Analysis of the 2007-08 Budget Bill: Education

Intersegmental: Higher Education Nursing Proposals

The Governor’s budget contains several augmentations for registered nursing programs at the University of California, California State University, and California Community College systems. We recognize the need to increase the number of registered nurses in the state, and find merit with some of the Governor’s proposals. Other proposals, however, lack adequate justification. We thus recommend approval of some proposals and reductions in others, as well as additional steps the Legislature could take to improve nursing programs.

In recent years, numerous studies have forecasted that—absent corrective actions—there will be an increasing mismatch between the supply of and demand for nurses as the state’s population increases and grows older. In response, the Legislature has taken a number of steps to increase the supply of nurses. In particular, the Legislature has focused on increasing capacity in the state’s higher education system, which plays a central role in training students to become registered nurses. The Governor’s budget includes several new nursing-related proposals for the University of California (UC), California State University (CSU), and California Community Colleges (CCC). In this write-up we provide an overview of state’s nursing programs, discuss the administration’s proposals to expand them, and offer our recommendations to the Legislature.

Background on State Nursing Requirements and Programs

State Requirements to Becoming a Registered Nurse

All registered nurses in the state must have a license issued by the California Board of Registered Nursing (BRN). To obtain a license, students must complete a number of steps, including graduating from an approved nursing program and passing the national licensing examination.

In California, there are three types of prelicensure educational programs available to persons seeking to become a registered nurse. All three types are generally full-time programs, and each combines classroom instruction and “hands-on” training in a lab with clinical placement in a hospital or other health facility. The first two options are for students to enroll in either an associate’s degree in nursing (ADN) program at a two-year college, or a bachelor’s degree in nursing (BSN) program at a four-year institution. Students that already hold a bachelor’s or higher degree in a non-nursing field are eligible to apply for an entry-level master’s (ELM) program at a university. Generally, students in an ELM program complete educational requirements for a registered-nurse license in about eighteen months, then continue for another eighteen months to obtain a master’s degree in nursing.

Graduates of these nursing programs are eligible to take the National Council Licensing Examination. Applicants that pass the examination and a criminal background check are licensed by BRN to practice as a registered nurse in California. (Registered nurses from other states and countries that want to work in California must also pass the national licensing examination and background check, as well as show proof of completion of a nursing educational program that meets state requirements.)

Nursing Programs in California

Currently, 108 public and private colleges in California offer a total of 121 prelicensure nursing programs. As Figure 1 shows, most of these are ADN programs offered at CCC. In addition, there are 17 BSN programs offered by CSU and UC, and 12 BSN programs offered at private four-year institutions. There are a total of 14 ELM programs in the state.

Nursing Program Applications Far Exceed Admissions. Statewide, the number of applicants to nursing schools in California far exceeds the number of available slots. According to a 2006 BRN study, there was a total of 22,750 qualified applications for just 8,750 first-year slots for the 2004-05 school year. The mismatch between potential students and actual slots applies to all types of nursing programs in the state, including the ADN, BSN, and ELM programs. Figure 2 breaks out nursing-school applications and available slots by program type.

Nursing Program Admissions Policies Vary

California nursing schools have developed different strategies in order to choose which applicants to accept into a program. Generally, nursing programs at four-year institutions and two-year private colleges require students to take several prerequisite courses (such as anatomy and microbiology) as well as a standardized test in order to apply to a program. Applicants are then evaluated based on their prerequisite grades, test-score results, and other criteria (such as ability to speak a second language). The students with the top qualifications are admitted to the program in accordance with the number of available first-year slots. For example, the forty highest-ranking applicants would be admitted into a program with space for forty nursing students.

In contrast, ADN programs at community colleges rely heavily on nonmerit-based or only partially merit-based selection processes. This follows a legal settlement concerning equal access (see box). All community college nursing programs require at a minimum that applicants obtain at least a “C” average on several science prerequisite courses in order to qualify for admission. Some nursing programs require that applicants meet stricter criteria (such as at least a “B” average on science and nonscience prerequisites) in order to apply, though these requirements must be justified through validation studies.

