August 12, 2026 · Budget Sub1 · 5,595 words · 12 speakers · 52 segments
The Senate Budget Subcommittee No. 1 on Education will come to order. Thank you for joining us for our final Subcommittee No. 1 hearing. Subcommittees are convening today to discuss lingering issues from the final June budget agreement as well as to hear comments from the public as we near the tail end of the budget process. For today's hearing, there is one issue on the agenda, which covers the higher education student housing program for the California community colleges. We will invite the Department of Finance, the Community College Chancellor's Office, and the Legislative Analyst Office to the witness table. Do you want to come up here?
And you can begin whenever you're ready. Sure, I'm happy to start. Chris Ferguson, executive vice president of finance and strategic initiatives at the California Community College Chancellor's Office. Senators, thank you for allowing us to be here today. As it relates to student housing, housing instability is usually the norm, not the expectation in our system. Nearly three out of five community college students have experienced housing insecurity, and one in four indicate being homeless more than any other higher education segment in California. Our basic needs challenges are widespread and persistent, with two-thirds of our students facing at least one form of basic needs and security with only modest improvements over time, underscoring ongoing structural affordability challenges that our students are facing. And, of course, as we know well, housing insecurity directly undermines student success and equity in that students facing housing instability are more likely to struggle academically with disproportionately higher impacts on underrepresented student populations. With that, under the affordable student housing program, in the 21-22 budget, there was a commitment to provide, and 22-23 budget, there was a commitment to provide approximately 1.1 billion in total resources to support affordable student housing projects at California community colleges, with the goal being providing substantially below market rate rent based units to our students at the time there were 35 applications to participate in the program we did do around for update so that 35 is now roughly 19 and of those 19 17 were in the original batch and two additional new projects have been submitted. When I say round four, that is we ask districts to go back to update their list and to submit new requests by July 1st of this year. With that, the 19 applications total about 1.2, 1.3 billion in need. So while the program has around 218 million in available capacity today the need clearly outstrips what is available. I would note that the total number of beds associated with that with those 19 applications is roughly 3,800 so 3,800 students if we were able to fund all of those applications would have access to a more affordable housing option while they attend a California Community College. We will be scoring those applications this fall and ranking them according to a rubric and that rubric relies upon a number of categories from cost per bed to location in the state to intersegmental partnerships so we will be doing that we'll provide that information once that scoring has occurred to staff and of course we continue to monitor existing projects as they construct and come online as of August 2026 there are five projects that are operational today one at Santa Rosa Junior College one at Napa Valley College Lake Tahoe Community College Riverside Community College District which is a an intersegmental project with UC Riverside and Sierra College and they have very high occupancy rates pretty much throughout There's one where we are working at Napa Valley College to improve that occupancy rate through partnerships with other universities, other campuses in the region. But overall, this is a tremendous benefit to our system. We look forward to working with the legislature and the administration to further address affordability challenges that our students face. And certainly providing affordable housing is one way that we can do that. Thank you. Happy to answer any questions at the appropriate time.
Good morning, Chair and Senator. Lisa King with the Legislative Analyst's Office. So as the Chancellor's Office has mentioned, of the funding that the legislature previously designated for community college student housing projects, $218 million remains available for allocation. And that's a mix of unallocated funds from previous rounds, as well as funds that have been returned by a couple of projects that have withdrawn from the program. We estimate that the available funds could likely support between two and five projects from that new round of applications that the Chancellor's Office just described. Those projects would likely yield a total of several hundred beds across the selected campuses. As you know, these projects would be debt financed through the state lease revenue bond program created a couple of years ago for this purpose. with the state repaying those bonds using general fund, and this is non-Proposition 98 general fund. We estimate that annual debt service costs on this $218 million would be approximately $15 million, though that amount could be higher or lower depending on interest rates. In addition to the new projects that are before you today, there are some projects previously approved for this lease revenue bond program that are still in progress. I believe there are nine that are continuing right now. We would note that several of these previously approved projects have seen cost increases. Statute does set an expectation that districts cover cost increases using local funds, and the Chancellor's Office has issued guidance directing districts to do this to the greatest extent possible. That said, we have seen to date one project request and receive additional state funding for this purpose. Thank you, and I'm happy to take questions.
