college programs. "Apportionment" funding (available for the districts to spend on general purposes) accounts for $3.8 billion in 2002-03, or about 81 percent of total Proposition 98 expenditures. The state General Fund supports about 48 percent of apportionment expenditures, and local property taxes provide the remaining 52 percent.

"Categorical" programs (expenditures earmarked for a specified purpose) are also shown in Figure 4. These programs support a wide range of activities—from services for disabled students to maintenance and special repairs. We discuss the Governor's proposed reductions in some categorical programs, as well as ways that categorical programs could be restructured, in the following section.

Update on Partnership for Excellence

Now in its fourth year, the Partnership for Excellence (PFE) program provides supplementary funding to community colleges in exchange for their commitment to improve student outcomes in specified areas. We find that improvement, to date, has been marginal and that the accountability intended by the Legislature has been elusive. We recommend that the Legislature either end the PFE experiment or consider modifications to address existing problems with the program.

The Legislature and the Governor established the PFE program in 1998 through Chapter 330 (SB 1564, Schiff). In general, the PFE provides additional funding (currently $300 million per year) to community colleges in exchange for their commitment to improve their performance in specified areas.

Background

Chapter 330 required CCC to develop between five and ten specific goals related to student success, as well as related outcome measures to assess district performance. The act states that the goals must include at least the following areas: (1) student transfers, (2) degrees and certificates, (3) successful course completion, (4) workforce development, and (5) basic skills. The act expresses the state's commitment to provide supplemental funding (above funding for enrollment growth and COLAs) "to invest in program enhancements that will increase performance toward the community colleges' system outcome measures."

As conceived, the PFE's success depends on (1) the establishment of appropriate goals and outcome measures, (2) the accurate measurement of progress toward achieving those goals, and (3) the linking of funding to performance. We summarize activities in these areas below.

Setting of Goals and Outcome Measures. In the fall of 1998, CCC adopted preliminary goals and accountability measures for the five mandatory categories specified in Chapter 330. (The CCC chose not to adopt any additional categories at that time.) These goals are to be achieved by 2005-06 (although the PFE statute is to sunset on January 1, 2005.) In accordance with Chapter 330, the Department of Finance (DOF), the California Postsecondary Education Commission (CPEC), and the Legislative Analyst's Office (LAO) reviewed and recommended modifications to CCC's proposed goals and accountability measures. Specifically, the three agencies recommended changing the base year of performance data, adding the goal of transfer-preparedness (and not merely actual transfers), and including separate subgoals within certain categories.

In September 1999, in accordance with language in the 1999-00 Budget Act, CCC reported (1) its response to the three agencies' concerns, (2) performance targets and baseline data, and (3) a plan for annual district-specific accountability reports beginning in April 2000. The report was reviewed jointly by the three agencies.

Although the report addressed some of the agencies' earlier concerns (including the addition of a "transfer-prepared" goal), the agencies' written response to the report expressed "serious concerns" with CCC's modified goals and assumptions. Most significantly, the three agencies disagreed with CCC's contentions that (1) "full funding" of the PFE requires annual augmentations of $100 million (reaching a $700 million annual appropriation in 2004-05), and (2) any lower level of funding would justify a commensurate reduction in their numerical targets. The three agencies also expressed concern that the plan did not ensure accountability, that its proposed outcomes did not reflect an adequate return on state investments, and that it did not provide annual benchmarks.

In 2000, CCC and the three agencies made several efforts to reconcile these issues, but no formal resolution was reached. The CCC's annual reports on the PFE in 2000 and 2001 were based on essentially the goals and measures outlined in CCC's September 1999 report (with minor modifications). Figure 5 summarizes these goals and outcome measures.

Measurement and Reporting of Outcomes. Pursuant to Chapter 330, community college districts report campus-level performance data to the CCC Chancellor's office, which in turn provides annual reports to the Governor and Legislature. To date, CCC has provided district and college baseline data in a May 1999 report, reports on district and system performance data in July 2000 and April 2001, and reports on local investments of PFE funding in July 2000 and April 2001.

