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Glossary of Terms

This glossary contains terms found in Commission publications, on this website, and in the education community. Several subsets of this glossary are available; click on the description in the menu to view them.

Definitions of State Finance Terms

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Academic Library Current Operations & Acquisitions Price Index (LPI)

The LPI reports the relative year-to-year price level of goods and services purchased by postsecondary institution libraries for their current operations. The priced components of LPI are organized into three parts -- personnel compensation, acquisitions and contracted services, and supplies and materials.

Boeckh Construction Index (Boeckh)

The Boeckh Division of the American Appraisal Company computes the Boeckh index. It is a measurement of inflation on building apartments, hotels and office buildings -- a mix of facilities relatively applicable to structures built on college campuses. The Boeckh index is a "fixed input" type of index of wage rates and building material prices weighted together. It covers the structural portion of building and all the integral plumbing, heating, lighting and elevators.

Bond Funds

The capital outlay displays identify two types of bonds "General Obligation Bonds" and "Other State Bonds." "General Obligation Bonds" are general issue bonds that are approved by the Legislature and State voters with repayment guaranteed from the State's general revenue source (i.e., taxes). "Other State Bonds" are revenue bonds that are sold to fund specific projects whose repayment is guaranteed by revenues that the funded project is expected to generate. Examples of the types of projects funded by revenue bonds are parking structures and dormitories. These operations charge fees to their users, and those fees are used, in part, to retire the accumulated debt of the bonds.

Cal Grants A and B Entitlement Program, and Cal Grant A and B Competitive Program

The Entitlement program is not limited to the number of annual awards. The Cal Grant A Entitlement Program helps needy students with the tuition and fees portion of the costs involved in attending college. The Cal Grant B Entitlement Program provides a living allowance and sometimes tuition and fee aid for low-income students. Grant winners are selected on the basis of both financial need and grade point average. The Competitive program is limited to 22,500 awards. For both Cal Grant A and B Competitive Programs, eligibility is based on financial need and academic qualification.

Cal Grant C Program helps vocational education students with tuition and training costs.

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California Consumer Price Index ( CPI )

The California Consumer Price Index is calculated by the State's Department of Finance, in consultation with the California Department of Industrial Relations, and is conceptually based upon the U.S. CPI. It was initially established as a population-weighted average of the five-county Los Angeles area and the 10-county San Francisco all-items survey in the late 1940s.

California Personal Income

California Per-capita personal income is derived by dividing the State’s total personal income (TPI) by its population. TPI is the sum of all of the money earned by all of the residents of the State in a given year.

Capital Outlay Funds used for Public Higher Education (COFPHE)

Capital outlay funds used for public higher education are defined as COFPHE. They are derived from Tidelands oil revenues and collected by the State Lands Commission.

Continuing Education Revenue Fund

Revenue generated by fees from the following nontraditional programs: concurrent enrollment, extension, and external degree.

Elementary-Secondary School Price Index (SPI)

The SPI measures the effects of inflation on the current operations of elementary and secondary schools. It reports relative price levels that schools pay for a fixed group of goods and services for their daily operation. These expenses include administration, instruction (mostly teacher salaries), plant operation and maintenance, and other costs. Costs excluded are capital outlay and debt service.

Extramural Funds (University of California)

All funds not included in the University of California's budget; hence, the terms extramural and non-budgeted are used interchangeably. These funds include sponsored research financed by federal contracts and grants, federal appropriations for the Department of Energy Laboratories, funds related to State agency agreements, and funds from private gifts and grants. These resources are designated as extramural because, with the exception of the laboratories, they are negotiated from year to year (or are negotiated after the end of the contract or grant period) and have no permanence attached to them. They are, therefore, appropriated outside of the budget.

Federal Mineral Tax

Funds generated from federally leased lands used for the production of geothermal energy, oil, gas, and minerals. The federal government collects all lease revenue and turns over half to the State.

Funded Units of Enrollment

Government services are usually funded based on workload measures that typically are a statistical calculation of the number of clients to be served. For California public K-12 education, the unit of workload measure is "Average Daily Attendance," or ADA. One ADA in public K-12 education equals the number of days a student attended school during an academic year (generally 182 days) divided by the number of days school was in attendance that year. A student is assumed as being in attendance for a school day if she or he is there for one session during the day.

California's two public baccalaureate degree-granting education systems, The California State University and the University of California, use the term "full-time-equivalent" enrollment (or, FTE) to describe units of student workload measure for funding purposes for the systems. The California Community Colleges use the term "full-time-equivalent students" (or, FTES) as its student workload measure for funding purposes. FTE student enrollment is based upon the number of course units a student enrolls in during a semester, while FTES are determined by student contact hours of classroom instruction. Though the two terms are used interchangeably here and in other most publications, it is important to note that FTE enrollment and FTES are determined through entirely different methodologies.

