Merritt College is one of four colleges in the Peralta Community College District, which faces fiscal challenges. (Photo by Andrew Reed/EdSource)

Facing the threat of a state takeover, a major California community college district is under pressure to resolve wide-ranging financial issues.

The Peralta Community College District, serving about 18,000 students in several East Bay communities, is in the early stages of implementing recommendations to improve budget, auditing, staffing and enrollment problems, among other issues highlighted by the Fiscal Crisis and Management Assistance Team (FCMAT), an agency established and funded by the state to provide advice to districts facing financial problems.

The Peralta district is home to four community colleges: Berkeley City College, the College of Alameda, Laney College and Merritt College.

FCMAT’s June analysis of the district detailed its current challenges and gave Peralta a risk score of 69.9 percent. Anything above 40 percent is considered a high risk of financial instability, according to the analysis.

The analysis resulted in California Community Colleges Chancellor Eloy Oakley assigning a fiscal monitor to watch the district and report back to the system’s Board of Governors. Oakley did not assign a special trustee, who would have control over the district’s governance. But he has not ruled out doing so in the future if Peralta fails to improve.

Oakley said he wants to be proactive in getting Peralta the help it needs and intends to do the same for other districts that might face similar problems. The circumstances at Peralta are highly unusual in the system of 115 community colleges. Along with the Compton Community College District, Peralta is one of only two districts in the system being monitored by the chancellor’s office.

Oakley said at a recent Board of Governors meeting that he expects more community college districts to experience financial distress going forward and wants to avoid a repeat of events in Compton and San Francisco, where community colleges lost local control amid similar fiscal crises in recent years. Compton regained its independence earlier this year, but a chancellor’s office-appointed trustee still monitors the district, according to the chancellor’s office.

Newly appointed Peralta Chancellor Regina Stanback Stroud, the former president of Skyline College in San Mateo County, has been given the task of turning around the troubled district, which may require significant layoffs to accomplish. For the spring 2020 semester, the district expects to cut about 6 percent of the faculty — nearly 70 full-time employees — according to a district progress report. The cuts could impact courses offered to students, a district spokesman said. Further reductions in subsequent years are also likely.

The faculty union planned a rally Tuesday, Oct. 22, at Stroud’s first board meeting in Oakland to urge her to settle a contract with teachers, counselors, librarians and nurses represented by Peralta Federation of Teachers which has been at an impasse with the district since Sept. 23.

“Everything now really hinges on the new chancellor coming in, being willing to establish the internal controls, processes and procedures that need to be in place and be willing to make those tough decisions to make change,” said Michelle Giacomini, a FCMAT executive who led the Peralta study.

The FCMAT analysis detailed various concerns and trends at the district. These included assertions that:

  • Budgets aren’t monitored or developed properly.
  • Facilities are not adequately maintained.
  • The district has six vice chancellors, compared to an average of two or three in similar-sized community college districts. The FCMAT analysis called Peralta’s current structure “inefficient.”
  • Enrollment has declined at each of the district’s four colleges since the 2014-15 academic year, with the sharpest drops occurring at Laney College and Berkeley City College. In total, the district’s full-time student enrollment fell from about 20,260 students in 2014-15 to about 17,600 students in 2018-19. The FCMAT analysis cited a lack of an enrollment management plan and poor marketing as among the reasons for the declining enrollment. 

“Some of the issues around fiscal instability, we were aware of, and others, we weren’t aware of the depth or how long some of these systems had not been adhered to,” Peralta board President Julina Bonilla said.

District spokesman Mark Johnson said Peralta “understands and accepts” the FCMAT report’s findings.

“Of course, they sting. But they’re also factual,” he said.

Peralta isn’t the first community college district in California to face fiscal challenges. Compton College lost its accreditation 14 years ago amid fiscal instability and only recently won back its accreditation and independence. The City College of San Francisco also came close to losing accreditation in 2013 because of financial woes and other challenges. 

Oakley said during a September Board of Governors meeting that he wants to ensure Peralta doesn’t meet the same fate as those colleges, which were assigned special trustees by the Board of Governors. The special trustees each had ultimate control over those colleges and their local boards’ decisions.

Oakley said assigning a special trustee would be a “very intrusive step.”

“We are taking a hard look at how we responded to San Francisco, at how we responded to Compton, and trying to learn from those examples and to be more proactive,” he said, adding that the community college system has identified several other colleges and districts “that we have concerns about.” Among them is San Diego County’s Palomar College, where FCMAT is examining deficit-spending patterns. 

The fiscal monitor assigned to Peralta, former Mira Costa College chief business officer Jim Austin, will report back regularly to the Board of Governors as the district makes its way through implementing up to 75 FCMAT recommendations. Those include developing an enrollment management team, reforming budget processes and considering a reduction in full-time faculty.

Jennifer Shanoski, a chemistry instructor at Merritt College and president of Peralta’s faculty union, said she doesn’t think cutting faculty is the answer to the district’s problems. Rather than reduce the faculty to align with the falling enrollment, she would prefer the district focus on reversing those enrollment trends.

“We feel like there’s no robust enrollment management plan,” she said. “And so we’re bleeding students and the way to get more students is certainly not to simply cut classes.”

Shanoski added that she wants the district to scale back its upper-administration, including the six vice chancellors. She also said the district should focus on making its campuses more appealing to students by renovating buildings. The FCMAT report noted several problems with campus facilities, including malfunctioning air conditioners, elevators and fire alarms. “Our facilities are, in some places, plain disgusting. It’s not a very inviting environment for students,” Shanoski said.

Bonilla, the district’s board president, did not say how extensive further reductions to faculty will be. She said future staffing decisions and other responses to the FCMAT report will be left to Stanback Stroud, the new chancellor.

Johnson, the spokesman for the district, said Peralta still has a long road ahead “to get our financial affairs in order.”

“It took years to get into this position that we’re in,” he said. “It’s going to take years to get out.”

Story originally published by EdSource.