The system and district performance reports present statewide and college-specific data for each of the PFE categories. The reports on local investments show how each college has allocated its PFE funding among the goal areas, and the number of employees (by category) hired with PFE funds. Overall, as shown in Figure 6, the system as a whole was actually losing ground in two goal categories as of the latest report (in April 2001).

Linking Funding to Performance. Although the PFE attempts to impose "accountability" on CCC's use of Partnership funding, the PFE is not truly a "pay-for-performance" mechanism. Instead, annual funding is provided at whatever level the Governor and Legislature agree upon, and the CCC reports back on its progress in achieving the specified goals.

Funding is provided to the CCC Chancellor's office, which distributes it to community college districts. Chapter 330 specifies that, for the first three years of the PFE, this funding shall be allocated among districts in relation to the number of full-time equivalent (FTE) students being served in each district. The PFE gives districts "broad flexibility in expending the funds for program enhancement that will improve student success and make progress toward system goals." Examples of PFE expenditures made by districts include hiring academic counselors, purchasing library materials, redesigning courses, and upgrading computers and other technology.

Beginning in 2001-02 (the fourth year of the PFE), CCC is annually to assess and report on the extent to which the system's PFE goals are being achieved. If it finds that progress has not been satisfactory, CCC is to implement a "contingent funding mechanism" of its own design, which would directly link a district's PFE funding to its achievement of PFE goals. Funding would no longer be guaranteed on a per-student basis. Instead, the amount of money received by a district would be dependent on its progress in meeting its PFE goals. In this way, the contingent funding mechanism would impose some measure of accountability at the district level.

In November 2000, the CCC Board of Governors approved a design for a contingent funding mechanism. Essentially, the only fiscal accountability provisions of the mechanism would be to (1) dedicate up to 1 percent of total PFE funds for planning and technical assistance to failing districts, and (2) allocate up to 5 percent of total PFE funds for one-time grants to high-achieving districts. The board's mechanism mandates that PFE spending plans be developed for districts that fail to meet three of their five PFE goals. (It does not, however, provide for any change to the funding levels of districts that perform poorly.)

At its March 2001 meeting, the CCC Board of Governors determined that the system as a whole was making satisfactory progress toward the goals and, thus, chose not to activate the contingent funding mechanism. As a result, funding in 2001-02 continues to be distributed on a per-student basis. At the time this Analysis was written, the CCC Board of Governors had not yet decided whether system progress remained adequate to avoid activation of the contingent funding mechanism in 2002-03.

PFE Failing to Meet Objectives

Chapter 330 requires LAO (as well as CPEC) annually to (1) provide independent assessments of CCC's progress toward system goals, (2) recommend necessary changes to the program, and (3) recommend ways of improving incentives for districts to contribute toward the achievement of system goals. Our findings and recommendations follow.

PFE Funding Welcomed by Districts, But Little Progress Is Evident. As shown in Figure 7, the PFE is funded at $300 million in 2001-02, and the Governor's 2002-03 budget proposal would continue that funding level. The PFE accounts for only 7.8 percent of districts' noncategorical funding (and 6.3 percent of their total funding). Still, PFE funding—currently at an average level of $274 per FTE student—has provided a boost in discretionary revenue to CCC districts.

As a system, however, CCC has shown mixed results regarding its PFE goals. As shown in Figure 6, after the first two years of the program, progress ranged from 29 percent achievement of the 2005 Basic Skills goal to a worsening—or movement away from—the transfer-prepared goal by 36 percent.

Measurement of Results Hindered by Methodological Disagreement and Conceptual Vagueness. As reviewed above, the process of establishing goals and outcome measures, as well as setting guidelines for how they might be adjusted over time, has been controversial. It remains unclear how much of the perceived movement towards system goals is due to the PFE, and how much is simply the result of enrollment growth. For example, between 1998-99 and 1999-00, Basic Skills completions increased by 4.6 percent as shown in Figure 6. However, CCC enrollment increased by 3.5 percent during this period, thus accounting for a substantial majority of measured "progress." Given this level of enrollment growth, the 0.7 percent increase in degrees and certificates awarded during this period reflects only marginal improvement.

