Summary of LAO Findings and Recommendations on the 2012-13 Budget

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Budget Issue
LAO Finding Or

Last Updated
See Detail  California Community Colleges Block grant for K-14 mandated activities Adopt Governor's May proposal to eliminate roughly half of education mandates and create a block grant for remaining activities. Modify proposal so that (1) block grant activities are required only as a condition of accepting the grant and (2) different types of local educational agencies receive funding based on different per-student rates. 5-30-12
See Detail  California Community Colleges May Revision Proposition 98 proposal Recommend the Legislature consider alternatives to the Governor's basic Proposition 98 budget plan and trigger plan (were his tax measure to fail). The alternatives are based on a reasonable approach to the creation and payment of maintenance factor obligations. In addition, the alternatives use a consistent "current-year" method for all applicable "rebenchings." 5-30-12
See Detail  Student Aid Commission Governor's May Revision methodology to reduce Cal Grant award amounts Reject Governor's May Revision proposal to prorate Cal Grant amounts based on students' eligibility for federal Pell Grants. The Governor's proposal uses too crude a measure of financial need. Instead direct that an independent study be completed by January 2013 with recommendations for comprehensive reform of the state's financial aid programs, which may include differential award amounts. 5-30-12
See Detail  Student Aid Commission Governor's May Revision proposal to restrict institutional eligibility for Cal Grants Adopt modified changes to institutional eligibility for Cal Grant programs that are less restrictive than Governor's May Revision proposal, which goes too far. A maximum cohort default rate of 20% (instead of 15%) and no graduation rate limit (instead of 30%) would provide $14 million in savings (instead of $24 million), assuming reduced awards for students at private institutions. 5-30-12
See Detail  UC and CSU Retirement costs Recommend rejecting Governor's May proposals to not adjust UC and CSU's budgets for certain pension and retiree health and dental benefits costs. Recommend modifying proposed $52 million augmentation for UC to reflect its actual pension costs. Recommend approving technical change to separately track funding for CSU retiree health care costs. 5-24-12
See Detail  Student Aid Commission Longer-term financial aid reforms Consider longer-term reforms to state aid programs, including (1) instituting more consistent, comprehensive approach to aid across segments; (2) differentiating award amounts based on specific student needs ; (3) developing rational policy for award levels at different types of institutins; (4) setting limit on awards for lower-division studies; and (5) decentralizing Cal Grant delivery. 2-23-12
See Detail  Student Aid Commission Decentralize Cal Grant delivery Recommend the Legislature enact legislation to decentralize Cal Grants. We offer several specific recommendations to improve student-centered delivery of state financial aid at the campus level; reduce duplication of functions between campuses, system offices, and the state; and improve both the effectiveness and efficiency of the state's financial aid enterprise. 2-10-12
See Detail  Student Aid Commission Financial aid General Fund (GF) savings options Modify financial aid programs to better target resources and create GF savings. Options include increasing GF offset from SLOF ($32 million), eliminating non-need-based fee waivers ($30 million), limiting competitive awards to stipends only ($30 million), adjusting eligibility criteria (variable), raising minimum GPA ($21 million), reducing award amounts (variable), and modifying CCC fee waivers 2-10-12
See Detail  UC, CSU, and CCC Trigger reductions Consider alternatives to Governor's proposed trigger cuts of $200 million for UC, $200 million for CSU, and $292 million for CCC. Alternatives include allocating cuts differently or building budget that does not assume voter approval of additional revenues. 2-10-12
See Detail  UC, CSU, and CCC Flexibility provisions Reject Governor's January proposal to eliminate enrollment targets for the three segments. Recommend Legislature reject Governor's proposal to eliminate all earmarks for UC and CSU budgets, and instead consider modifying or eliminating earmarks on a case-by-case basis. Recommend modified approach to the Governor's proposal to expand CCC categorical flexibility. 2-10-12
See Detail  UC, CSU, and CCC New funding compact Reject Governor's January proposal to commit the state to annual General Fund augmentations for the three segments, regardless of actual costs they face or the state's fiscal condition. Recommend working with Governor to pursue meaningful accountability for higher education. 2-10-12
See Detail  UC and CSU Debt service costs Recommend rejecting the Governor's January proposal to (1) shift funding for general obligation debt service into the universities' base budgets and (2) remove restrictions on funding for lease-revenue debt service. 2-10-12
See Detail  California Community Colleges Contracting out for noninstructional services Recommend the Legislature ease restrictions on contracting out for noninstructional services. 2-10-12
See Detail  California Community Colleges Prioritizing course enrollment Recommend the Legislature (1) adopt statewide registration priorities that maximize access for CCC's most-focused students under the Master Plan; (2) establish a 100-unit cap on the number of taxpayer-subsidized credits a CCC student may accumulate, for savings of up to $175 million in 2012-13; and (3) eliminate state funding for repetition of physical education and other recreational classes. 2-10-12
See Detail  California Community Colleges Funding and flexibility for credit basic-skills instruction Recommend the Legislature reduce the funding rate for credit basic-skills instruction to the same rate provided for noncredit basic skills, for state savings of about $120 million in 2012-13. Provide more flexibility by permitting colleges to (1) hire basic-skills instructors possessing a bachelor's degree or higher, as well as to (2) contract out basic-skills instruction to a third party. 2-10-12
See Detail  California Community Colleges Intercollegiate athletics Eliminate state funding for CCC intercollegiate athletics, for savings of about $55 million in 2012-13. 2-10-12
See Detail  California Community Colleges Board of Governors (BOG) fee waiver program Recommend the Legislature: (1) adopt satisfactory academic progress requirements for the program; (2) require colleges to count dependent students' income for purposes of determining eligibility for a waiver; and (3) require students to apply for a waiver using the federal financial aid application. 2-10-12
See Detail  California Community Colleges 50 percent law Give districts more ability to hire faculty who provide direct support services to students by including expenditures on counselors and librarians as part of instructional costs. Alternatively, suspend the law. 2-10-12
See Detail  California Community Colleges Full-time faculty targets (75/25 law) Suspend requirements on the number of full-time faculty that districts must employ. 2-10-12
See Detail  California Community Colleges Categorical program flexibility Modify Governor's January budget proposal to consolidate virtually all funding for community college categorical programs into one general purpose "flex item" by restricting use of the funds only for existing categorical-program purposes, or, alternatively, creating two block grants (for student support and faculty support). 2-10-12