CCC Assessment and Selection Policies Until the early 1990s, many California Community College (CCC) nursing programs chose students by ranking them according to factors such as prerequisite grades and test-score results. Students in various other programs, meanwhile, were required to take assessment tests for course placement purposes. In 1988, the Mexican American Legal Defense and Educational Fund (MALDEF) filed a lawsuit against the CCC system. The MALDEF contended that CCC’s assessment, placement, and prerequisite policies were disproportionately excluding Latino students from certain courses and programs (including nursing). The organization agreed to drop the lawsuit in 1991 after the CCC Chancellor’s Office committed to develop a new set of regulations. Under these regulations, nursing programs, for example, are allowed to continue requiring prospective students to achieve a minimum grade point average on science and nonscience (such as English composition) prerequisites to be eligible to apply. However, districts must first conduct validation studies showing that students who fail to satisfy these requirements are unlikely to succeed in the district’s nursing program. Districts also must offer programs (such as English-as-a-second-language instruction) to help applicants achieve minimum eligibility requirements. The regulations also require nursing programs to adopt nonevaluative selection methods (such as a lottery system) when there are more eligible applicants than enrollment slots.

Because there are more applicants that qualify for admission than enrollment slots, community college nursing programs must decide which applicants to admit. The method of selecting students varies by program. Many programs use a lottery system, which randomly selects students from a pool of applicants. Others admit students on a first-come, first-serve basis, or give priority to “wait-listed” applicants that were not chosen in prior years. As discussed above, the Chancellor’s Office does not allow programs to select from among eligible students based strictly on merit criteria.

A recently enacted statute (Chapter 837, Statutes of 2006 [SB 1309, Scott]), allows community colleges to administer a nationally validated diagnostic assessment test to admitted students before they start a nursing program. Students that are unable to obtain a passing score must demonstrate readiness for the program by, for example, passing remedial courses (such as English or math classes) or receiving tutorial services from community college staff. The intent of this new policy is to reduce attrition in CCC nursing programs by ensuring that students are sufficiently prepared for success in a nursing program.

Recent Trends

Graduates Up... Figure 3 shows that nursing programs have increased the number of graduates significantly in the past few years. A total of about 7,500 students graduated from a nursing school in California during the 2005-06 school year. This is over 800 graduations more than the previous year. Most (about 70 percent) of these nursing-school graduates completed a two-year college’s ADN program. About one-quarter received a BSN from a four-year university, and 4 percent completed an ELM program. As discussed in more detail below, the state has made additional investments in all three types of nursing programs, which are expected to increase graduation totals to over 8,000 annually in future years.

...But Attrition Is a Concern. A large number of nursing students, particularly at community colleges, never complete their degree. As Figure 4 shows, only about one-half of the roughly 6,000 students that enrolled in a community college ADN program in 2002-03 graduated on schedule. About one-quarter of the students graduated in longer than two years, and another one-quarter (about 1,500 students) never graduated. By contrast, the average attrition rate for BSN and MSN students is about 11 percent.

Recent Nursing Program Augmentations

Typically, the Legislature provides funding in the annual budget act for enrollment growth at each of the three segments. With minor exceptions, each segment’s enrollment augmentation is based on a single rate of funding for each new full-time equivalent (FTE) student. The rate represents an average of enrollment costs in different programs and campuses within each segment. The segments themselves then make decisions about how the new enrollment slots will be distributed among their campuses and programs.

The segments, therefore, are able to expand nursing enrollment each year using their regular enrollment growth allocations. However, in recent years the Legislature has taken the unusual steps of: (1) providing supplemental funding beyond the regular growth funding in order to expand nursing programs, and (2) specifying the number of additional nursing students it expects the segments to serve. The extra funding recognizes three special factors concerning nursing programs:

• Nursing programs are considerably more expensive than average. In fact, they are among the most expensive programs on many campuses.