For the California Community College, one FTES represents 525 class (contact) hours of student instruction/activity in credit and noncredit courses. The number, 525, is derived from the fact that 175 days of instruction are required each year and a student attending three hours per day for 175 days will be in attendance for 525 hours. That is, three times 175 equals 525.

For the California State University, the term FTE enrollment is defined to be 15 semester or quarter units. Variations in the academic calendars of the campuses of the CSU are taken into consideration in the definition of the annual FTES, which is equivalent to 30 semester or 45 quarter units. With these definitions, the number of individual students on campus is difficult to determine, but the total volume of instructional activity is more accurately reflected.

For the University of California, one undergraduate FTE in the semester system is student enrollment in 15 semester units for two semesters. One graduate FTE in the semester system is student enrollment in 12 semester units for two semesters. In the quarter system, the totals are 45 under-graduate credit units and 36 graduate credit units per academic year, respectively.

Higher Education Price Index (HEPI)

Dr. Kent Halstead of Research Associates of Washington developed The Higher Education Price Index (HEPI). It measures the average relative level of prices for goods and services purchased by postsecondary institutions through current educational and general expenditures (E&GE). In this way, HEPI shows changes in the costs of services unique to colleges and universities (such as, faculty salaries, instructional equipment, etc.) in addition to more traditional expenditure categories, such as plant maintenance and utilities. Sponsored research, sales and services of education departments, and other for profit or auxiliary enterprises are not included in the calculation of HEPI.

Specifically, according to Dr. Halstead, HEPI is based upon the following: (1) salaries of college personnel, from faculty and administrators to clerical and nonprofessional staff; (2) contracted services, such as data processing, communication, transportation materials and supplies, maintenance, and equipment; (3) library acquisitions; and, (4) utilities. Weights are assigned to these items representing the relative importance of each item in the current E&GE budget. These data are collected from a variety of sources, including salary surveys conducted by the American Association of University Professors and the College and University Personnel Association and U.S. CPI information from the Bureau of Labor Statistics of the U.S. Department of Labor. Information from other price indices is also in the calculation of the HEPI.

Implicit Price Deflators (IPD)

These are derived from the national income and products accounts. They are derived as the ratio of current to constant-dollar Gross Domestic Product (GDP), multiplied by 100. They are also weighted averages of the detailed price indexes used in estimating constant-dollar GDP but the indexes are combined using weights that reflect the composition of GDP in each period. Consequently, changes in IPD reflect not only changes in process but also changes in the composition of GDP. Thus, they are generally not designed to be used as measurements of price changes.

The advantage of IPDs is that since they take changing expenditure patterns into account, they are more representative of the actual, or effective rate of inflation in the nation. These deflators are not available at the State or regional level. This limitation is a drawback for most states, however in a large state with a diversified economy such as California a national deflator is probably as representative as would be any state data-based inflation index.

The two major IPDs presented here are the Gross Domestic Product (GDP) deflator and the State and Local Government (S&LG) deflator.

Inflation Measures

The report utilizes various statistical measurements of periodic changes in prices as a yardstick for gauging the effect of increased costs and financial obligations on funding for California's public colleges and universities, on levels of student charges (tuition and fees), and faculty salaries. These price (inflation) indices are explained below, using information and descriptions provided by the U.S. Bureau of Labor Statistics, the California Department of Finance, and material in the book Inflation Measures for Schools & Colleges, 2000 Update (Research Associates of Washington, September 2000).

Instruction-Related Activities (I-R)

This term is used to define the average expenditures for instructional activities in the postsecondary education sectors. The public-sector information on instruction-related expenditures was initially generated for the Commission report, "Expenditures for University Instruction" (Commission Report 93-2) which contains background detail on the numbers shown here. The methodology for determining these instruction-related revenue data was developed by the Commission and the three public higher education systems, in consultation with the Department of Finance, the Office of the Legislative Analyst, and other officials involved with that research project. For the California Community Colleges and the California State University, these expenditures were determined by dividing each system's selected fund sources for a given year by their full-time-equivalent (FTE) enrollment for that year to determine average State support per funded student.

Local Revenues

This fund source for public K-12 Education and the California Community Colleges is local property taxes, including local government agencies' debt service, excess property tax payments, and State property tax subventions. For the community colleges, these revenues also include nonresident student tuition paid by persons attending the colleges whose legal residence is in another state or country.

Per-Capita

Per-capita calculations divide a given data series by a defined population grouping. For Example, California Per-capita personal income is derived by dividing the State's total personal income (TPI) by its population. TPI is the sum of all of the money earned by all of the residents of the State in a given year. To calculate per-capita funding for another unit of measure (a given population group), the funding amount being used is divided by the specified population set.

Personal Consumption Expenditures

The goods and services purchased by persons.