Good morning, Chair and Senator. The 2024 budget act established a state lease revenue bond financing mechanism to support 13 affordable housing projects at the California community colleges. Two districts elected to withdraw their projects from the financing in 2024. Of the remaining 11, five are in design, four are under construction, and two have been completed, with one recently included in the spring 2026 bond sale and the other due to be included in the upcoming fall 2026 bond sale. Most recently, the 2026-27 three-party budget agreement included a commitment to utilize $218.2 million in unallocated authority from the original funding transition and the two withdrawn projects and reallocate this authority to some additional affordable student housing projects. Thank you, and I'd be happy to take any questions at the appropriate time.
Thank you. Thank you for your presentation. I'll go ahead and get us started and then I'll see if the members of the committee have any questions. I want to follow up first on something that the chancellor's office had mentioned. So you talked about improving occupancy rates through partnerships. I think that that's really critical. Obviously, if we're going to be building this housing is making sure that students are actually utilizing it. And so what are the occupancy rates currently for the various campuses? I don't know if you happen to have those numbers or percentages on you. I would love to be able to see them and would also love to understand what those partnerships look like. If you can kind of further describe how you're working with other institutions to make sure that we're getting that housing filled.
Certainly. So I do have the occupancy rates. So Santa Rosa Junior College is at 97 percent. Napa Valley College is at 55 Lake Tahoe Community College percent Riverside Community College District the joint project with UC Riverside is at 100 percent and Sierra College is at a hundred percent occupancy so what it looks like from a partnership perspective is there's two ways there is from the start the project was constructed on an intersegmental basis and there are three there are four projects in the state that were designed with that in mind one at UC Merced with Merced College one at Riverside with use between Riverside Community College District and the University of California Riverside one with Imperial Valley College in San Diego State University and then one between Cabrillo College and UC Santa Cruz so that is one approach the secondary approaches we've always said this is about maximizing the return to students so for example with Napa Valley it's they have been encouraged to reach out to other universities in the area so we have you know within a 50 mile area you have for example Sonoma State University very close so to reach out to those universities make it available make it available to any other community colleges that may be in the area Solano community colleges also relatively close from a driving distance perspective to Napa Valley College and they've been encouraged to establish that partnership to get those rates back up we do acknowledge that 55% is a challenge and part of the challenge with Napa Valley in particular is that was constructed as a p3 project so the other four projects that I mentioned were not constructed under a p3 approach and you said it was constructed as a p3 project
Can you speak a little bit more to what is the p3 project? Yeah, so in this case that it was a public-private partnership
with 135 of the beds being deemed affordable beds and that was the contribution from the district to ensure affordability and there are roughly 453 market rate beds in the project that were outside the application that was funded by the state. So in that respect, market rate is paying for a good portion of the overall project with the state's contribution paying for those affordable beds in the project.
And is it that you're having trouble getting students to fill? I'm imagining the market rate
beds. Yeah, I would have to get back to you on the specifics, but that's my understanding. It's
the market rate side that's the challenge. Interesting. Okay. I also recognize that costs are continuing to go up as folks are actively building these projects, right? And that's just like across the board, whether it's residential, commercial infrastructure, everybody's having issues with the cost of building right now. So how is the chancellor's office preparing itself in the case that costs are going to go up over the time that you're building these projects? I appreciate that we're having a special subcommittee today but I want to know you know financially what you all are preparing yourselves to do in that case
yeah I think we first and foremost we start with value engineering so we ask districts to look at their project and ensure that you're maximizing the the value engineering aspects the cost of the project so an example of what a district may do originally they may have planned for a kitchenette in every dorm room or every student housing unit and they may shift to a centralized kitchen you know to try and reduce cost for that particular project so they will look at those types of approaches they'll look at maintaining bed counts through you know decreasing the number of single occupancy units and increasing the number of double occupancy units they'll look at for example they may have been supporting family housing and they may have wanted to build a playground for young children that would be with with those students and they will say well we'll remove the potential playground so they will look at all of those aspects of how can you drive down the cost how can you do the the core focus of housing at an affordable rate and in a way where the construction costs can be managed from within existing resources you know in the event after all of those attempts are completed if there is a need districts then have you know a few choices one is to look internally to say what resources may we have available to support the project they may have had a flexible bond that their community had supported they may have some other private philanthropy that would support the district in completing the project they may have a nonprofit partner in some cases and then of course the very last challenges in law there is an ability to request an augmentation that should be you know one of the last areas that we turn to but it is correct that there is that that challenge in terms of cost escalation our commitment to your staff and to the administration though is you know at this point if there is a project that may be considering it we will sit down we'll discuss what's changed what's occurring what we're seeing all the steps the district has taken before you know putting forward any you know official requests I think that's I will have a couple of questions
right now but I also want to allow for my colleagues to raise questions to Senator Choa Boak do you want to go first? Thank you Madam Chair and good
morning and welcome. So I've been a proponent of building housing on campuses I think it's the best thing for a buck for both the state and the universities as well as the students. On the public partnership with regards to Napa, are we So I know we have a formula on how we prioritize these grants before and then projects that we're helping subsidize. In that formula, do we take in consideration the demand? Because even though, of course, we're looking at Napa, you just said 55% occupancy rate with the majority of them being affordable. But if they're not being occupied, then we're kind of losing out as a state as far as the funding goes. It doesn't really work. So are we looking and reassessing whether or not moving forward we're going to look at, you know, prioritize market rate moving forward? And I know it makes it a little more less cost effective, but once again, if they're not being leased out, they're not going to be. And when you look at the intersegmental component of the allocation, Are you folks looking at, well, let me preface that question. How far are the closest universities by vehicle, by car? Because usually it's very difficult for people, students to have a car and be able to. So that's also another component that we need to look at. And so I'm looking at proximity to the schools. I'm looking at whether or not there is a backlog need for those universities, which I would assume that that would have been a consideration in selecting these projects of where to build.