• Nursing programs train professionals who serve critical functions relating to public health.

• There is a substantial shortage of nurses in California’s workforce. To address this concern, the Legislature has sought to expand nursing programs much more rapidly than average enrollment growth.

The 2006-07 Budget Act provides support for a number of nursing program expansions, as shown in Figure 5. In addition, the current-year budget package authorizes 140 new loan forgiveness awards for nursing students, and creates new programs to recruit and retain nursing faculty.

Another way that colleges have funded the higher costs of nursing programs is through partnerships with hospitals and others (such as foundations). These organizations provide funding, or in-kind support, in order to improve the pipeline of nursing graduates that may end up working for them. For example, in recent years a number of health care organizations have supplied faculty, equipment, facilities, and student scholarships to increase enrollment at nursing programs.

Governor’s Proposal

The Governor’s budget proposes a number of augmentations and budget provisions concerning nursing enrollment. Several different budgeting approaches are taken. For example, in some cases augmentations are provided to fund the entire cost of additional nursing students, while in others only the regular per-student funding rate is provided.

University of California

The Governor’s budget proposal includes an augmentation of $757,000 to fund 57 FTE students above the current-year level. The Governor proposes to fund these enrollment slots on top of UC’s normal enrollment growth allocation. The average cost per funded student is $13,254. This compares to the regular per-student funding rate (or “marginal cost”) of $10,876.

California State University

Proposed budget bill language would require CSU to increase enrollment in its BSN programs by 340 FTE students. These students would be counted as part of CSU’s overall enrollment growth, and would thus receive the regular marginal cost funding of $7,837 per FTE student. The budget maintains ongoing funding from recent nursing augmentations providing support for about 475 FTE nursing students at funding rates of around $10,000 per student.

California Community Colleges

One-Time Costs for New Programs and Simulation Laboratories. The Governor’s budget proposes to augment CCC’s current-year budget (through trailer bill appropriation) by $9 million for two, one-time purposes. First, the budget requests a total of $5 million to create five new CCC nursing programs. The funding would cover start-up costs, such as hiring staff to develop the program curriculum. The programs would be selected through a competitive grant process. The budget proposes to spend the remaining $4 million in one-time funds to establish four nursing simulation laboratories. Simulation laboratories, which consist of medical equipment and computerized mannequins, allow students to practice medical procedures (such as inserting intravenous needles) and respond to realistic situations (such as heart attacks) involving mannequin “patients.” The Chancellor’s Office indicates that the laboratories would be shared with other nursing programs (including CSU). The locations would be determined based on a competitive process.

Ongoing Costs to Reduce Attrition and Increase Prerequisite Course Offerings. Beginning in 2007-08, the budget proposes $9 million in new base funding for two purposes. The budget requests $5.2 million to provide a variety of programs (such as tutoring and academic counseling) to reduce attrition among nursing students. This amount would be in addition to $2.9 million in CCC’s base budget, which, pursuant to Chapter 837 (discussed earlier), is to fund diagnostic assessment testing and related services for nursing students. The Governor’s proposal includes budget bill language authorizing nursing programs with attrition rates below 15 percent to use these funds instead to expand enrollment.

The remaining $3.8 million would be provided to community college districts as an incentive to increase science prerequisite course offerings in anatomy, physiology, and microbiology. Generally, students must take these courses in order to apply to a nursing program. It is not clear whether districts would receive a certain amount of money to offer each new course, or whether the money is intended to provide a funding increment per FTE that supplements what is already provided by general apportionments.

