Chancellor’s Office Updates Community College Internal Auditors Fall 2018 Conference October 4-5, 2018 Fullerton College Michael R. Quiaoit, Dean – Student Services and Special Programs Wrenna Finche, Director – Fiscal Standards and Accountability

Agenda Student Centered Funding Formula (SCFF) Budget & Legislative Update Student Equity and Achievement (SEA) Program Annual Audit Update

Student Centered Funding Formula (SCFF)

Given the challenges we face, we must reexamine our policies and practices to align with the Vision for Success. The Student Centered Funding Formula is one of several connected efforts aimed at reaching the Vision goals under the Guided Pathways framework.

Challenges Most students who enter a community college never complete a degree or certificate or transfer. Achievement gaps persist across student groups and across regions. Students who do reach an educational goal take a long time to do so.

Discussions about a new funding formula began more than a year ago, given concerns among system stakeholders that enrollment—the traditional driver of funding—has been stagnant in many districts. Enrollment

In reforming funding for community college districts, we aim to do the following: Provide groups of students that have faced barriers to success with additional support to meet our goals. Encourage progress toward the Vision for Success adopted by the Board of Governors. Make resources most useful to community college districts by making them stable, predictable, and flexible.

We want community college finance to further the activities the Chancellor’s Office is undertaking through the Guided Pathways framework. Associate Degree for Transfer Associate Degree Regional Living Wage Baccalaureate Degree Completion of nine or more CTE# Units Credit Certificates Transfer to Four-Year University Transfer-Level Math and English

Ye Olde Funding Formula (1996 – 2018) District size (number and size of colleges and centers) Each student (FTES) funded at same rate for Credit, Noncredit, and CDCP

Milestone “…California’s state leaders have truly delivered on a promise to put students first and set an example for the rest of the nation by adopting a new funding formula that incentivizes student success…” –Chancellor Eloy Ortiz Oakley

The Student Centered Funding Formula is a three-part model that (1) supports costs of education by linking funding to enrollment, (2) recognizes higher needs of students who have historically faced barriers to success, and (3) creates new financial incentives around the goals that matter to our students.

Student Centered Funding Formula Base Allocation = Ye Olde Funding Formula Supplemental Allocation—Counts of low-income students. Student Success Allocation—Counts of outcomes related to the Vision for Success, with “premiums” for outcomes of low-income students. August 27, 2018

Ye Olde Funding Formula | SCFF

SCFF Fun Facts Noncredit FTES, Special Admit, and Inmate FTES is funded at current rates. Special Admit and FTES ‘outcomes’ count for Supplemental and Student Success allocations. The rates are calculated to provide a three-year transition. 2018-19 2019-20 2020-21 Base Allocation 70% 65% 60% Supplemental Allocation 20% Student Success Allocation 10% 15%

Supplemental Allocation Districts receive one “point” based on prior year data: Pell Grant recipients. California College Promise Grant recipients. AB 540 students. August 27, 2018

Student Success Allocation Student Success Allocation—Measures All Students Promise Grant Premium Pell Grant Premium Associate degrees for transfer granted 4 6 Associate degrees granted (excluding ADTs) 3 4.5 Baccalaureate degree granted Credit certificates (16 units or more) granted 2 Completion of transfer-level mathematics and English courses within first academic year of enrollment Successful transfer to four-year university 1.5 2.25 Completion of nine or more CTE units 1 Attainment of regional living wage August 27, 2018

Point Values August 27, 2018

Example 1 Allocations Dollars Base Allocation $3,727 Supplemental Allocation n/a Student Success Allocation Completion of transfer-level mathematics and English courses within first academic year of enrollment (2 points * $440) 880 Total for 1 FTE $4,607

Example 2 Allocations Dollars Base Allocation $3,727 Supplemental Allocation College Promise & Pell Recipient (2 points * $919) 1,838 Student Success Allocation Completion of transfer-level mathematics and English courses within first academic year of enrollment (2 points * $440) + (5 points * $111) 1,435 Total for 1 FTE $7,000

Hold Harmless Provision In 2018-19, 2019-20, and 2020-21, a district would receive the greater of the formula total or the amount the district received in 2017-18, adjusted by the changes in the cost-of-living. The formula includes a “stability” provision that delays any decreases in revenues by one year.

