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November 08, 2021

CCFC Update: Assembly Education Budget Subcommittee Holds Student Housing Hearing

Today, Assembly Budget Subcommittee #2 on Education Finance held an informational hearing on “California Student Housing: Solutions for Improving Capacity and Affordability.” Assembly Member McCarty, the subcommittee chair, opened the hearing by saying that sky-high rents across the state affect many people, especially students. He stated that half the cost of a higher education is attributed to housing, and that students who live near campus are more likely to graduate on time.

Jennifer Pacella (Legislative Analyst’s Office) provided an overview of student housing across the three California systems and in other states. She focused on what the state’s role should be in helping to deliver student housing, and she spoke about how colleges typically fund, finance, design, and construct student housing projects. She discussed issues such as public-private partnerships, financing and borrowing terms, environmental issues, and the challenges of creating viable projects.

Ms. Pacella addressed the new Higher Education Student Grant Program created by SB 169 in the FY 21-22 Budget Act. According to the LAO, the state received the following applications for the first year of the program:

  • 92 California Community College (CCC) applications
    • 21 for construction worth $1.2 billion
    • 71 for planning worth $313 million
  • 113 total applications worth $3.2 billion (UC, CSU, CCC and intersegmental applications)

Details were not provided on the individual project applications. Ms. Pacella indicated that it is unclear at this time how the new housing grants will interact with existing programs, such as Financial Aid and Rapid Rehousing.

SB 169 provides $2 billion over three years, with 50% of the funds committed to CCC projects. With first-year applications exceeding the total dollar amount available for all three segments, the subcommittee discussed ways to maximize state funds. We were previously told that the SB 169 program was intended to provide 100% of construction funding for individual projects. However, Assembly Member McCarty stated during the hearing that this may not be the best approach to maximize state funding. Multiple speakers from UC and CSU suggested creation of a state Revolving Loan Fund providing no- or low-interest loans, with state funding serving as a down payment to reduce debt service costs and ultimately lower rents for students. This would allow the grant funds to be spread over a larger number of projects.

Amy Costa (Vice President, CCC Board of Governors) and Lizette Navarette (Vice Chancellor for Finance and Facilities Planning, CCC Chancellor’s Office) represented California’s community colleges. Ms. Costa indicated that 60% of CCC students face housing insecurity, and 19% are homeless. She was enthusiastic about student housing because it will directly improve student outcomes. Ms. Navarette stated that there are only 2,052 CCC student housing beds statewide, and that we should implement a comprehensive system to ensure effective implementation of the SB 169 program. She announced that the Chancellor’s Office is kicking off a statewide student housing task force to provide guidance and support to colleges on student housing. She said that community colleges are in the early stages of planning projects, and the Chancellor’s Office is recommending creation of a long-term funding mechanism to continue addressing housing needs after the SB 169 funds have been exhausted. The Chancellor’s Office requested $50 million annually in their FY 22-23 budget request to address student housing.

Assembly Member Ting (Chair, Assembly Budget Committee) expressed concerns with the total planning grant requests. The average request was over $4 million per application (71 applications worth $313 million). He asked if campuses could absorb these costs, or if there was a cheaper way to address these needs, so that the state program could focus on construction. Ms. Navarette suggested a state-level structure to assist colleges with these needs. Assembly Member Ting asked for more information about the 21 construction applications. Because the applications were submitted by districts directly to Department of Finance, Ms. Navarette said the Chancellor’s Office does not have information about individual applications.

The subcommittee discussed issues specific to UC and CSU, such as some individual campuses planning not to expand enrollment unless they are able to add housing to accommodate new students. CSU requested funds for rehabilitation of existing buildings for student housing projects.

Next Steps

The Department of Finance will compile a list of projects recommended for funding under the Higher Education Student Housing Grant Program, and will submit the list to the Joint Legislative Budget Committee by March 1, 2022. Assembly Member McCarty was clear that the Legislature will select which projects are funded under the SB 169 program.

Rebekah Cearley
CCFC Legislative Advocate