In enacting the PFE legislation, the Legislature expressed its intent that the goals be "rigorous and challenging to the system, and exceed what could be expected to occur based on increases in funded enrollment." It is not at all clear that this has been the case.

What makes measuring outcomes especially difficult is CCC's expressed intention of continually adjusting targets whenever the levels of state financial support, local property taxes, student fees, adult population, student courseloads, and inflation do not match hypothetical "expected" levels. For example, if the rate of inflation were higher than anticipated, CCC would adjust target figures for workforce development to reflect a different business climate. To be sure, various factors beyond CCC's control do affect outcomes. But this applies to most endeavors for which a public agency is held accountable. Moreover, these kinds of adjustments require a sophistication that has not been evident in CCC's PFE modeling to date.

Administration's Budget Proposal Raises Questions About Core PFE Assumptions. As discussed above, the PFE is premised on the understanding that PFE funding is provided in addition to funding for base program enrollment growth and COLAs. In other words, PFE funding is meant to allow districts to enhance services, equipment, and programs in a way that targets additional improvement in the specified goal areas. The Governor's 2002-03 budget proposal calls this assumption into question. Specifically, the administration states that PFE funding should be used to replace base funding the Governor has proposed to eliminate from various student services and faculty development programs. In other words, rather than supplementing core funding as called for in Chapter 330, PFE funds are now proposed for supplanting core funding.

Accountability Is Lacking. Notwithstanding poor performance on some goals by a number of districts, the contingent funding mechanism has not been put into effect. Even if it were implemented, the mechanism adopted by the CCC Board of Governors only weakly links funding to performance. It provides no sanctions—in the form of reduced funds—for districts not performing well. It would offer a pool of up to $15 million (at current funding levels) to exceptional districts, and provide technical assistance in developing spending plans for failing districts. In short, there is currently little incentive for individual districts to improve performance in the specified goal areas.

Legislature Should Reconsider PFE in Light of Performance

We recommend that the Legislature reconsider the Partnership For Excellence (PFE) program in light of its performance to date. If the Legislature chooses to continue the program, we suggest two modifications that could be made to address existing problems with the PFE.

We believe the PFE is failing to meet the Legislature's expectations in enacting Chapter 330. As discussed above, PFE's central principle of accountability has only been weakly realized, improvement in the five specified areas has been mixed, and PFE funding is proposed to be diverted to backfill reductions in categorical programs. For these reasons, the Legislature may wish to terminate the PFE experiment.

We recognize that the Legislature and the administration have committed to supporting the PFE until 2005. As an alternative to ending the PFE at the conclusion of the current year, the Legislature could allow the PFE to continue until nearer its sunset date of January 1, 2005. The program could be thoroughly evaluated and the Legislature could choose at that time whether or not the PFE should be allowed to continue. If the Legislature chooses to continue the PFE for now, we believe it should make several changes to the program which would address some of the more serious problems we have identified.

Create a Meaningful Link Between Funding and Performance. In order to increase accountability and provide districts with a financial incentive to improve performance in the specified goal areas, we believe there must be a meaningful link between funding and performance. Accordingly, the Legislature could adopt budget bill language allocating all or part of PFE funding to the CCC Chancellor's office for distribution to districts based on their PFE performance. We believe that at least $100 million of PFE funding would be a reasonable amount for this purpose.

Focus on Actual Performance Rather Than Progress Toward Disputed Numerical Targets. We believe the five PFE goals (such as "increasing the rate of course completion") are generally appropriate, and provide a reasonable set of guidelines for assessing CCC performance. We further believe it is appropriate to attempt to measure progress in each of those goal areas using quantitative measures. However, we do not believe that the particular numerical targets adopted by CCC (see Figure 5) provide a meaningful guide to progress. As discussed above, considerable time and energy is spent establishing, measuring, defending, and modifying the numerical targets for PFE goals. Significant disagreements concerning these targets remain among various parties in the administration, the Legislature, and the CCC system.

