2023-126 California Community Colleges
Oversight of the 50 Percent Law Is Ineffective, and the Law Could Be Amended to Better Support Students
Published: April 8, 2025
Audit Recommendations Disclosure
When an audit is completed and a report is issued, auditees must provide the State Auditor with information regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year. Additionally, Senate Bill 1452 (Chapter 452, Statutes of 2006), requires auditees who have not implemented recommendations after one year, to report to us and to the Legislature why they have not implemented them or to state when they intend to implement them. Below is a listing of each recommendation the State Auditor made in the report referenced and a link to the most recent response from the auditee addressing their progress in implementing the recommendation and the State Auditor’s assessment of auditee’s response based on our review of the supporting documentation.
Recommendations to the Legislature
Recommendation 1
To help districts provide support services for students while continuing to comply with the 50 Percent Law, the Legislature should consider amending the 50 Percent Law to include, but not be limited to, either or both of the following as Instructor Salaries:
- The salaries and benefits of librarians.
- The salaries and benefits of counselors.
Agency response status:
Not fully implemented
Date of implementation:
N/A
State Auditor assessment status:
No action taken
60-Day Agency Response
As of 6/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
6-Month Agency Response
As of 10/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
Recommendation 2
To offset the potential impact of including such expenses as Instructor Salaries, or the numerator of the calculation formula, the Legislature could also consider increasing the percentage at which districts must achieve compliance.
Agency response status:
Not fully implemented
Date of implementation:
N/A
State Auditor assessment status:
No action taken
60-Day Agency Response
As of 6/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
6-Month Agency Response
As of 10/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
Recommendation 3
To ensure that the 50 Percent Law accounts for the changes in technology since its passage, the Legislature should consider amending the 50 Percent Law to allow districts to exclude technology expenses directly related to instruction from the 50 percent calculation.
Agency response status:
Not fully implemented
Date of implementation:
N/A
State Auditor assessment status:
No action taken
60-Day Agency Response
As of 6/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
6-Month Agency Response
As of 10/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
Recommendation 4
To ensure that the Legislature has consistent information about basic needs services spending, and to allow the Legislature to determine whether it should similarly add additional basic needs services spending to Instructor Salaries, or the numerator of the calculation formula, after the Chancellor’s Office implements our recommendation to require consistent reporting of basic needs services, the Legislature should require that the Chancellor’s Office provide to it information on basic needs services spending by restricted and unrestricted funding for each district.
Agency response status:
Not fully implemented
Date of implementation:
N/A
State Auditor assessment status:
No action taken
60-Day Agency Response
As of 6/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
6-Month Agency Response
As of 10/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
Recommendation 5
To ensure that districts spend lottery funds consistent with the law, the Legislature should consider defining or clarifying the noninstructional purposes for which lottery funds may not be spent.
Agency response status:
Not fully implemented
Date of implementation:
N/A
State Auditor assessment status:
No action taken
60-Day Agency Response
As of 6/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
6-Month Agency Response
As of 10/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
To ensure that community‑supported districts comply with the 50 Percent Law, the Legislature should consider creating an enforcement mechanism that effectively applies to community‑supported districts. For example, the Legislature could consider imposing a financial penalty, such as a fine.
Agency response status:
Not fully implemented
Date of implementation:
N/A
State Auditor assessment status:
No action taken
60-Day Agency Response
As of 6/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
6-Month Agency Response
As of 10/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
To promote transparency and to ensure that stakeholders have appropriate information about the rationale for creating new administrator positions, the Legislature could consider requiring districts to do the following:
- Report annually to the Legislature information on newly created administrator positions, the justification for those additional positions, and the funding source used to pay for the position.
- Consistently and thoroughly document their justifications when creating new administrator positions by including whether the position is needed for increased workload, or if applicable, how the position will contribute to student success. If a district creates the position to improve student success, the district should identify the student success metrics by which it will measure the position’s success.
Agency response status:
Not fully implemented
Date of implementation:
N/A
State Auditor assessment status:
No action taken
60-Day Agency Response
As of 6/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
6-Month Agency Response
As of 10/7/25, the Legislature has not taken any action in the 2025/26 Legislative Session to address this specific recommendation.
Recommendations to the California Community Colleges Chancellor’s Office
Recommendation 8
To ensure that districts consistently track their spending on basic needs services, the Chancellor’s Office should update its accounting manual by September 2025 to include an accounting code for basic needs services and specify which basic needs services districts must include under this code.
