Board Discussion on 50 % LAW November 13, 2007

50% Law Compliance  Education Code 84362: Requires Community College Districts  Spend at Least Half of Their Current Expense of Education for  Classroom Instructor Salaries and Benefits  Classroom Instructional Aide Salaries and Benefits  Current Expense of Education Includes  Unrestricted General Fund Only  Actual Expenditures  No Categorical Programs or Grants  No Capital Projects, Equipment, Transfers Out 11/13/20072

General Fund Unrestricted Only Object CodeTOPS CodeDescriptionHelpsHurtsNumeratorDenominatorNot Included Academic F/T Classroom InstructorsX XX Reassign Time* X X Faculty using Banked OSH** X X Instructional SabbaticalsX XX OverloadX XX 1313/ Fall, Spring, & Sum Inst OSHX XX Instr Banked OSH when earnedX XX Librarians X X 1413/ Part Time Librarians X X Librarian Sabbaticals X X /6130 Libr Banked OSH when earned X X Counselors X X 1413/ Part Time Counselors X X Counselor Sabbaticals X X /6130 Cnslr Banked OSH when earned X X Academic Administrators X X Stipends X X * Cost of time reassigned only ** Cost is reduced by amount of OSH banked 11/13/20073

General Fund Unrestricted Only Object CodeTOPS CodeDescriptionHelpsHurtsNumeratorDenominatorNot Included Classified Non Classroom Classified X X Classified Managers X X Classroom Lab TechsX XX Learning Center TechniciansX XX Learning Center TutorsX XX Benefits Instructional EmployeesX XX Non Instructional Employees X X Supplies Instructional Supplies X X Books & Software X X Non Instructional X X 11/13/20074

General Fund Unrestricted Only Object CodeTOPS CodeDescriptionHelpsHurtsNumeratorDenominatorNot Included Other Operating Expense X X Conferences X X Software Licenses X X Advertising X X Consultants X X Printing X X Contracted Services X X Contract Instruction***X XX Postage X X Maintenance Agreements X X Legal Fees X X Field Trips X X *** e.g. - Cosmetology 11/13/20075

General Fund Unrestricted Only Object CodeTOPS CodeDescriptionHelpsHurtsNumeratorDenominatorNot Included Capital Outlay 6120Site Improvement X 6220Buildings X 6410Instructional Equipment X 6410Non Instructional Equipment X Other Outgo 7100Debt Retirement X 7390Transfers to other funds X 7400Transfers-Categorical Matches X Ancillary and Auxiliary Programs 6991Student Development X 7091Foundation Salaries X 6890Community Outreach X 6960Athletic Support X 11/13/20076

50 % LAW  Three Different Laws Regarding Faculty Employment  50% Law  Full Time Faculty Obligation  75/25 Full Time to Part Time  Each Law Is Independent of the Other: One Does Not Relate to Another  Four Year History of 50% Calculation  2003/ %  2004/ %  2005/ %  2006/ % 11/13/20077

Compliance Work  Fiscal Staff  Met With Coast CCD and Rancho Santiago CCD to Discuss Compliance Practices in Feb  Reviewed Practices With Auditors  Implemented Practices of Surrounding Districts  Made Preliminary Calculation During Year End Close  Reviewed Expenditures During Year End Close and Made Transfers to Restricted Accounts Where Permitted to Help Calculation 11/13/20078

Compliance Work  Calculation is “A Moving Target”  Difficult To Project % Until Books Are Closed  Based On Actual Expenses  Salaries (our largest expense) Vary From Month to Month  Final Payrolls Are Posted June 30 th and July 10 th  Encumbrances Not Reversed Until June 30 th  Final Expenditures Not Recorded Until Mid July After Year End  Full Time Faculty Hiring Process Requires One Year 11/13/20079

Reasons for Decline in Calculation %  Account Coding Changes  State Chancellor’s Office Requires Auditor Review  Reassigned Time Recoded to Non-Instructional ( )  Instructional Aide Recoding – Resulted from Auditor Testing in Spring 2007  Increased Reassigned Time/Stipend Costs  Reduction in Full Time Faculty Ratio  Exceeded Full Time Faculty Obligation by 24 in Fall 2006  Enrollment Was Declining  Early Retirement Incentive (Spring 2004)  Cost Savings of the Plan Yielded Lower Faculty Salaries Resulting in a Reduced Faculty Salary and Benefit Expense  Start-Up of ATEP 11/13/200710

Actions When Less Than 50%  Governing Board  May File Application for Exemption  Filing Deadline Sept. 15  Copy of Application Must Be Sent To  District’s Academic Employees’ Representative  College Academic Senates 11/13/200711

Exemption Process  Governing Board  Hold a Public Hearing to Determine the Basis for Exemption  Serious Hardship [Title 5, section 59204(c)]  SOCCCD = Basic Aid District  District Pays Salaries of Classroom Instructors Higher Than Cohort [Title 5, section 59204(d) and (e)]  SOCCCD = #4 Average Tenure Track Salary per CCCCO Report on Staffing  Transmit Findings of Local Governing Board to System Office (form CCFS 350B)  Deadline – Dec. 1 st  Academic Organization  May Submit Written Statement Opposing Application  Request a Hearing by the System Office  Within Two Weeks of Public Hearing or Dec. 1st 11/13/200712

Non Exempted Deficiency  Districts With a Deficiency Not Entirely Exempted by the State Board of Governors Are Subject to Title V, Section  Must Submit a Plan by June 30 th  How the Amount Not Exempted Will Be Expended for Salaries of Classroom Instructors  Failure to Provide Plan  Amount Not Exempted Will Be Withheld From State Allocations  Basic Aid Districts  State Will “Find A Way” 11/13/200713

Steps to Compliance  Chancellor’s Establishment of Advisory Council on Compliance with 50% Law  Council Members  Deputy Chancellor – Chair  Vice Chancellor, Technology and Learning Services  Vice Chancellor, Human Resources  Vice Presidents, Instruction  Saddleback and IVC  Vice President, Student Services - IVC  Directors, Fiscal Services  District, Saddleback, and IVC 11/13/200714

Steps to Compliance  Chancellor’s Establishment of Advisory Council on Compliance with 50% Law  Council Members  Academic Senate  Saddleback College – Two reps  IVC – Two Reps  District Faculty Association  Two Reps  CSEA  Two Reps  Total Members - Seventeen 11/13/200715

50% Law Advisory Council  Develop Plan for Compliance  : Recommendations Due to Chancellor by Nov. 1 st  : Recommendations Due to Chancellor by Dec. 15 th 11/13/200716

50% Law Remedies  Increase Classroom Salary and Benefit Expenditures  Hire Additional Full Time Faculty  Hire Additional Instructional Aides  A Combination of the Above  1% Increase = $2.25 million Increase in Classroom Salary and Benefit Expenditures  Reduce Non Classroom Expenses  Non Classroom Salaries and Benefits  Supply and Operating Expenses  1% Increase = $2.15 million Reduction in Non Classroom Expenditures 11/13/200717

50% Law Remedies  Convert Non Classroom Expense to Classroom Expense  Increase Classroom Salary and Benefit Expense  Decrease Non Classroom Expense  Non Classroom Salaries and Benefits  Supplies  Operating Expenses  1% Increase = $1.1million Shift from Non Instructional to Instructional  Greatest Impact on the Calculation  Incremental Increase of One Additional Full Time Faculty Estimated at $60,000 11/13/200718

50% Law Summary  Consider 50% Law Implications in All Expenditure Decisions  Everyone is Committed to Resolve 11/13/200719