California EDGE Coalition’s Summary of the 2021-22 Governor’s Proposed Budget

On January 8th, Governor Newsom unveiled the 2021-2022 proposed state budget with a total of $227.2 billion in critical funding. The California EDGE Coalition applauds Governor Newsom for making significant investments in workforce development and recognizing the vital role community colleges and the business community play to help bolster California’s economic recovery. As we’ve seen since the start of the pandemic, there have been record-breaking unemployment numbers, small businesses having to close their doors, students and educators struggling to adapt to distance learning, and ongoing racial and economic inequities working people are facing across the nation. Additionally, our state leaders had to navigate an unprecedented and challenging fiscal year with limited resources, leading to proposed budget cuts in critical education and workforce programs. Fortunately, many of those proposed cuts were spared in the final 2020-2021budget. With regards to federal support, Congress just recently issued another economic relief package in December 2020, totaling $900 billion, with $82 billion to support our higher education system, including flexible funding for community colleges. This federal funding is still forthcoming; however, California anticipates an estimated $3 billion from the relief package which will assist our higher education segments.

As we enter 2021, Congress will need to do more to support our most underserved populations who are in desperate need of financial relief – many who have lost their jobs, are struggling to pay rent and put food on the table, struggling to pay for affordable childcare and healthcare, and students having to drop out of college in order to pay their bills and help their families survive. Based on the state budget proposal, some of the top priorities for the Governor are securing state stimulus support for our lowest income earners, providing rental assistance, funding for K-12 schools and colleges, and boosting financial relief for small businesses. The budget also introduces emergency grants for students struggling financially and proposes 9,000 new slots for students in the Cal Grant program. The Governor also proposes an early action package, which is being considered as an immediate investment plan that will be funded, in large part, as a result of the improved budget conditions and federal assistance. The early action package will focus on providing immediate relief for working families and small businesses most affected by the pandemic.

Although this budget proposal seems optimistic due to the increased revenues, reliable rainy day fund, and some support from the federal government, the state continues to face difficult budget decisions, meaning we must be cautious and prudent on how each dollar is being spent. This year’s additional financial buffer is considered a one-time funding pot, however, the economic downturn due to the pandemic could last for several years. The administration projects long-term deficits in the $7 – $11 billion range extending into the next three years, placing constraints to the state budget for new and ongoing funding commitments. With that said, below is an analysis of the proposed 2021-22 budget, which includes items that are aligned with EDGE’s priorities and interests.

Supporting California’s colleges, low-income students, and adult learners

Prior to the pandemic, low-income students, including adult learners, particularly from communities of color, were already facing barriers in accessing and completing their academic programs, including lack of financial aid support. The pandemic has only worsened these barriers and unveiled significant equity gaps in higher education. Therefore, the budget proposes investments to colleges and support services for students in order to help alleviate some of the economic burdens imposed by the ongoing pandemic. 

  • Community Colleges: $641 million ($213 million ongoing), which also includes a cost of living adjustment of $111 million. As mentioned, the budget proposes an early action package that will aid those impacted most by the pandemic. For the community colleges, that includes:
    • Emergency Financial Aid. The budget proposes a one-time $250 million in Prop 98 General Fund for emergency student financial aid grants. $100 million of this funding will be used for early action to support low-income, full-time students and other students who were/are working full-time, and who demonstrate financial need. The $150 million remaining will be available to the same population in addition to those that had at least a 2.0 GPA. Although this item does provide some assistance for low-income students and adult learners, it is unclear where part-time students fall. More details to come in trailer bill language.
    • Student Retention. The budget proposes a one-time $20 million from Prop 98 General Fund for student retention and enrollment strategies. These funds would be used to engage students who may have dropped out of college due to the pandemic, and to engage with current and/or prospective students who are hesitant to remain or enroll in college due to the ongoing pandemic impacts.
  • Other Community College Student Support Services
    • $100 million one-time from Prop 98 General Fund for student basic needs to address food and housing insecurity. 
    • $10.6 million ongoing Prop 98 to support distance learning, like counseling and tutoring.
    • $30 million ongoing Prop 98 for mental health and technology services. 
  • Cal Grants
    • Cal Grant A eligibility: an increase of $58 million ongoing beginning in 2020-21 to restore Cal Grants for students who lost eligibility due to a change in living arrangement. This will be part of the early action package.
    • Competitive Cal Grant Awards: $35 million ongoing to fund an additional 9,000 new competitive awards annually (bringing the total number of new awards to 50,000 annually).
  • Adult Education Program: $1 million Prop 98 General Fund ongoing to provide Adult Education Program technical assistance.
  • Adult Learners in Charter Schools: Intent budget trailer bill language would clarify that current law allowing charter schools in exclusive partnerships with state or federal job-training programs would receive state apportionment funding for students above 19 years of age.
  • Repaying Deferrals: Last year, the budget included $1.45 billion in Prop 98 payment deferrals for the community colleges. This budget proposes a $1.127 billion one-time Prop 98 General Fund to pay down deferrals. For 2021-22, $326 million in deferrals would remain. Specifically for community colleges, June 2022 apportionment payment would be deferred to early 2022-23. 
  • Cradle to Career Data System: One of EDGE’s biggest priorities is to engage and support the development of a statewide longitudinal data system, which will integrate data across education, workforce, and human services systems. EDGE has been heavily involved in the development stages within the last two years, advocating for the adult learner and worker voice, and the inclusion of apprenticeships and workforce training programs. We are glad to see the Governor has prioritized this important project by proposing a $15 million General Fund investment to provide support and resources for the establishment of the data system. Another $3.8 million ongoing Prop 98 General Fund will also support the California Career Guidance Initiative (CCGI) which provides an interface for student data between high schools, students, and families that will be integrated into the data system. 