Agency response status:
Not fully implemented
Date of implementation:
12/31/26
State Auditor assessment status:
Pending
60-Day Agency Response
The Chancellor’s Office is prepared to revise the Budget and Accounting Manual (BAM) to establish a dedicated accounting code for basic needs services and define the expenditures to be reported under this code. The Chancellor’s Office will work with stakeholders across all districts to ensure accurate and consistent reporting. However, engagement across all districts will require thorough planning and support.
6-Month Agency Response
The Chancellor’s Office will revise the Budget and Accounting Manual (BAM) and update the CCFS-311 system to establish a dedicated accounting code for basic needs services and define the expenditures to be reported under this code. The Chancellor’s Office will work with stakeholders across all districts to ensure accurate and consistent reporting. However, engagement across all districts will require thorough planning and support and we will provide an update on the progress at the 1-Year Follow-Up.
1-Year Agency Response
The Chancellor’s Office is updating the Budget and Accounting Manual (BAM) to incorporate Basic Needs services accounting guidance and align program classifications with the systemwide transition from the Taxonomy of Programs (TOP) to the federal Classification of Instructional Programs (CIP) structure. Because these changes affect multiple interrelated sections of the BAM, the Office is implementing them as a single, coordinated update to ensure consistency and avoid duplicative revisions. The proposed updates are scheduled for Board of Governors consideration in September 2026, with final issuance anticipated by December 2026.
To ensure that districts submit accurate information related to their compliance with the 50 Percent Law, by September 2025 the Chancellor’s Office should provide the districts with regular training and clarify its existing guidance. The trainings should include instruction about how districts should correctly classify instructional aides and should identify the correct accounting codes districts should use to accurately identify transactions included in Instructor Salaries, Current Educational Expenses, and exclusions.
Agency response status:
Fully implemented
Date of implementation:
July 2025
State Auditor assessment status:
Fully implemented
60-Day Agency Response
The Chancellor’s Office provides training and guidance to the districts on a regular and ongoing basis. For example, training was provided at an Association of Chief Business Officials workshop on 5/20/25 and will be provided at the Chancellor’s Office Budget Workshop on 7/31/25. The Office also provides post workshop training online and updates FAQ, if needed.
Public Reasoning Behind State Auditor 60-Day Assessment
The Chancellor’s Office provided examples of two presentations. However, the Chancellor’s Office did not demonstrate how it will provide regular training, including instruction on how to correctly classify instructional aides and the accounting codes districts should use to identify transitions include in Instructor Salaries, Current Education Expense, and exclusions. The Chancellor’s Office also did not demonstrate that it clarified its existing guidance with this information.
6-Month Agency Response
During the 2025 Annual Budget Workshop, the Chancellor’s Office provided training on properly classifying instructional vs. non-instructional aides, including clarification of the correct accounting codes for transactions under Instructor Salaries, Current Educational Expenses, and exclusions. The training emphasized the proper use of Object Codes 2200 (Instructional Aides, Regular) and 2400 (Instructional Aides, Other) as outlined in the Budget and Accounting Manual (BAM) and reinforced in the Community College District Audit Manual (CDAM), Section 421 – Salaries of Classroom Instructors (50 Percent Law). The CDAM is available in the “Manuals” section on the Chancellor’s Office website and will also be linked on the 50% Law webpage once remediation is complete.
Additionally, the California Community College Internal Auditors (CCIA) Spring Conference in May 2025, the Chancellor’s Office provided training on what constitutes instructional versus non-instructional activities, further supporting accurate classification and compliance. That same month, at the Association of Chief Business Officials (ACBO) Spring Conference, the Chancellor’s Office presented “50% LAW: COMPLIANCE, AUDIT INSIGHTS, AND BEST PRACTICES”, covering proper categorization of instructional aides and strengthening understanding of 50% Law requirements. Remediated slides from the 2025 trainings will be posted by January 2026.
Ongoing Training Plan:
As part of ongoing efforts, the Chancellor’s Office will continue to provide updates, reminders, and best practices on the 50% Law during the ACBO and CCIA spring conferences, and at the Annual Budget Workshop, during the summer, as needed. Following each presentation, the training materials and slides will be posted on the 50% Law webpage for on-demand access by districts and an email will be disseminated to the respective listservs to ensure all stakeholders are aware of the information shared at the conferences.