Chancellor’s Office Implementation Team Board of Governors Legislature Governor Oversight Committee Advisory Groups Chancellor’s Office Implementation Team August 27, 2018

SCFF Oversight Committee The Legislature established the committee for the purpose of continuously evaluating and reviewing the implementation of the SCFF. The committee consists of 12 members:   Four members appointed by the Senate Committee on Rules with at least one of these members employed by a community college district in a classified position. Four members appointed by the Speaker of the Assembly with at least one of these members being a faculty member from a community college district. Four members appointed by the Governor serving a four-year term with at least one being a community college administrator.

Goals of Implementation Team To communicate how the implementation of the Student Centered Funding Formula (SCFF) advances the Vision for Success under the Guided Pathways framework.  To apportion funds consistent with the statutes related to the SCFF.  To support community colleges in implementing these policies by providing professional development and technical assistance.  To align system policies, practices, and systems with these changes.  To maintain stability in in the policy environment by building coalitions and making decisions transparently.

The Chancellor’s Office will provide guidance, technical assistance, and professional development as we make the transition.

Website URL Email Address scff@cccco.edu http://extranet.cccco.edu/Divisions/FinanceFacilities/ StudentCenteredFundingFormula.aspx

Other Support We have scheduled three SCFF webinars: September 13—Nuts and Bolts of the SCFF missed it October 8, 10:30 AM -12:00 PM —Deep Dive into Data November 5, 2:00-3:00 — Information on Local Goals

SCFF Questions?

Budget & Legislative Update

Recently Approved Legislation SSSP, BS, SE now SEA Program Apprenticeship – some FTES ok CCAP Dual Enrollment – Charter ok, Online ok Nonresident Tuition Fee Exemption – Eligible Special Immigrant Visa and Refugees Students AB 540 – Attendance & Completion requirement changes Noncredit only students EXEMPT from Residency requirements

Title 5 Regulatory Changes Nonresident/Noncredit FTES ok Proposed Regulatory Changes: FTES for Supervised Tutoring – Student self-referral ok Elimination of fourth quarter CCFS-311Q Reporting Requirement

Board of Governors 2019-20 Budget and Legislative Request 5% increase ($345 million) in the funding rates for the Student Centered Funding Formula to address community colleges’ general operating expense increases (in addition to the cost-of-living adjustments and other baseline adjustments) $1.5 billion for Cal Grant program reforms (paid from non-Proposition 98 funds) 5% increase ($23 million) for the Student Equity and Achievement Program $50 million in ongoing funds for faculty support $25 million in ongoing funds for a new College-Wide Professional Development Program $20 million in onetime funds to expand work-based learning, including apprenticeship The proposed reforms to the Cal Grant awards program are to address current inequities in eligibility that adversely impact community college students who are non-traditional or returning students. The reforms include: Linking the maximum awards to the total cost of attendance, rather than tuition Entitling students to Cal Grant awards based on financial need as defined by the expected family contribution (rather than their age, how recently they graduated from high school, or what their grade point average was) Extending the Cal Grant to all certificate and associate degree programs offered at community colleges, regardless of whether the programs are oriented to transfer to four-year universities or to careers The proposal for the increase in Student Equity and Achievement Program funds comes with a request to establish—through the consultation process—a methodology for allocating the funds in a way to create financial incentives for meeting the goals of the system’s Vision for Success and to provide flexibility to local districts in designing their programs. The request for faculty support funds is tied to a proposal to use the consultation process, including deliberations by the Workgroup on Regulations related to the 50 Percent Law and the full-time faculty obligation, to determine how best to allocate the funds and allow for some local flexibility in the use of the funds. The College-Wide Professional Development Program request is an ongoing augmentation to continue the $5 million in one-time funds provided in the current year for the Classified School Employee Professional Development Block Grant Program.

Budget Update Questions?

