Why California community colleges are reluctant to spend more than $500 million in state money

The student center at Cuesta Community College in San Luis Obispo on Jan. 10, 2024. Photo by Julie Leopo-Bermudez for CalMatters

More than a year after California community colleges received $650 million in state COVID-19 relief money, schools have spent less than 20% of it. 

Colleges say they desperately need the money, but that they are reluctant to spend it because of ongoing uncertainty surrounding the state’s budget. Namely, they fear they’ll be asked to give it back. 

“It’s either feast or famine,” said Dan Troy, an assistant superintendent at Cuesta College in San Luis Obispo and a former member of the finance team at the California Community Colleges Chancellor’s Office. 

Community colleges can spend the relief money on a wide range of programs, including mental health services, food pantries for students, technology, and professional development for faculty. But more than $500 million remains unspent, according to the most recent data from the chancellor’s office.

Two years ago, in the 2022-23 budget, California had a projected budget surplus due in part to an influx of federal COVID-19 relief money. The state allocated that surplus to a number of programs and services, including $650 million to community colleges.

Last year, the state had a projected deficit, and Gov. Gavin Newsom proposed asking colleges to return the COVID-19 money less than a year after giving it to them. It was part of a proposed tradeoff so that the governor could accommodate other requests, including an increase in the amount of general fund dollars awarded to community colleges. 

The proposal never came to fruition, but the governor did claw back other funds from community colleges in order to close the state’s budget deficit.

Now the governor and the Legislature are grappling with a $37.9 billion deficit as they plan the 2024-25 budget. According to the governor’s proposed budget, released last week, the community college system will not face any major cuts this year, though the budget is subject to change before it’s enacted this summer.

“Predictability, consistent funding, I think that’s what most campuses would love to see,” Troy said. His district, which has three campuses in San Luis Obispo County, has spent or signed contracts amounting to $390,000 as of the end of last year, a fraction of the nearly $5 million in COVID-19 funds it received in 2022. 

There are other reasons behind his spending decision. Before Cuesta College received its nearly $5 million portion of the state’s COVID relief dollars, it had already received a much larger relief grant — roughly $28 million — directly from the federal government. Troy said his plan was to prioritize spending down federal dollars first, since it’s much more money and needed to be used before the end of last year. Colleges have until 2027 to spend the money from the state.

Across the state, community colleges said financial uncertainty is shaping everyday decisions about spending money they receive from the state. 

(Photo courtesy of Lake Tahoe Community College)

In South Lake Tahoe, where the cost of housing has become unaffordable for many low-income students, the local community college is building a 100-bed dorm with state construction funding. But inflation led to rising building prices. President Jeff DeFranco said the college initially held back on spending its COVID-19 money in case it needed to use it for the housing project. The final housing estimate came in lower than expected, he said, meaning the college was free to use its COVID-19 funds elsewhere. 

More uncertainty followed for Lake Tahoe Community College. Several months after the final housing estimate came in, Newsom proposed that colleges return more than half of the COVID-19 money they had received.

While the final version of the budget didn’t include those particular cuts, the governor did ultimately ask colleges to return more than half of the money they had received for maintenance projects. Colleges that had already spent that money either needed to renege on contracts or pull from other sources of funding to cover the difference. 

“I was reluctant to make major commitments to the (COVID-19) dollars for fear that the rug would be pulled out from under us. I was concerned that we’d make commitments we couldn’t keep,” Troy said.

Of the $390,000 that Troy has committed so far, most is for a contract with the regional transit agency to provide free bus travel for students. That contract has more flexibility than a traditional contract with a private company. 

While a small investment compared to the millions of unspent funds, those dollars make a difference for Sean Runyon, 55, who relies on the bus in order to attend classes at Cuesta College four days a week. He sold his car a few years ago in order to help pay for a surgery and can no longer drive because of a related disability.

He’s a single parent of a teenager and survives on government benefits, earning about $1,000 a month, half of which goes to rent. “That $68 dollars is a lot of money,” he said, referring to the cost of a monthly bus pass. Without it, he said, “I’d probably have to stop going to college.” After working as a chef for decades, his goal is to change careers into something that’s less physically demanding, such as counseling for people with substance use problems.

Sean Runyon, 55, a student at Cuesta Community College, in his home in Santa Margarita, Calif. on Jan. 19, 2024. Photo by Julie Leopo-Bermudez for CalMatters

Runyon said he’s grateful for the services that Cuesta College provides and places the blame for the college’s budget dilemma on Newsom and the state’s leadership. 

Troy said the recent budget the governor released gives him more confidence to spend down the money he has. “It’s not a great budget by any means, but it’s stable enough that I feel confident committing those dollars.” 

He said the college might spend the remaining money on services to support students, such as food pantries and vouchers to offset textbook costs. He also mentioned possible improvements to classroom technology, such as new whiteboards and laptops.

California’s 116 community colleges are organized into 73 independently governed districts, which are overseen by the state chancellor’s office. Spending public money within any of these districts requires various approval processes, which can each take time, said Michal Kurlaender, a professor at UC Davis who studies COVID-19 recovery in higher education. College boards typically make the final call but the state usually requires that faculty, staff, and students be involved too.

“It’s a really diverse system,” she said. 

While most colleges have only used a fraction of the state’s COVID-19 dollars, some have already spent it all or committed it all through contracts. 

Students leave class at Rio Hondo College in Whittier on Dec. 2, 2022. Photo by Alisha Jucevic for CalMatters

Rio Hondo College, located in Whittier in eastern Los Angeles County, has spent roughly half of the more than $7 million in COVID-19 relief it received in 2022 and has signed contracts that spend the rest by May, according to Stephen Kibui, the vice president of finance and business for the college. Most of the money is going toward providing low-income students laptops, WiFi hotspots, and software such as Microsoft Office.

The college is not immune from budget fluctuations, though. Last year, when the state pulled back money for maintenance, Rio Hondo was one of several colleges that had already spent the money or signed contracts for projects. 

“One of the contracts we’re dealing with now is the roofing of our science building. It’s a three story building and it’s leaking all the way to the second floor,” he said.

He pulled from the college’s general fund in order to keep the project going. Now, the coffers of the general fund are getting low, so he said he’d need to pull from the college’s reserves if anything similar were to happen this year. It would be “unacceptable” and “very punitive,” he said.

Just north of Joshua Tree National Park, Copper Mountain College received the smallest amount of COVID-19 funds in 2022 and spent it all within the fiscal year, said President Daren Otten. 

“We’re a small operation,” he said. “We move quickly. Once we realized what the resources could be spent on, we deployed them.” The school used the money to cover debts, such as unpaid course fees, that students had accrued. 

However, Otten drew a distinction between his college and many other schools. “Spending a lot of money is a lot harder. Our total allocation was $760,000.” On average, community college districts received more than $9 million in 2022 from the state for COVID-19 relief. 

At the start of the pandemic, Kurlaender said college leaders often asked her what to do with all the relief money they received, especially the federal dollars which were even larger than the state’s allocation. She said she didn’t have an easy solution. “The reality is we don’t have a big wealth of evidence of how to deal with something like a pandemic when students are facing this level of disruption.”

Adam Echelman covers California’s community colleges in partnership with Open Campus, a nonprofit newsroom focused on higher education.

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