Public Reasoning Behind State Auditor 6-Month Assessment
The Chancellor’s Office provided documentation that it has offered trainings and clarified its existing guidance to the districts at several conferences, including how districts should correctly classify instructional aides, and how they should identify transactions included in Instructor Salaries, Current Educational Expenses, and exclusions.
To ensure that districts submit accurate information related to their compliance with the 50 Percent Law, by September 2025 the Chancellor’s Office should provide training and clarify its guidance to districts that only ISAs in the “Other Expenditures” category should be included as Instructor Salaries.
Agency response status:
Fully implemented
Date of implementation:
Dec. 2025
State Auditor assessment status:
Fully implemented
60-Day Agency Response
The Chancellor’s Office will continue to leverage existing communication channels to provide ongoing training and guidance to districts based on the Budget Accounting Manual (BAM), and we stand ready to assist districts. Planned training and guidance to date include:
- Developing an Accounting Advisory, planned for release on 9/8/25.
- Updating the BAM, Contracted District Audit Manual (CDAM) & 50% law webpage to provide clarification, and presenting the updates at future webinars.
6-Month Agency Response
In its 2025 Annual Budget Workshop, the Chancellor’s Office gave a presentation with accompanying slide deck that directed districts to only report ISA direct instruction costs in the Other Operating Expenses to comply with the 50 Percent Law.
To ensure that districts submit accurate information related to their compliance with the 50 Percent Law, by September 2025 the Chancellor’s Office should provide districts with guidance about what constitutes an instructional and noninstructional purpose when expending lottery funds.
Agency response status:
Fully implemented
Date of implementation:
July 2025
State Auditor assessment status:
Fully implemented
60-Day Agency Response
The Chancellor’s Office will continue to leverage existing communication channels to provide ongoing training and guidance to districts, and we stand ready to assist districts. Current and planned training and guidance includes:
-Presented training at the Association of Chief Business Officials (ACBO) Conference on 5/21/25.
-Updating the Budget Accounting Manual (BAM) & Lottery webpages to be responsive to district inquiries and presenting that information at future training events.
Public Reasoning Behind State Auditor 60-Day Assessment
The Chancellor’s Office provided documentation that it has presented on our finding on use of lottery funds, but it did not provide documentation that it updated its guidance in the Budget Accounting Manual or lottery webpages.
6-Month Agency Response
To ensure districts submit accurate information related to the 50 Percent Law, the Chancellor’s Office provided guidance on July 25, 2025, during the Annual Budget Workshop on the proper treatment of lottery funds, which are excluded from the 50 Percent Law calculation. Districts were reminded to use separate accounts or subfunds for lottery receipts and expenditures, consistent with guidance available in the Community College District Audit Manual (CDAM), Section 421.04, Paragraph #7 – Salaries of Classroom Instructors, Suggested Audit Procedures.
At the California Community College Internal Auditor (CCIA) Spring Conference in May 2025, the Chancellor’s Office also provided training to districts on what constitutes instructional versus non-instructional activities when expending lottery funds. Instructional purposes include materials and activities that support student learning (e.g., textbooks, educational resources, technology-based materials), while non-instructional purposes include administrative support, counseling, and operations not directly tied to teaching. Additionally, at the Association of Chief Business Officials (ACBO) Spring Conference that same month, the Chancellor’s Office presented the “50% LAW: COMPLIANCE, AUDIT INSIGHTS, AND BEST PRACTICES” – a session designed to strengthen understanding of the 50% Law and provide best practices for compliance and the use and treatment of lottery funds.
The presentation materials and a link to CDAM Section 421 will be posted on the Chancellor’s Office website under the 50% Law and Lottery pages for on-demand access by January 2026 once they have been remediated.
Public Reasoning Behind State Auditor 6-Month Assessment
The Chancellor’s Office has provided training to districts regarding what may be considered instructional and non-instructional when related to Lottery Funds.
To ensure that districts submit accurate information related to their compliance with the 50 Percent Law, by September 2025 the Chancellor’s Office should perform basic reviews of the financial reports that the districts submit to identify any obvious errors in reporting, such as the numerator of a section being larger than the denominator.
Agency response status:
Fully implemented
Date of implementation:
Oct. 2025
State Auditor assessment status:
Fully implemented
60-Day Agency Response
The Chancellor’s Office implemented audit checks in the Annual Financial and Budget Report reporting system (CCFS-311) for Actual FY 2024-25 and is currently testing the updated checks.