Because the Legislature has never agreed to the numerical targets adopted by CCC, and because they have become a distraction from more basic performance issues, we recommend that the Legislature focus on actual year-by-year performance by the CCC rather than on movement in relation to the 2005-06 targets.

Categorical Consolidation Should Accompany Proposed Cuts

The Governor's budget proposes a total of $121.7 million in reductions to six categorical programs. We believe that, in the aggregate, these programmatic reductions are reasonable, and we recommend their adoption. However, we recommend that these reductions be accompanied by a consolidation of funding for several categorical programs in order to allow community college districts greater flexibility in directing available resources to where they are the most needed.

Governor Proposes $122 Million in Cuts to Categorical Programs

The Governor's budget proposal would reduce funding for six categorical programs by a total of $121.7 million. As detailed in Figure 8, the proposed cuts amount to a 47 percent reduction in Proposition 98 General Fund support for these programs.

We describe the six programs and the specific funding changes below.

CalWORKs. The California Work Opportunity and Responsibility to Kids (CalWORKs) program is financed by a combination of federal Temporary Assistance for Needy Families (TANF) block grants, the state General Fund, and county funds. To receive the annual TANF block grant, California must meet a $2.7 billion maintenance-of-effort (MOE) spending requirement. Although this requirement is met primarily with state and county spending in the CalWORKs program, state spending in other departments, including CCC, is also used to satisfy the requirement.

Specifically, each year since 1997-98, CCC has received $65 million from the General Fund—countable toward the MOE spending requirement—to provide services that help CalWORKs recipients move toward employment and self-sufficiency. The current-year budget requires that at least $49.5 million of this amount be used for work study and job placement services, coordination with welfare organizations, curriculum development, and child care (which must receive at least $15 million of this amount). Up to an additional $10 million of this total appropriation may be used for providing services to former CalWORKs recipients.

The 2002-03 budget proposal reduces CCC's CalWORKs funding to $15 million, and requires that this amount be expended solely on childcare services for current and former CalWORKs recipients. To maintain MOE compliance, this reduction in MOE-countable expenditures is offset by increased state spending in the CalWORKs program. (For a fuller description of the "CalWORKs" program, see the "Health and Social Services" Chapter in this Analysis.)

Matriculation. Community colleges provide matriculation services to help students succeed in their educational goals. Matriculation services include enrollment, orientation, skills evaluation, counseling, referral, and related activities. The current-year budget provides $76.3 million for matriculation services. The 2002-03 budget proposal reduces this amount to $49.5 million, which is similar to the amount provided in 1996-97. The proposal includes budget bill language specifying that 15.7 percent, or $7.7 million, of this amount be allocated for matriculation services directed at students enrolled in noncredit classes and programs.

Telecommunications and Technology. The Telecommunications and Technology Infrastructure Program (TTIP) supports the development and expansion of technological applications at CCC campuses. Funding is divided among (1) allocations to all community college districts for the development of computer and related information networks, (2) competitive grants for technology that improve student learning, and (3) allocations to districts to fund faculty and staff training in the use of technology.

Funding for TTIP in the current year ($44.3 million) is allocated as follows: $23.6 million for networks, $12.7 million for competitive grants, and $8 million for training. The current-year budget also includes budget bill language requiring CCC to submit a report on the status of the program to the Legislature and the DOF by November 1, 2001. As of early February 2002, CCC had not provided this report.

The 2002-03 budget proposal would reduce TTIP funding to $24.5 million, which is slightly less than the level of state support in 1999-00. The budget proposal would allocate $12.5 million for networks and $12 million for competitive grants. No TTIP funding would be provided for faculty and staff training.

Fund for Student Success. The Fund for Student Success (FSS) was established in 1997-98 mainly to provide competitive, limited-term grants for the development of campus programs that improve student performance. (In addition, a relatively small amount of FSS funds have been available for specific outreach and other programs.) Budget bill language requires that competitive grant funding is available for a limited duration, after which programs initiated with FSS grants must be institutionalized within campus budgets (without FSS funds).