Proposition 98

On November 8, 1988, voters of the State approved Proposition 98, the "Classroom Instructional Improvement and Accountability Act," a combined initiative constitutional amendment and statute designed to guarantee public primary, elementary, secondary and community college education (referred to as K-14) a minimum share of the State's General Fund revenues each year. Other State agencies (the departments of Developmental Service and Mental Health, the State Special Schools, and the California Youth Authority) also receive funding under Proposition 98; however, their combined share averages less than one-third of 1 percent of annual Proposition 98 funding. The initiative was later modified by provisions contained in Proposition 111, approved by the voters in June of 1990.

Under Proposition 98 C as modified by Proposition 111 C public schools and community colleges are to get the greater of: {a} in general, a set percentage of General Fund revenues (commonly referred to as "Test 1"); {b} the amount of General Funds appropriated to K-14 in the prior fiscal year, adjusted for changes in the cost-of-living (as measured by changes in State per-capita personal income) and enrollment ("Test 2"); or, {c} a third test that replaces "Test 2" in any year in which the percentage growth in per-capita General Fund revenues from the prior year plus 0.50 percent is less than the percentage growth in State per-capita personal income ("Test 3"). Under "Test 3", K-14 receives the same amount appropriated to it in the prior year, adjusted for changes in enrollment and per-capita General Fund revenues plus another small adjustment factor. In any year that "Test 3" is used, K-14 receives a "credit" for future revenue years in which the General Fund is larger than the difference between the "Test 3" amount and the amount that would have been appropriated under "Text 2."

Proposition 98 School Funding

On November 8, 1988, voters of the State approved Proposition 98, the "Classroom Instructional Improvement and Accountability Act," a combined initiative constitutional amendment and statute designed to guarantee public primary, elementary, secondary (K-12) and community college education (referred to as K-14) a minimum share of the State’s General Fund revenues each year. Other State agencies (the departments of Developmental Service and Mental Health, the State Special Schools, and the California Youth Authority) also receive funding under Proposition 98; however, their combined share averages less than one-third of 1 percent of annual Proposition 98 funding. The initiative was later modified by provisions contained in Proposition 111, approved by the voters in June of 1990. Under Proposition 98 C as modified by Proposition 111 C public schools and community colleges are to get the greater of: {a} in general, a set percentage of General Fund revenues (commonly referred to as "Test 1"); {b} the amount of General Funds appropriated to K-14 in the prior fiscal year, adjusted for changes in the cost-of-living (as measured by changes in State per-capita personal income) and enrollment ("Test 2"); or, {c} a third test that replaces "Test 2" in any year in which the percentage growth in per-capita General Fund revenues from the prior year plus 0.50 percent is less than the percentage growth in State per-capita personal income ("Test 3"). Under "Test 3", K-14 receives the same amount appropriated to it in the prior year, adjusted for changes in enrollment and per-capita General Fund revenues plus another small adjustment factor. In any year that "Test 3" is used, K-14 receives a "credit" for future revenue years in which the General Fund is larger than the difference between the "Test 3" amount and the amount that would have been appropriated under "Text 2."

Public Service

For the University of California, activities funded within this category include campus public service, cooperative extension, and the contract with the Charles R. Drew University of Medicine and Science. A major component of public service is the University's intersegmental outreach and K-14 improvement programs designed to provide assistance to K-14 students and schools to encourage more students to become qualified for higher education. Outreach includes such programs as MESA, Puente, Early Academic Outreach Programs, Community College Transfer Centers and the California Subject Matter Projects. Campus public service includes such programs as EQUALS, Lawrence Hall of Science, the California Articulation Number, Scripps Aquarium-Museum, the California State Summer School for Math and Science (a program for gifted K-12 students), and the Teratogen Registry.

Research and Development Price Index (R&DI)

The R&DI measures changes in the price of goods and services bought by colleges and universities through current direct expenditures for sponsored research, excluding indirect (overhead) research costs charged to other departments. The direct expenditures for sponsored research priced by the R&DI consists of salaries and wages for professional and non­professional personnel, fringe benefits, contracted services, supplies and materials, and equipment.

Restricted Funds

Budgeted funds within the University of California that are not identified by a 199XX fund number and that are earmarked for specific purposes, such as hospital income for teaching hospitals, fees for University Extension courses, and room and board charges for dormitory operations are restricted funds.

Special Account For Capital Outlay (SAFCO)

This fund is supplied with tidelands oil revenues.

State Appropriations Limit

As described by the materials from the State Treasurer, the State of California is subject to an annual limit on its appropriations imposed by Article XIII B of the State Constitution, which was adopted by the State's voters as Proposition 4 in 1979. This "State Appropriations Limit" (SAL) was significantly modified by the voters in Proposition 98 and Proposition 111 (discussed above). Nearly all-state authorizations to spend proceeds of taxes are subject to the SAL. Essentially, this phrase refers to tax revenues, some regulatory license fees, and "excess" user fees (fees collected above levels needed to provide the service for which they are being collected). "Proceeds of taxes" excludes most State subventions to local governments, tax refunds and some benefit payments, such as unemployment insurance.