Public Reasoning Behind State Auditor 60-Day Assessment
The Chancellor’s Office implemented an audit check to determine that total lottery expenditures match the lottery total unrestricted total expenditures, but not other basic checks, such as ensuring that the numerator of a section is not larger than the denominator.
6-Month Agency Response
To support implementation of this recommendation, the Chancellor’s Office developed a Fifty Percent Law Trend Benchmarking Excel Workbook that was tested on FY 2023-24 actuals and used it for FY 2024-25. This tool performs comprehensive data validation and includes:
- District-level compliance data from FY 2013-14 through FY 2024-25
- District-specific trend charts and statewide comparison charts
- Summaries of compliance percentages over time
- Calculated object codes for the numerator (instructional salary expenditures) and denominator (current expense of education) across five fiscal years
The workbook enables automated detection of anomalies and provides quick self-inspection features. Specifically aligned with the auditor’s recommendation, a validation formula was implemented:
IF(Numerator > Denominator, Flag)
Where Flag = Statement is True.
Initial testing revealed that approximately 15% of cases triggered this condition, with further analysis identifying additional anomalies. After refining logic to reduce false positives, the enhanced checks confirmed that 100% of districts had no obvious reporting errors in the FY 2024-25 dataset. While the tool is already enhancing our review process and ensuring compliance accuracy, we are applying final refinements to complete it. Full finalization is expected by March 2026.
Additionally, the CCFS-311 reporting system includes an automated audit check for lottery expenditures. If the total lottery expenditures reported on the 50% Law page do not match the actual unrestricted lottery expenditures entered elsewhere in the report, the system displays a warning in red text and generates an audit check report noting the discrepancy. This feature ensures that districts are alerted to inconsistencies before submission.
Beginning with the next reporting cycle (FY 2024-25), these enhanced reviews and system checks will be formally implemented to identify and correct obvious reporting errors in CCFS-311 submissions.
Public Reasoning Behind State Auditor 6-Month Assessment
The Chancellor’s Office provided a copy of its workbook, but the Chancellor’s Office notes that full finalization is expected by March 2026. Until the process is in full finalization, we assess this recommendation as partially implemented.
1-Year Agency Response
The Chancellor’s Office completed a review of FY 2024-25 financial data submitted by districts. The review included numerator-to-denominator comparisons to identify obvious reporting errors, such as instances where the numerator exceeded the denominator. The Fifty Percent Law analysis provided is generated from the benchmarking workbook and includes output demonstrating that the checks were performed for all 73 districts.
Public Reasoning Behind State Auditor 1-Month Assessment
The Chancellor’s Office provided documentation that it has performed reviews of the financial reports submitted by the districts, including verifying that the numerator of certain sections are not larger than the denominator and identifying significant changes in the amounts reported for those sections.
To ensure that districts follow the exemption process when they have not complied with the 50 Percent Law, the Chancellors Office should create a policy by September 2025 for verifying that a district’s compliance plan specifies how the district will spend the deficient amount for Instructor Salaries during the next fiscal year and ensuring that the district governing board has certified the compliance plans.
Agency response status:
Not fully implemented
Date of implementation:
9/31/26
State Auditor assessment status:
Partially implemented
60-Day Agency Response
This recommendation is under consideration.
6-Month Agency Response
The Chancellor’s Office has developed and implemented a formal 50% Law exemption policy to ensure compliance plans are certified by governing boards and include detailed allocations of deficient amounts.
Beginning September 15, all districts will have their 50% Law supplementary reports reviewed (certified or uncertified). For districts at risk of noncompliance, the Chancellor’s Office will initiate direct communication to notify them, request completion of CCFS-350, and schedule meetings to review Fiscal Health Indicators. Following the CCFS-350B checklist, districts will work with the Chancellor’s office to determine the Salaries Cohort. Districts experiencing hardship will be asked to complete CCFS-350B and provide additional factors.
Monthly communication will continue to monitor progress, provide technical assistance, and confirm compliance plans are approved by governing boards.
Additionally, to strengthen the exemption policy, internal instructions will be finalized to standardize timelines and Chancellor’s Office – Fiscal Standards team actions for statewide monitoring. These instructions are expected to be completed by March 2026.
Public Reasoning Behind State Auditor 6-Month Assessment
The Chancellor’s Office has made information related to exemption forms available online. We will review the updated instructions at our one-year follow up.