The current-year budget provides $16.2 million for FSS. It also includes language requiring CCC to submit to the Legislature and DOF report outlining the results achieved by programs funded from competitive grants by November 1, 2001. As of early February 20002, no such report had been provided.

The 2002-03 budget proposal provides $6.2 million for the FSS—a reduction of $10 million from the current year. The budget allocates this amount to specified outreach programs, and provides no funding for competitive grants.

Economic Development. Beginning in 1990-00, CCC's budget has included an increasing amount of funding for economic development programs. This amount rose from $5.2 million in 1990-91 to $50.2 million in 2001-02. Chapter 939, Statutes of 2000 (AB 2794, Havice), recast CCC's economic development program and established a sunset date of January 1, 2003. Chapter 939 also requires CCC to provide annual reports to the Governor and Legislature by January 1 that detail activities and expenditures of the program. As of early February 2002, the January 1, 2002 report had not been provided.

The 2002-03 budget proposal would reduce funding for CCC's economic development program to $40.3 million. This amount includes $9.2 million for grants to regional business resources and centers, $16.4 million for regional development and training program grants, $3.6 million for economic development networks, $5 million for job cre ation for public assistance recipients, $2.1 million for Mexican International Trade Centers, and $4 million for nursing programs.

Faculty and Staff Development. Since 1992-93, CCC has received $5.2 million annually for campus-based faculty and staff development efforts. Funded activities include training, conferences, workshops, and similar development opportunities that increase the effectiveness of CCC faculty and staff. The 2002-03 budget proposal eliminates funding for this program, expressing concern about its lack of meaningful accountability.

Reductions Are Reasonable, But Greater District Flexibility Needed

The Governor's proposed reductions are focused in areas not directly related to CCC's core mission of providing classroom instruction. Instructional programs, therefore, should not be affected by this proposal. Moreover, there has been little accountability for most of the programs proposed for reduction. Finally, we note that many of the activities conducted through these programs could be funded from other sources, including districts' general apportionment funds, PFE funding, and private funding from regional businesses. (We discuss "PFE" in detail in this Item.) For these reasons and given the state's current fiscal situation, we recommend approval of the proposed reductions to the CCC categorical programs.

Restructuring Categorical Programs Would Increase Flexibility. We also believe that districts' ability to use these and other categorical funds effectively could be enhanced by increasing their flexibility. There are 72 locally governed community college districts in the state, each with different student populations, local resources, and job environments. District needs, therefore, can vary greatly. For example, some districts may have a relatively high need for matriculation services, while other districts may require relatively less matriculation funding and more resources for technological investment.

The state creates categorical programs to ensure that districts address specific priorities. While this is an important goal, we believe there are opportunities to combine funding for similar programs in a way that increases local flexibility while ensuring that state priorities continue to be addressed. (In recent years the state has taken a number of actions toward categorical reform in K-12 education. We discuss some of these efforts, and identify additional opportunities, in the "K-12 Education" section of this chapter.)

For CCC, we recommend that funding for several existing categorical programs be combined into two block grants—Student Services and Faculty Support. Figure 9 summarizes the elements of our two proposed block grants.

Our proposed Student Services block grant includes three of the categorical programs that the Governor has proposed to be reduced in 2002-03, as well as three other related programs. By combining funding for all six of these programs into one block grant, community college districts would be able to allocate student services funding among specific programs in a way that best meets the needs of their students. We recommend that the funds provided under this block grant be allocated to districts primarily on an FTE basis. However, because some of these services are used disproportionately by needy students, we recommend that districts with a high percentage of such students receive a larger share of the funding.

Our proposed Faculty Support block grant includes funding for six programs to improve faculty performance and to recruit and retain part-time faculty. Although the Governor proposes to eliminate the Faculty and Staff Development program, we believe that the activities currently funded by that program could appropriately be carried out under our proposed Faculty Support block grant. We recommend that the funds provided under this block grant be allocated to all districts on an FTE basis.