Yeah, so unpacking that a bit. So in terms of unmet demand, that is certainly one of the criteria in our scoring rubric. So we're trying to figure out what is the wait list, what is the demand, what are county rental vacancy rates. So we do look at that aspect when considering our ranking criteria. in terms of that intersegmental approach usually it is campus to campus at the local level and they develop that to have that project from the start be co-located so you know for example the co-located project between Riverside Community College District and the University of California Riverside is on the University of California Riverside I believe the UC Merced project is similar the Cabrillo project will be closer to the Cabrillo campus and I believe the San Diego project will be closer to the Imperial Valley campus so in that in intersegmental approach they are looking at that look that locale that range from their facility to their partner facility so that is taken into
consideration is there a sorry to interrupt but is there a maximum distance that we're looking at or a minimum distance for these campuses we don't
look at it from distance we look at it from the two campuses working together from the start to say this is what we would recommend and knowing the campuses they doing that naturally to say the demand would have to account for that because if you too far away from one of your facilities that going to impact that demand whether that student would opt to live there and take that type of commute so you know if we were a hundred miles apart in an extreme example it's not feasible to expect a student from one institution to drive a hundred miles to the affordable unit I just wouldn't absolutely agree with you
which is why I'm curious as to when we're looking at the distance between campuses what is that look like what is the average or what is the the reasonable amount of distance that is being considered yeah and I don't think there
is a specific standard of the projects that are there I want to say that most are within five miles of each other just knowing Riverside and and Riverside Community College it's around five miles but you know for example with the Riverside Community College District they do make it available to any student in the district so whether you're at the Moreno Valley campus the Norco campus or the Riverside Community College campus or any student can submit an application to be in that affordable housing so while it is close to Riverside Community College any student in the district would have that access when we look at Merced it is going to be on the Merced campus and I believe similarly it's about five to ten miles between the two campuses as well intent in that case it's intentionally co-located so that it facilitates transfer and it enables our students to also learn from students on the campus so the examples that I have are all very close now Imperial Valley campus is quite a distance from the main San Diego State campus but the housing that is being constructed is actually close to their Imperial Valley Center so it is close to a facility that offers
opportunity for San Diego State okay and then going back to the Napa Valley one we're at 55% what is the closest university I believe the closest public university would be Sonoma State I have not double-checked that but it would be
I believe and how far is that in distance I want to say 20 miles but I
will have to check that 20 miles okay are there any other colleges close by that could be utilized on that on that campus not to my awareness I know Solano
it's about 15 to 20 miles as well but our encouragement is it doesn't matter where the college is located in terms of serving students maximize the closest university partnerships it's about serving our needs so you know we would not say go to one that's further first we would say go to any that are close in
proximity and work with them to see what can be done okay just just asking because I think there's something to be said about learning from from Napa moving
forward that's right yeah and it really is that focus on demand and I think at the time that the studies were done the demand was sufficient but it turns out that that demand has changed over time whereas the other projects are in areas where that demand has sustained and remained interesting thank you madam
chair thank you senator show book senator Archuleta
thank you madam chair and welcome thank you for coming out you had mentioned 135 beds public-private that sounds like a great program because when you you get public tell me a little bit more about how you got and I'm assuming the
community involved in this yeah so I would have to get back to you with more specifics from the district the project from the start actually predated the state program they had been working with the California School Finance Authority to potentially do conduit bonds to help support their contribution for the project but what they did is the focus was affordable beds from market rate beds and the project from the start was designed to be close to the campus and meet demand based on what they had been seeing at the time so all of the the demand was pre pandemic that's when the project was you know envisioned when the planning began the state's program came online and happened to fit nicely with what they were attempting to do so what the state did is it was effectively saying we will buy a portion or support a portion of the project so that a portion of those beds are affordable rate beds.