1-Year Agency Response
The Chancellor’s Office agrees with the recommendation and has developed an internal policy to strengthen oversight of the 50 Percent Law exemption process. The policy establishes internal requirements for the Chancellor’s Office to communicate with districts that have reported deficiencies in the CCFS-311 to submit an application for exemption from the 50% law that includes a complete, timely and governing-board-certified compliance plan that clearly specifies how the full deficiency amount will be expended on Instructor Salaries in the subsequent fiscal year and includes verification that the plan is certified by the district governing board.
The policy establishes formal review and verification procedures to ensure completeness, accuracy, and alignment with statutory requirements, as well as ongoing monitoring to track district progress in implementing approved compliance plans.
The exemption process internal policy is currently under executive review and is scheduled to be finalized and implemented by September 2026.
To ensure that Calbright complies with state law, the Chancellor’s Office should immediately require Calbright to follow the process to apply for an exemption as state law prescribes, including submitting the initial exemption application and second exemption form, and obtaining a decision from the CCC Board of Governors.
Agency response status:
Not fully implemented
Date of implementation:
6/30/26
State Auditor assessment status:
Pending
60-Day Agency Response
Calbright has been informed of its obligation to comply with state law when not meeting the 50% law, including the need for districts not meeting the 50% requirement to annually request an exemption, providing the district with a link to the exemption request form and a note that the form for this upcoming cycle is due 9/15/2025.
6-Month Agency Response
The Chancellor’s Office met with Calbright on June 23, September 22, and November 24, 2025, to discuss 50% Law noncompliance and the exemption process and its deadlines. The exemption application (Form CCFS-350A) was due September 15, and the governing board findings (Form CCFS-350B) were due December 1, and Calbright submitted both on time. Calbright will present Form CCFS-350B to their Board for review at the next Board meeting in January 2026 and will provide a certified copy of the form with the Board’s decision once approved.
Public Reasoning Behind State Auditor 6-Month Assessment
The Chancellor’s Office provided a copy of Calbright’s exemption request and application for exemption. Once approved, the Chancellor’s Office should provide the decision from the CCC Board of Governors.
1-Year Agency Response
The Chancellor’s Office met with Calbright on June 23, September 22, and November 24, 2025, to discuss 50 Percent Law noncompliance and the statutory exemption process, including applicable exemption deadlines.
Calbright submitted the exemption application (Form CCFS-350A) by September 15 and the governing board exemption request (Form CCFS-350B) by December 1. A certified copy of Form CCFS-350B was submitted by Calbright on January 20, 2026.
The exemption request and supporting information were presented at the California Community Colleges Board of Governors meeting on March 24, 2026. The Chancellor’s Office is awaiting the Board of Governors’ final decision.
To ensure that districts submit accurate information related to their compliance with the 50 Percent Law, by September 2025 the Chancellor’s Office should perform basic checks of its administrator, faculty, and support service staffing and salary data by checking district submissions for fewer than one FTE or less than one dollar for salaries in the administrator, faculty, and support staff categories. The Chancellor’s Office should follow up with districts about any potential errors it identifies.
Agency response status:
Not fully implemented
Date of implementation:
Feb. 2026
State Auditor assessment status:
Pending
60-Day Agency Response
The Chancellor’s Office is reviewing this recommendation, and its implementation.
6-Month Agency Response
The Chancellor’s Office collects district staffing (EB/EJ) data annually in January. During the upcoming January 2026 data collection, the MIS team will review district submissions, analyze the data, and notify districts of any issues identified in accordance with the audit recommendation.
To ensure that districts submit accurate information related to their compliance with the 50 Percent Law, by September 2025 the Chancellor’s Office should implement a training and guidance program for districts about their submission of required staffing and salary data for administrator, faculty, and support staff, and require all districts to complete it.
Agency response status:
Not fully implemented
Date of implementation:
Ongoing
State Auditor assessment status:
Pending
60-Day Agency Response
The Chancellor’s Office is reviewing this recommendation, and its implementation.
6-Month Agency Response
The MIS team conducted a series of MIS data submission training webinars from July through September 2025. The September 26, 2025, webinar provided an overview and description of district staffing data files and elements, as well as EB/EJ data submission troubleshooting and error correction guidance. A copy of the webinar series description and schedule that was shared with the districts was submitted for reference.
Public Reasoning Behind State Auditor 6-Month Assessment
Although the Chancellor’s Office provided documentation of a training regarding their submission of required staffing and salary data, it has not made it a required training for all districts to complete.
