Board Discussion on 50 % LAW

1. Board Discussion on 50 % LAW November 13, 2007

2. 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

3. General Fund Unrestricted Only

4. General Fund Unrestricted Only

5. General Fund Unrestricted Only

6. General Fund Unrestricted Only

7. 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 - 53.38% • 2004/2005 - 51.81% • 2005/2006 - 50.31% • 2006/2007 - 50.03%

8. Compliance Work • Fiscal Staff • Met With Coast CCD and Rancho Santiago CCD to Discuss Compliance Practices in Feb. 2007 • 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

9. 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 30th and July 10th • Encumbrances Not Reversed Until June 30th • Final Expenditures Not Recorded Until Mid July After Year End • Full Time Faculty Hiring Process Requires One Year

10. Reasons for Decline in Calculation % • Account Coding Changes • State Chancellor’s Office Requires Auditor Review • Reassigned Time Recoded to Non-Instructional (2005-2006) • 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. 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

12. 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. 1st • Academic Organization • May Submit Written Statement Opposing Application • Request a Hearing by the System Office • Within Two Weeks of Public Hearing or Dec. 1st

13. Non Exempted Deficiency • Districts With a Deficiency Not Entirely Exempted by the State Board of Governors Are Subject to Title V, Section 59213 • Must Submit a Plan by June 30th • 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”

14. Steps to 2007-08 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

15. Steps to 2007-08 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

16. 50% Law Advisory Council • Develop Plan for Compliance • 2007-2008: Recommendations Due to Chancellor by Nov. 1st • 2008-2009: Recommendations Due to Chancellor by Dec. 15th

17. 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

18. 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

19. 50% Law Summary • Consider 50% Law Implications in All Expenditure Decisions • Everyone is Committed to Resolve