Student Equity and Achievement (SEA) Program Michael R. Quiaoit, Dean – Student Services and Special Programs Building out the guided pathways leadership team: Laura Hope Michael Quiaoit Rob Rundquist Mina Dadgar Guided Pathways Advisory 2.0 Partners Network

TOPICS What is Student Equity and Achievement Program? What happened to SSSP, Student Equity, and BSI Key deliverables in the Student Equity and Achievement Program

Intent - EDC 78222(a) (a) (1) The Student Equity and Achievement Program is hereby established. (2) It is the intent of the Legislature that funds for the Student Equity and Achievement Program support the California Community Colleges in advancing the systemwide goal to boost achievement for all students with an emphasis on eliminating achievement gaps for students from traditionally underrepresented groups by doing of all of the following: (A) Implementing activities and practices pursuant to the California Community College Guided Pathways Grant Program. (B) Ensuring students complete their educational goals and a defined course of study. (C) Providing quality curriculum, instruction, and support services to students who enter college deficient in English and mathematics to ensure these students complete a course of study in a timely manner.

Requirements - EDC 78222(b) (b) As a condition of the receipt of funds for purposes of this section, a district shall comply with all of the following: (1) Maintain a student equity plan pursuant to Section 78220 to ensure equal educational opportunities and to promote student success for all students, regardless of race, gender, age, disability, or economic circumstances. (2) Provide student matriculation services pursuant to Section 78212, including implementation of orientation, counseling and advising, referral to specialized student support services, and other education planning services needed to assist a student in making informed decisions about his or her educational goal and course of study and in developing an education plan. The Office of the Chancellor of the California Community Colleges shall establish guidelines on student matriculation services, including, but not limited to, the development of an education plan leading to a course of study. Notwithstanding any other law, students who are exempted from matriculation services pursuant to Section 78215 are not subject to the requirements of this paragraph. (3) Adopt and implement placement policies consistent with the requirements of Section 78213. (4) Provide all students with an education plan, which identifies courses, a sequence of courses, key progress milestones, and other requirements the student must complete to earn an associate degree, career technical education certificate, other community college certificate, or meet transfer requirements. Notwithstanding any other provision of law, students who are exempted from having an education plan under Section 78215 are not subject to the requirement of this paragraph. (5) Provide a report to the chancellor’s office by January 1 of each year detailing how funding pursuant to this section was expended in the prior fiscal year and for what specific purposes. A district report shall also include an assessment of the progress in advancing the goals identified in paragraph (2) of subdivision (a).

Programmatic Changes

Credit and Noncredit SSSP A Credit and Noncredit SSSP Plan (Integrated Plan) is no longer required Funding will not be based on the SSSP Allocation formula (e.g. counts of Core Services: Orientation, Education Plans, etc.) for both credit and noncredit Core matriculation services identified in EDC 78212 (SSSP Matriculation Services) are still required

Student Equity All requirements from EDC 78220 (Student Equity Plan) are still in effect Integrated Plan information does not replace Student Equity plan Next Student Equity Plan due to the Chancellor’s Office June 30, 2019

Basic Skills Initiative A Basic Skills Plan is no longer required (Integrated Plan) 2017-18 BSI allocation included in 2018-19 SEA funding Alignment with EDC 78213 (AB 705) requirements

Program Reporting 2016-17 2017-18 2018-19 2019-20 SSSP Student Equity Year-End Expenditure Report – September 17, 2018 Not Applicable Student Equity Student Equity Plan – Due June 30, 2019 (3 year plan) BSI Integrated Plan (2017-19) Mid-Year Expenditure Report – August 31, 2018 Year-End Expenditure Report – September 2019 SEA Program Annual Report – Due January 2020 Annual Report – Due January 2021

Summary SEA Program combines SSSP, Student Equity, and BSI Student Equity Plan remains, others do not Education Plans for all students Funding will be at 2017-18 levels for colleges (all programs combined), until new formula is developed New report is due each year – first one will be January 2020

Thank You!

Annual Audit & CDAM Updates

Annual Financial and Compliance Audit 4/3/2019 Annual Financial and Compliance Audit Community college districts are required to have an annual audit conducted by a CPA firm (EC § 84040.5) The Contracted District Audit Manual (CDAM) prescribes the requirements and procedures for the annual audit New CDAM issued each Fiscal Year Section 400 of CDAM -State Compliance Tests (15 tests in 2018-19) Of the 15 State tests, 7 directly relate to verifying FTES eligibility for State general apportionment. Findings in these areas could result in an apportionment adjustment. 45

