San Diego Community College District

Following the release of Governor Gavin Newsom’s proposed 2024-25 state budget, Chancellor-Designate Gregory Smith provided an analysis with the potential implications for the SDCCD.

Key takeaways from Governor Gavin Newsoms 2024-25 California Budget Proposal:

• The state would use a combination of strategies to manage a $37.9 billion revenue shortfall without cutting or deferring community college funding
• COLA is proposed at 0.76% for the Student Centered Funding Formula and select categorical programs
• COLA would not apply to Strong Workforce or the Student Equity and Achievement Program
• Student housing funding for community colleges (City College) would be provided through a state lease revenue bond
• $60 million would be available for expansion of current nursing degree programs and establishment of new programs, including baccalaureate programs

Introduction

In the spring of 1920, the United States was recovering from the influenza pandemic of 1918-19 and the ravages of the first world war. The tensions and upheaval to daily life left many longing for the relative peace and predictability of life before the war and pandemic. In this climate, a relative long-shot presidential candidate emerged behind the slogan ‘return to normalcy’. Warren G. Harding’s message of healing and restoration of an idealized past was well-received and he won the election decisively. Unfortunately, history has repeatedly taught us it is impossible to retreat to a prior state. War and a global pandemic had fundamentally changed societies around the world and retreating into the past was impossible. Harding’s policies, in part, set in motion events which led to the Great Depression. One enduring legacy of Harding’s campaign has been the idea of nostalgia as a political and social virtue.

We often find ourselves in a tension between a desire to reclaim some past ‘normal’ and creating a ‘new normal’. Our current economic condition highlights this tension. Wishing for the relative predictability and stability we experienced in the years after the Great Recession feels comforting as we confront significant economic turbulence. The idea of returning to our prior normal can be appealing, however, our future lies ahead, not behind us. Our work now is creating stability as we emerge from instability.

On January 10, 2024, Governor Gavin Newsom presented his 2024-2025 budget proposal, which largely continues the state’s investment in addressing the many social challenges we face within our current economic reality.

Governor’s Budget Proposal Overview

The state budget development process began in earnest with Governor Gavin Newsom’s presentation of his budget proposal for the 2024-2025 fiscal year. The Governor’s proposal initiates a progression of advocacy, negotiation, and analysis between the Assembly, Senate, and Governor’s office which will culminate with a final approved budget in late June. The initial proposal in January is always based on the uncertainties of state revenue projections and even more so in 2024-2025 given the delays in tax filing dates in 2023 and significant fluctuations in interest rates, stock market performance, and the state economy. Over the course of the spring, we will learn more specific details about actual state revenues and more precise projections for the current and future years, which will inform a revision to the initial budget proposal in May.

Governor Newsom’s presentation of the budget was framed by economic correction and normalization. The correction comes in the form of anticipated reductions in state revenues following record proceeds in 2021 and 2022 which were the result of pandemic-related funding and extraordinary stock market performance. The normalization comes in the form of ensuring available resources continue to support the state’s ambitious program of social services, including investments in higher education.

The proposed state budget comes in at $291.5 billion, a 6% reduction from the 2023-2024 state budget. The Governor’s budget assumes a $37.9 billion shortfall in revenue, which is addressed by reducing spending by $8.5 billion, drawing on $13.1 billion in reserves, delaying $5.1 billion of previously approved spending, and a combination of borrowing and budget adjustments that account for $12.9 billion of costs.

Specific to public education, the Proposition 98 guarantee is down $11.3 billion over the three-year period from 2022-23, 2023-24, and 2024-35. The proposed budget draws $5.7 billion from the Rainy Day Fund to cover the shortfall without reducing or deferring public education funding. This is a critical measure for protecting services at K-12 schools and community colleges.

The Governor proposes a modest increase in base funding for community colleges through a 0.76% cost-of-living adjustment (COLA) to the Student Centered Funding Formula (SCFF) and certain categorical programs. The proposed COLA would increase community college funding statewide by $69.1 million. The proposal includes $29.6 million for growth funding as colleges continue to rebound from enrollment declines in prior years. Finally, the proposal would add $60 million to expand nursing programs and fund creation of new Bachelor of Science in Nursing programs in the community colleges.

Local Impact

The proposed budget is welcome news for the San Diego Community College District. The COLA will ensure we have additional revenues to cover increases in employee salaries and benefits and operational expenses.

SCFF and Categorical COLAs

The 0.76% COLA will add $2.4 million to the District’s base revenue under the hold harmless provisions of the SCFF. The additional revenue would be distributed in accordance with the Resource Allocation Formula (RAF).

The 0.76% COLA for select categorical programs will increase funding for the Adult Education, EOPS, DSPS, Apprenticeship, and CalWORKs programs. As with 2022-23, Strong Workforce and SEAP are not proposed to receive a COLA increase.

Affordable Student Housing

The Governor’s budget proposes to use state lease revenue bonds to fulfill the state’s commitment of $75 million to San Diego City College’s affordable student housing development. This will ensure we offer rental rates well below market for our students.

Nursing Program Expansion

If passed, Senate Bill 895 (Roth) would allow up to 15 community college districts which currently offer and Associate’s Degree in Nursing to create new baccalaureate programs in nursing. The $60 million in proposed funding would allow San Diego City College to compete to be among the first colleges to create a new BSN program.

In Conclusion

The 2024-2025 budget year is critical for California community colleges. Since its introduction in 2017-2018, the SCFF has included a hold harmless provision which ensured districts continued to receive COLAs. Beginning in 2025-2026, districts which do not fully earn their revenue through their SCFF performance will be frozen at their 2024-2025 funding level. Under the proposal, our District would have a new funding floor of approximately $318.5 million. While we fully expect to exceed this amount through our SCFF performance, it is helpful to have certainty as we plan for future year budgets.

The past four years have been an economic rollercoaster. Our District has been prudent in the investment of one-time funds over the course of the COVID-19 pandemic, ongoing funds received in historic COLAs, and rebuilding its financial reserves to withstand the ups and downs of the economy. We will continue to advocate for stability in community college funding, increases to base funding, and new programs to meet the evolving needs of our communities and students. The Governor’s budget proposal signals the state’s commitment to public education and our shared mission to provide every resident in the San Diego area with equitable access to a high-quality education.