Recommend Adoption of Categorical Reforms. We recommend that the Legislature adopt these proposed categorical reforms. We also recommend that the Legislature combine and recast the reporting requirements currently connected with existing programs to reflect the consolidation of funding for these programs.

Other Issues

Possible Increase in PERS Contribution Rate Would Add District Expenses

Community college districts contribute to the Public Employees' Retirement System (PERS) on behalf of their PERS-covered employees (generally, noninstructional staff). The contribution rate paid by college districts (as well as K-12 school districts and county offices of education) is set by PERS using a formula that takes into account performance of the fund. The employer rate has been zero percent of covered payroll since 1997-98, due to the actuarial performance of the PERS fund.

The PERS now estimates that the contribution rate would increase to 1.72 percent in 2002-03. The Governor's budget, however, proposes to defer employer contributions to PERS, resulting in a zero percent contribution rate again in the budget year. As we discuss in the "Crosscutting Issues" section of the "General Government" chapter of this Analysis, we recommend that the Legislature reject this proposal. Our recommendation would have implications for CCC. We estimate that, without the PERS deferral, community college districts would have to pay $12 million in employer contributions in 2002-03. Unlike school districts and county offices of education, community college districts do not automatically receive a corresponding increase in apportionments with which to pay this contribution to PERS. Thus, this amount would have to come from CCC's general apportionments.

Even if the PERS deferral proposal is rejected and CCCs experience these costs, there may be available funds to offset these costs. As described below, the COLA for CCC apportionments may be $15 million less than provided in the Governor's budget. This would more than offset the PERS cost. In addition, we estimate that the budget-year Proposition 98 minimum guarantee may increase by $825 million. If so, there would be a significant amount of "room" to accommodate the added PERS costs.

Statutory COLA May Be Overfunded

The Governor's budget includes $84.4 million for a COLA for district apportionments. According to state statute, the COLA is calculated using a specified formula incorporating official data in a federal price index. That index will not be available until April 2002, at which time the precise amount of the COLA will be known. The Governor's budget assumes that this COLA will be 2.15 percent. As we discuss in "K-14 Education Priorities" in this chapter, we currently project that the statutory COLA will be about 1.8 percent. Funding this smaller COLA would require about $79.5 million, or approximately $15 million less than proposed in the Governor's budget. If our projection is correct, budgeted funds for COLA purposes could be reduced by $15 million. This amount would then be available for other K-14 priorities.

Governor Proposes to Move Adult and Vocational Education Programs From K-12 to CCC

The Governor's budget summary includes a proposal for reforming the state's workforce development system. As we explain in our "Crosscutting Issues" write-up in the "Health and Social Services" chapter, this proposal would, among other things, consolidate vocational and adult education under CCC.

Consolidation Would Involve Major Fund Shift to CCC. According to the Governor's budget summary, community colleges currently receive approximately $459 million (Proposition 98 General Fund) for vocational education and related job development services. Consolidation would involve moving approximately $1.3 billion ($1.1 billion Proposition 98 General Fund and $138 million other funds) worth of additional adult and vocational programs from the State Department of Education (SDE) and the Secretary for Education to CCC.

Proposal Not Developed. The budget summary provides little detail about how this consolidation would be accomplished. It does not explain, for example, how the proposed transition would be phased in, how long it would take, whether aggregate funding for the program would be affected, and whether administrative savings or other efficiencies could be achieved. We understand that the administration is still developing the details of this proposal, and that it will likely provide a more complete proposal at the time of the May Revision.

The 2002-03 Budget Bill, as introduced, does not reflect any consolidation of vocational and adult education programs under CCC. We believe that there will be little time for an adequate review and consideration of a consolidation proposal in May if the Legislature does not examine the implications of a consolidation beforehand. We therefore recommend that the Legislature have CCC, SDE, and other affected agencies report as soon as possible on the implications of consolidating the programs.