Which, when you're talking about locations and the project, which is your most successful? Though you saw a quick response and the student body was just really excited that finally they cut the ribbon and you've opened new doors of opportunities because housing is such an issue, no doubt.
So I would say that all five that have come online have varying degrees of success. I can speak to three having been to three of them specifically. So at Lake Tahoe, the success is outstanding. The campus community that they're building through their housing, outstanding. I believe it's their student body president who lives in that housing as well, is very well known, very connected to the campus as a result. in Riverside we know that the students are learning from UC Riverside students and vice versa we know that they have campus staff at the housing location throughout the week to assist students and to guide them Sierra College in particular was you know a story around being ready at the right time so they had pre-planned a project they had envisioned they've been working on it They didn't have a funding source and when the state program came to be it enabled them to move quickly to construct and provide that opportunity to their students. So all have varying degrees of success. All had varying degrees of planning. I do know Santa Rosa was in a similar position where they had pre-planned the project and had been working with the California School Finance Authority to use conduit bonds. The difference for those two when they were considering conduit bonds is you would have had more market rate or market level rents to pay for those bonds, whereas with the state program it enabled affordable rent levels.
And my last point and question is affordability and obviously some students are a little tougher to work with because of their financial situation, and yet we have others that may not be in that way. you have a scale that the higher end would contribute rather than using the
grant totally yeah so we we don't have a scale but what we do is we have priority for underrepresented students that are in that income bracket for placement into available housing stock that is there so when you're applying if you're in those lower income brackets you get a higher priority in terms of access to available housing and I know one of the rent levels offhand and this is this is why I think it's so powerful for our students so at Riverside Community College and went on their website I looked at the cost for a student and it's seven hundred and thirty three dollars per month which is in California a very affordable rate for students so that impact to your point is real for our students and the focus is on those that have the greatest needs
Thank you, Madam Chair. Thank you.
I know that Senator Ochoa-Bogue, I think, had a follow-up question she wanted to ask. I think Senator Ochoa-Lito might have kind of alluded to it. It was just basically asking if those market rate units have not been occupied, occupied, would there be a consideration to lower the rent to ensure that they are rented rather than having vacant something rather than nothing? But is that even possible?
Yeah, we can certainly relay that to the district. I don't know what the financing situation on that particular building looks like from a debt service repayment through the P3 side of the house. But certainly my economics background would say that's one of the first things you do is start lowering the cost because you still get more revenue. So, you know, certainly we'll work with the district.
How long have it been bacon? How long have you been working on trying to get it occupied?
So I believe the facility and I'll have to get back to you, but I believe it been open for about a year and a half if I recall Okay so a year and a half We both in real estate we would look at lowering prices in order to get it to get a unit occupied yeah my
colleagues we're concerned about the market rate and it's a business one way or the other you got to look at it supply and demand and and my thought pattern is with the number of students that are trying to live on campus and And not all are in that dire need situation, because we have others that have monies coming from parents and what have you, that they should be paying a little bit more. And the Veterans Administration is very generous with our students, our veterans. And so they're able to pay a little bit more because of their benefits they're able to receive from the VA. Well, for some young person, 18 years old, not finding that job yet, and so on. So I just want to balance it to make sure that we're not losing anything to offset the other. I guess it's called subsidy, but, you know, you need to do it.
Yep, absolutely. We'll commit to working with the district on that, and I absolutely agree. It's an economic principle. Sometimes you actually get more revenue by charging a lower amount. And like I said, something is better than nothing.
And in real estate, we always look, you know, market rate is basically what a buyer is willing and able to pay. And if it's vacant for a year and a half, it means that it's not at market rate. It needs to be re-evaluated and so forth. But at this, you know, when you're looking at that from that perspective, from a real estate perspective, you know, it can be rented. maybe not at what we were aspiring to or had planned for, but that means you're not at market rate. Just a little bit of insight on that.
No, very helpful. Thank you.