LAO Recommendations

Standardize Approach for Funding Nursing Expansion

Given the rapid increases in nursing enrollment, we recommend that the Legislature provide the University of California (UC) and California State University (CSU) with additional funding above the normal marginal cost to cover recognized higher costs of nursing students. However, we recommend that growth in nursing enrollment be treated as part of the overall enrollment growth provided in the budget, which already includes funding for marginal cost. Consistent with this principle, we recommend that UC receive $621,000 less for this purpose than it has requested, while CSU receive an increase of $939,000 in supplemental funding. (Reduce Item 6440-001-0001 by $621,000 and increase Item 6610-001-0001 by $939,000.)

As previously noted, the Governor’s budget provides $757,000 for UC to expand its nursing program by 57 FTE students. This amounts to $13,254 per FTE student, and would provide full funding for these students outside of UC’s regular enrollment growth allocation. By contrast, the budget requires CSU to expand its BSN programs by 340 students as part of its regular enrollment growth allocation. In effect, the budget provides the marginal cost rate of $7,837 per FTE student.

The Governor’s approach continues and expands a practice that has grown over the past several years whereby nursing enrollment is treated inconsistently and, at times, outside of normal enrollment growth. The result is an increasingly complicated and confusing set of expectations with regard to nursing enrollment. Accountability is uneven as well, with new funding sometimes tied to actual increases in enrollment, and at other times simply intended for additional enrollment.

Recommend Funding Nursing Enrollment Within Regular Enrollment Growth. As discussed above, the annual budget includes funding for overall enrollment growth at each segment. The segments allocate this funding among the programs they judge to require expansion. Although different programs incur different costs per student, the growth funding is based on an average, and thus enables all programs—both high and low cost—to grow in proportion to the growth funding provided. For example, funding for 2 percent system growth would enable all programs to grow by 2 percent.

However, in response to the Legislature’s intent of addressing the nursing shortfall, nursing programs are expanding more rapidly than the funded growth rate for overall programs. For this reason, as well as the usually high cost of these programs, we see justification for providing additional funding for nursing enrollment. We note that this supplemental funding would not be necessary in years in which nursing programs grew at a level more in line with overall system funded growth.

Accordingly, we make the following recommendations:

• Reduce UC Funding. We recommend that UC’s expansion of nursing programs be considered part of its regular enrollment growth. Because this would provide the marginal cost amount of $10,876 for each of the 57 additional FTE students requested, achieving the Governor’s proposed funding level of $13,254 for each of these students would require a total supplement of $136,000 (beyond marginal cost funding). Because the Governor’s budget provides $757,000 for these students, we recommend this augmentation be reduced by $621,000.

• Increase CSU Funding. Similarly, we recommend that supplemental funding be provided for the proposed expansion of CSU’s BSN programs. Because these students are considered part of regular enrollment growth, the Governor’s budget provides $7,837 for each of these students. Raising funding for these students to the $10,600 already provided for 35 BSN slots created last year would require $939,000. We recommend CSU’s budget be increased by this amount.

In recent years, the Legislature has provided ongoing funding to enhance the per-student funding rate for community college nursing students. The Governor’s budget, however, does not propose any new funding for expanded nursing enrollment in 2007-08.

CCC—Reject Current-Year Augmentations

We recommend the Legislature reject the Governor’s current-year request for $9 million to establish five new nursing programs and four simulation laboratories, as the need for these proposals has not been justified.

Existing Programs Have Room to Grow. We recommend the Legislature reject the Governor’s request for $5 million in current-year start-up funds for nursing programs and instead direct the CCC system to increase enrollment through more cost-effective means. The Chancellor’s Office plan is to open five new programs of about 25 students each by fall 2009 or spring 2010. This means that up to 125 additional nursing students would be produced by the CCC system beginning in spring or fall 2011. While we think that increasing enrollment is warranted given the statewide demand for more nurses, we believe that a more cost-effective approach would be to add slots at existing CCC nursing programs. Additional capacity appears to be available. According to BRN, for example, only 23 of the community college’s 70 nursing programs offer evening courses. An even smaller number of programs offer courses on weekends or during the summer term. Many nursing programs could increase enrollment by adding a part-time program. An annual increase of just two additional graduates per existing program would exceed the number of graduates (up to 125 in 2011) proposed for these new programs.