Supporting Working Families
As mentioned, working families, particularly those living in underserved areas of the state, Black and brown communities, and immigrant communities, have been hit the hardest during the ongoing pandemic crisis. The proposed budget makes investments in several programs that support working families, but more will be needed to lift our communities out of poverty. Some of those investments include:

  • $44 million ongoing funds for childcare services through Prop 64 cannabis tax revenues, providing 4,500 more child care vouchers for low-income families. We understand these numbers are not enough and we hope to see more investments made in this space that will better assist our working families. 
  • $200 million one-time General Fund infrastructure investments for transitional kindergarten facilities.
  • $75 million ongoing General Fund to assist immigrant communities. The budget includes a $5 million one-time General Fund for the Rapid Responses Program to support entities that provide services to immigrant families when federal funding is absent.
  • $2.4 billion to fund the Golden State Stimulus, $600 dollars in direct state payments to low-income workers through the Earned Income Tax Credit – an estimated 4 million Californians will benefit from this funding. 
  • $30 million one-time General Fund for the Department of Social Services to fund food banks participating in the Emergency Food Assistance Program. Another $11.4 million one-time General Fund to provide the maximum allowable benefit to families participating in the California Food Assistance Program.

Investments in Workforce Development
As previously stated, EDGE appreciates the significant investments being made in workforce development, with a focus on supporting dislocated workers and adult learners who may have lost their job due to the pandemic and are now seeking training programs to upskill and achieve their academic/career goals. Specifically, we are glad to see investments to the California Apprenticeship Initiative, which did not receive funding in the last budget cycle. Other significant investments include work-based learning initiatives – ensuring community colleges and the industry sector work side by side to improve and strengthen core curriculum with employer needs. The proposed workforce development budget comes with a total of $353 million to fund the following:

  • $250 million one-time General Fund to better link higher education and gainful employment. Higher education segments will be expected to better connect student’s learning to workforce and industry needs. 
  • $25 million one-time General Fund for the California Workforce Development Board (CWDB) to expand the High Road Training Partnership model in various industry-specific sectors. This is part of the early action package, which will provide over 2,000 new apprenticeship and pre-apprenticeships as follows:
    • $8.5 million one-time General Fund for construction apprenticeships to help meet housing goals, resulting in 650 jobs. 
    • $6.5 million one-time General Fund for training center jobs in forest and agriculture sectors, resulting in 500 jobs.
    • $4 million one-time General Fund to expand training in the healthcare workforce, resulting in 350 jobs. 
    • $4 million one-time General Fund for Youth Works – a pilot training partnership for youth in SoCal and Bay Area, resulting in 500 jobs.
    • $2 million one-time General Fund for cybersecurity apprenticeship programs with public and private employers, resulting in 200 jobs.
  • $35 million in Prop 98 General Fund to support the following work-based learning initiatives: 
    • $15 million ongoing Prop 98 General Fund for the California Apprenticeship Initiative.
    • $20 million one-time Prop 98 General Fund to expand work-based learning models at community colleges – includes working with faculty and industry partners to incorporate work-based learning curriculum. 
  • The budget proposal mentions that by July 2021, per executive order, the Labor and Workforce Development Agency and Governor’s Office of Planning and Research will release a Just Transition Roadmap. The roadmap will lay out actions that will focus on the state’s workforce to build a carbon-neutral economy with consideration and inclusion of displaced workers and communities in need. 
  • Workforce Innovation Opportunity Act (WIOA): budget proposes $407 million in federal dollars (2020-2021) to continue supporting WIOA programs. This funding includes 15% of discretionary dollars to support training programs, displaced workers, immigrants community, and CalAssist. 
  • Department of Jobs and Higher Wages: budget proposes to create a new Department of Jobs and Higher Wages to consolidate the Workforce Development Board, Employment Training Panel, Workforce Service Branch and Labor Market Information Division of the Employment Development Department, and the Division of Apprenticeship Standards at the Department of Industrial Relations. No specific funding for this item as of yet. 
  • Future of Work Commission: The Commission’s report is expected to be released this month (January) per the budget proposal, which will focus on the impact of technology on the workforce, job quality, wages, worker safety nets, and workforce training.  