Thank you. I appreciate the comments from my colleagues because obviously if we're going to invest $8 into building housing, we just want to make sure that it's full. I think at the end of the day, that's what you're hearing from all the members of the committee. and you know I'm happy we're going to be reallocating some of this money I recognize some of this was left over you know from when we transitioned to the bond and the other was from two projects that we weren't able to take to fruition and so you're going to have this scoring methodology to determine which projects are going to be able to move forward so I'll be excited to see which ones those are but in hearing you talk about some of the project proposals and what's been successful. I mean, it's pretty clear that there's a trend here that partnerships with the UC system, with the CSU system, have really been fruitful in their successes. And so I'd encourage you all as a system to continue seeking out some of those partnerships. You know, I know, I mean, Cal State LA, for example, built student housing that was very significant. Some years ago, they've had trouble with filling it and I know that there's been some conversations that have happened between them and PCC but it's those kinds of partnerships that I think allow us to better you know solve the student housing crisis so I'd encourage you all to continue to collaborate with one another so that these projects are successful they're reaching a hundred percent occupancy and students are benefiting from creating those relationships with students and
other segments yeah absolutely committed to that ironically I happen to be on the Cal State LA campus last week and saw the housing that you're referring to and the student body spoke specifically to the outreach to PCC and the collaboration that's occurring to try and enable available housing to be occupied by students in our local community colleges so absolutely committed to facilitating
those types of partnerships. Thank you. If there are no other comments from any of our other presenters, I think that will be it for this item. And this is actually all the discussion items that we have on today's agenda. We'll now move on to public comment and thank everybody for their presentations. If there's anyone in room 112 who wants to provide public comment on items that were on today's agenda please sign up we ask that you limit your testimony to one minute I'll go ahead and time that on my phone give me one moment all righty now let us begin
good morning Andrew Martinez community college League of California in support of the investments into our housing and appreciate it being brought up today
thank you Jason Henderson on behalf of the Faculty Association California community colleges in support of using the additional money for projects with
availability and need thank you thank you mark McDonald on behalf of the state center community college district and support of this action but also wanted to note let's not forget the projects that have already been approved and make sure that we can see those to completion thank you good morning senators Jutan
Stevens with public advocates were also the conveners of the California affordable student housing coalition. I just want to thank you all for bringing this issue back up so we can discuss and make sure that that monies are being reallocated to go towards affordable student housing. There was also quite a bit of discussion about making sure that there's enough demand. And I would also encourage this committee to consider expanding access to part-time students. Many community college students go to school part-time, including student parents, foster youth, students that are disabled. And so there's this significant overlap between the 60% that are struggling with housing and are part-time students. And so I think I would love to work with y'all to consider expanding access to them as well.
you Tiffany mock on behalf of CFT a union of educators and classified professionals thank you so much for this hearing that centers on the affordability of student housing which we strongly support I always want also wanted to note the tantrum TIE that you know the importance of student housing is also they can access their classes and with their classes access faculty in office hours and so we also urge this committee to fully fund office hours Thank you so much.
Good morning. Digo Zamayo, intern with Latina Advocate here on behalf of Long Beach City College. The district has applied for funding since the grant program started in 2021 and after every iteration. Long Beach City College conducted a survey finding a strong need and demand for housing and would even support CSULB's waiting list for housing should there ever be any occupancy available. They are thankful for the committee's consideration of the topic and hope to maximize the use of unallocated funds available. Thank you very much.
Good morning, Madam Chair and members. Carol Gonzalez on behalf of Gabilan Community College. The college serves students in rural areas from Gilroy up to San Jose. It's in an interesting position because it's around basic eight districts, so it makes it really hard to compete in the region when it comes down to scoring and the way that the Chancellor's Office scores projects. We just wanted to elevate that as consideration as you see the list come out next year. It's hard to compete because of those conditions, but we're seeing a greater demand for student housing, especially as folks are migrating down considering the high cost in San Jose. And for those reasons, they're really excited to see additional funding go towards student housing and really hope that it's dispersed in an equitable way and they could hopefully one day access those funds just considering the scoring metric. Thank you.
Seeing nobody else rising and having heard from all members of the committee, we will go ahead and finish today's agenda. I want to thank everybody for participating today. If you were not able to testify, please submit your comments or suggestions in writing to the Budget and Fiscal Review Committee or visit our website. Your comments and suggestions are important to us and we want to include your testimony in the official hearing records. We thank everyone and we appreciate your participation. We have concluded the agenda for today's hearing, so the Senate Sub-Budget Subcommittee Number One on Education is adjourned.