Proposed Simulation Laboratories Not Justified. We further recommend the Legislature reject the Governor’s request for simulation laboratories. Community college nursing programs already have laboratories for students to practice medical procedures. The administration has not made a case as to why the current laboratories are inadequate.

Rejection of One-time Proposals Would Reduce Current-Year Overappropriation. As we discuss earlier in this chapter (please see “Proposition 98 Priorities”), our forecast indicates that Proposition 98 is overappropriated by more than $600 million in the current year. Rejection of the administration’s proposals for new nursing programs and simulation laboratories would reduce this amount by $9 million, thereby creating current-year General Fund savings and lowering the minimum guarantee in the budget year.

CCC—Budget-Year Request

We recommend rejection of $3.8 million in additional funds for science prerequisite courses because an enhanced funding rate has not been justified. (Reduce Item 6870-101-0001 by $3,786,000.)

Support Services Would Help Reduce Attrition. We recommend the Legislature approve the administration’s request for $5.2 million to provide additional support services to students. The Governor’s budget proposes to use the additional funds primarily for academic counseling and other services for students. Research has shown that these types of programs can be effective tools for improving retention. Given the current problem with student attrition in most CCC nursing programs, we believe that these additional services are justified. Moreover, it seems appropriate to direct nursing programs that already have relatively low attrition rates to use these funds for enrollment expansion.

Funding Request for Science Prerequisites Is Problematic. We recommend the Legislature reject the Governor’s request to allocate additional funds to community college districts for science prerequisite courses. The administration contends that the funding districts receive from the state for anatomy, physiology, and microbiology courses does not cover their actual costs. As a result, the administration maintains that districts cannot provide enough of these courses to meet student demand, thus making it more difficult for prospective nursing students to become eligible to apply to a program. The administration contends that the proposed funds will create an incentive for districts to offer more science prerequisite courses, thereby improving the applicant pipeline to nursing program.

We have two serious concerns with Governor’s proposal. First, the rationale behind the requested supplemental funding is to improve student access to prerequisite courses, thereby increasing the number of nursing applicants. Yet, as we noted earlier, there are already thousands more eligible applications than enrollment slots. The large applicant pool has continued even with recent increases in nursing-program capacity. To the extent the proposal achieved its stated goal, the result would be an even larger number of applicants turned away or placed on wait lists.

Second, we do not see justification for providing an enhanced funding rate. Unlike nursing courses, which incur unusually high costs and address a significant statewide shortage in registered nurses, the science prerequisite courses have not been shown to require such an enhancement. Indeed, we are concerned that the Governor’s proposal moves down a slippery slope where many programs with only moderately above-average costs could seek additional funding. Without making commensurate reductions for below-average-cost programs, this would skew CCC enrollment funding well above justifiable levels.

CCC—Assess Admissions Polices

We recommend that the Chancellor’s Office report at the budget hearings on potential changes to nursing school admissions processes.

As discussed earlier, community college policies in such areas as student assessment and placement stem largely from a nearly twenty-year old lawsuit settlement involving the Mexican American Legal Defense and Educational Fund. The regulations that resulted from the legal dispute require, among other things, that districts use nonevaluative admissions strategies (such as random selection) when selecting students for oversubscribed programs. Research indicates that these admissions practices reduce the ability of districts to select students most likely to succeed in a program, and may be a contributing factor to the high attrition rates in CCC nursing programs.

Given the state’s interest in reducing attrition, we recommend that the Legislature direct the Chancellor’s Office to report at budget hearings concerning the extent to which regulations could be changed to improve the selectivity of the admissions process, promoting fairness as well as student success. This could include, for example, implementing merit-based admissions policies that take into account applicants’ academic performance as well as other skills and special circumstances (such as the ability to speak a second language, community service, and life experiences).

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