Common State Compliance Audit Findings 4/3/2019 Incorrect Attendance Accounting Procedures (T5 §§ 58000 et seq.) Weekly Census procedure incorrectly applied. Support records for positive attendance hours generated did not agree with hours claimed. Claimed students that were required to be removed from census roster. Apportionment claimed for cancelled “census-based” classes. Programming Errors in attendance/scheduling information system caused incorrect FTES totals 46

Education Protection Account Recent SCO Audit of EPA Funds No findings for the Chancellor’s Office! However: EPA Expenditures didn’t reconcile to fiscal year EPA apportionment (timing differences) Instructional Activities are Great! Administrative salaries, benefits, and other costs are PROHIBITED Recent SCO Audit of EPA – no findings for Chancellor’s Office 9 districts showed administrative costs in the Reconciliation of EPA Expenditures with NO ASSOCIATED FINDING? Should be all in “Instructional Activities” EPA Suggested Audit Procedures Verify the local governing board held an open session public meeting where they took action to adopt a plan to expend EPA funds. 2) Verify the district expended EPA funds according to the board adopted EPA spending plan. 3) Verify EPA funds were not used to support administrative salaries and benefits or other administrative costs consistent with the Chancellor’s Office Accounting Advisory FS 16-13 dated December 19, 2016.

Review of 2017-18 Audit Reports EXTRAPOLATED Questioned FTES Education Protection Account Reconciliation of Financial Statements to CCFS-311 Pension and OPEB liabilities Acceptance/Follow-Up Letters Repeat Findings District Corrective Action Plan (CAP) required Submit CAP to Chancellor’s Office by April 1, 2018 Extrapolate Questioned FTES from Statistical Sample or 100% testing. We look only at FTES, $$ affect on apportionment determined at C.O. as per FTES rates fluctuate. Pension (82) and OPEB obligations (GASB 75) Is reconciliation to CCFS-311 helpful? As CPAs and Internal Auditors – Are there any other areas you would recommend that we focus on?

Fiscal Health Monitoring Opinions Financial Statement Federal Compliance State Compliance Management Letter Findings Repeat Findings Pension and OPEB liability trends Each audit report & Mgt Letter analyzed individually – looking to id CONTROL issues Remember, repeat findings = CAP submitted to Chancellor’s Office by April 1, 2018 Overall Fiscal Health assessment combined with financial data from CCFS-311 may result in a CAP also.

FY 18-19 CDAM – Revisions/Updates Removed: Section 428 – Student Equity Section 429 – Student Success & Support Program Funds The Student Equity and Student Success & Support programs have been replaced by the Student Equity Achievement (SEA) Program. Section 440 – Intersession Extension Program The Education Code that created this program was repealed. 

FY 18-19 CDAM – Revisions/Updates Section 424 – State General Apportionment Funding System Background and criteria sections now reflect the newly enacted Student Centered Funding Formula (SCFF). NO specific audit procedures for supplemental or student success allocations are added this year. Apprenticeship programs that don’t claim RSI are now eligible to claim FTES for apportionment purposes. Start thinking about how data flows Initial procedures will be related to developing and implementing a process to ensure SCFF data is complete and accurate. Apprenticeship programs that don’t claim RSI can now claim FTES. AB 1809 Budget Trailer Bill- Apprenticeship Changes Beginning in 2018-19, districts may report hours generated by apprentices on the CCFS- 320 if not reported on the CCFS-321 (must use positive attendance method to calculate FTES) Course must be taught by a community college faculty member to report attendance on the CCFS-320 Enrollment may be limited to apprentices if that course or course section is required for those students as a part of a registered apprenticeship program. If the course is part of an apprenticeship program in the building and construction trades, the sponsor must approve a decision to report attendance on the CCFS-320 rather than on the CCFS-321.

FY 18-19 CDAM – Revisions/Updates Section 425 – Residency The audit procedures have been updated to reflect recent legislation related to the residency determination for students cross enrolled through the online course exchange of the Online Education Initiative Consortium. The residency determination of the student’s home college is accepted if the teaching college possesses a signed consortium reciprocity agreement.  

FY 18-19 CDAM – Revisions/Updates Section 427 – Dual Enrollment Recent legislation now allows : CCAP agreements with charter schools Closed courses for eligible high school students in person or using an online platform In addition, the CCAP annual report must include the total number of FTES generated by online CCAP participants.

Annual Audit Update Questions?