Specifically excluded from the SAL are appropriations for: (1) debt service on bonds in existence prior to January 1, 1979 and those bonds approved by the voters subsequently; (2) appropriations required to comply with mandates of courts or the federal government; and (3) appropriations for "qualified" capital outlay projects and appropriations derived from State gasoline tax increases and motor vehicle weight fee increases, per Prop 111 (explained below). Several initiatives approved in recent years were specifically written to be exempt from the Article XIII limits and were structured to create new revenue sources dedicated to specific uses, such as the tobacco tax increase in Proposition 99 in 1988. The SAL may also be suspended in cases of emergency as declared by the Governor (natural disasters and civil disturbances). If the SAL is otherwise exceeded (i.e., appropriations are made over the limit on approval by a two-thirds vote of the Legislature and the Governor), the entire excess must be recaptured over the next three fiscal years by lowering State appropriations.

Originally, the SAL was based on actual fiscal year 1978-79 authorizations; however, this method changed starting in fiscal year 1991-92, because of provisions in Proposition 111. The 1991-92 SAL was recalculated based upon the 1986-87 SAL and implementing the annual adjustment procedures spelled out in Prop 111. These provisions require that the SAL in each year be based on the State limit for the prior year, adjusted annually for changes in State per-capita personal income and changes in population. When applicable, this adjustment would also account for transfers of the financial responsibility for providing public services among units of government. As amended by Prop 111, the SAL is tested (calculated) over consecutive two-year periods, with any excess "proceeds of taxes" collected over that time that fall above the combined SALs for those two years split equally between K-14 education and refunds to taxpayers.

State Determined Funds

The term "State-determined funds," as defined here, includes only those fund sources used for operating expenses for the general, non-restricted educational missions of the three public higher education systems over which they and/or the State (through the Legislature and Governor) have policy and allocation authority.

State General Fund

The State General Fund is the main account for State revenues from which appropriations for most State programs emanate. It is used to account for all revenues and activities financed by the State that are not required by law to be accounted for by any other fund. Most State expenditures are financed from the General Fund. Normally, the only difference between the General Fund and the other governmental cost funds are constitutional or statutory restrictions placed on the use of the other governmental cost funds.

Student Fees

Fees paid by college students ordinarily cover indirect instructional costs, such as student support services, extramural activities, student events, and charges for specific courses (technology fees). Fees are also charged to students for related services including health insurance, parking and housing (dormitory fees). In California public colleges and universities, revenues generated by student fees are used for both direct and indirect educational operations much like student tuition funds are used in other states. (see Student Tuition)

Student Tuition

Tuition in higher education generally refers to charges for educational instruction paid by students attending postsecondary institutions. These costs include both direct instruction (employee salaries, campus operating expenses and capital and administrative costs, etc.) and related services provided by the college or university. Revenues generated from student fee charges in California’s public higher education systems are generally used to fund educational operations in the same manner tuition revenues are used in other states. (see Student Fees)

U.S. Consumer Price Index (CPI)

The United States Bureau of Labor Statistics "Consumer Price Index for All Urban Consumers," or U.S. CPI, is a measure of the average change in prices over time in a fixed market basket of goods and services purchased by U.S. residents. According to the Bureau, the items included in the pricing survey are: food, clothing, shelter, transportation costs, medical and dental care charges, and other goods that people buy for day-to-day living. All of the taxes directly associated with the purchase and use of items are included in the index. Items in this market basket are weighted for importance in the base year, as determined by a survey of consumer expenditures; relative weights change over time as the price of items rises more or less rapidly than the overall index. Prices are collected in 85 geographic areas around the country, utilizing more than 57,000 housing units and 19,000 retail businesses. The U.S. CPI is based on monthly pricing of the market basket and this pricing occurs throughout the entire month.

UCRP -- University of California Retirement Program

UCRP is the acronym for the University of California Retirement Program (also referred to as UCRS University of California Retirement System). This is a retirement system set up for University of California employees.

University Funds

All University of California-generated income that is classified as General Purpose Resources (budgeted under a 199XX fund number) and that includes nonresident tuition; the State's share of overhead receipts from federal contracts and grants and the Department of Energy Laboratories management fee; interest earned on General Purpose Resource Fund balances; application fee income and income from certain other student fees and charges; and miscellaneous sources such as farm income, and sales and service income.

University of California Retirement Program (UCRP)

University of California Retirement Program (also referred to as UCRS University of California Retirement System): A retirement system set up for University of California employees.

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