Analysis of the 2005-06 Budget Bill Legislative Analyst's Office February 2005

California Community Colleges (6870)

The Governor proposes $262 million from the Higher Education Capital Outlay Bond Fund of 2004 for 50 projects. Of this amount, $75 million is for 22 new projects and $187 million is for 28 previously approved projects. We recommend the Legislature approve 49 projects. We discuss the remaining project below.

Six Projects Require Future Funding

There are insufficient uncommitted funds remaining in the 2004 Higher Education Bond Fund to complete 17 higher education projects proposed to receive partial funding in the budget. Six of these projects are at community colleges. We recommend the Legislature approve five of the projects and designate $40 million of unallocated 2004 bond funds for the future costs of the projects. We further recommend approval of the sixth project contingent on the district committing to fund the project's completion with nonstate funds if state funds are not available.

The Governor's budget proposes $4 million from the 2004 Higher Education Capital Outlay Bond Fund to prepare preliminary plans and/or working drawings for six community college projects. The six projects will require $54.5 million to complete after 2005-06, as summarized in Figure 1.

As discussed in the "Crosscutting Issues" section of this chapter, there are not sufficient funds to complete 17 projects in all three segments of higher education, including the six projects for community colleges.

We recommend that the Legislature allocate remaining bond funds to projects based on their priority ranking. For community colleges, we recommend the Legislature approve five of the projects and designate a total of $40 million from the 2004 bond to cover the future costs of these projects. The five projects are the Citrus, Contra Costa, Rio Hondo, San Mateo, and Santa Barbara Community College District (CCD) projects shown in Figure 1. All five of these projects provide classrooms and teaching laboratories—facilities to improve undergraduate academic programs. This type of building falls into our fourth highest recommended priority rank, as discussed in the "Crosscutting Issues" section. The Palo Verde project is an auditorium, which qualifies in our sixth highest priority rank—administrative and support facilities, and faculty offices. Because there are not enough 2004 bond funds remaining to fund projects in this rank, we recommend the Palo Verde CCD project be approved only if the district commits to fund the project's completion with nonstate funds if state funds are not available.

Community Colleges Have Other Funding Option. The community colleges have an option to provide funding to complete projects because they can issue local district bonds to provide a source of funds. Since the passage of Proposition 39 in 2000, which reduced the voter approval requirement for school facilities bond measures from two-thirds to 55 percent, 51 out of 55 (93 percent) CCD bond measures have been approved and over $12 billion has been made available for community college facilities. In the event that nonstate funds were needed to complete the Palo Verde CCD project, the district would have the option of seeking locally approved bonds.