Supporting California’s Businesses
From the start of the pandemic, not only have working Californians suffered the large negative effects of the pandemic, but businesses across the state have also been hit the hardest, having to lay off their employees and shut down operations indefinitely. EDGE appreciates the Governor’s willingness to put our small businesses at the forefront by supporting them with critical financial resources to help them sustain and remain open. The following are budget proposals that seek to help alleviate some of the financial burdens for businesses:

  • $575 million grants for small businesses and cultural non-profits. The proposed budget includes $550 million one-time General Fund relief grants to small businesses that have been impacted by the pandemic, which will be administered by the California Office of the Small Business Advocate (CalOSBA). This amount, along with the initial $500 million investment made in November, would bring the total investment in grants to $1.05 billion. An additional $25 million is available for small cultural non-profits. 
  • $70.6 million fee waivers for small businesses. The budget proposes a $70.6 million one-time General Fund to provide fee waivers for barbers, cosmetologists, and manicurists, in addition to bars and restaurants.
  • $50 million one-time General Fund for the California Infrastructure and Economic Development Bank (IBank) programs, with a focus on supporting underserved businesses. This also includes funding for the Small Business Finance Center and the California Rebuilding Fund.
  • CalCompetes Tax Credit and Grant Program. The budget proposes toincrease the amount of CalCompetes Credit available by $90 million in both 2020-21 and 2021-22 for a total of $270 million per year, which is intended to incentivize CA businesses to remain and grow in the state. The proposal also includes a $250 million one-time General Fund to establish a grant component of CalCompetes that will increase business investment and create jobs. $50 million of that pot will be dedicated to high-need areas of the state.
  • California Dream Fund: $35 million one-time General Fund to support micro-grants up to $10,000 to support entrepreneurship and small business creation in underserved communities that are facing opportunity gaps.

Finally, on the issue of broadband, the budget recognizes the long-standing inequities of internet affordability and availability throughout California. Although no specific funding is allocated in this proposal for statewide broadband expansion, the Governor does mention ongoing collaboration is underway between various state agencies, local governments, and internet service providers to address the digital divide. EDGE urges our state leaders to commit to digital inclusion and ensure all Californians have access to quality, affordable high-speed internet, have the technological tools, and have access to digital literacy opportunities to use the technology. 

Moving forward, we understand that the fiscal reality will make it much harder to introduce new programs and/or expand current ones. Many of the proposed budget items included in this version align with EDGE’s policy priorities, some of which include supporting funding for education and workforce training programs; protecting and expanding earn-and-learn opportunities; providing support services for students, including adult learners, to complete their programs; boosting broadband access; and strengthening partnerships between industry, education,  local workforce, and community-based entities. Additionally, EDGE would like to elevate the importance of providing more resources for adult education programs, as well as the importance of ensuring the Cradle to Career Data System remains a priority for the administration and legislature. A statewide longitudinal data system will help the state identify equity gaps within the education and workforce systems. 

Again, we appreciate the Governor’s budget prioritizing California’s workers and businesses. The CA EDGE Coalition looks forward to working with the administration, legislature, and stakeholder partners to ensure our business community, workers, adult students, and underserved communities are provided the support they need as we continue to navigate these challenging times.

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