Fifty Percent Law

Percent of Current Education Expense = Salaries of Classroom Instructors/Total Current Education Expense

Salaries of Classroom Instructors (Numerator)

  +  Salaries of Classroom Instructors (Unrestricted General Fund, Activity Codes 0100-5900, 6110)
Academic Salaries: Instructional (Contract or Regular and Other) 
Classified Salaries: Instructional Aides (Regular Status and Other)
Employee Benefits for Academic Instructional and Instructional Aides (Direct Instruction only)
Other Operating Expenses (Only direct instructional costs for Instructional Service Agreements)

  - Less Exclusions Activity to Exclude: Instructional Staff-Retirees’ Benefits and Retirement Incentives Lottery Expenditures: Academic Salaries, Classified Salaries, Employee Benefits

Total Current Education Expense (CEE) (Denominator)

  + Current Expense of Education (Activity Codes 0100-6799) Academic Salaries: Instructional (Contract or Regular and Other)  Academic Salaries: Non-Instructional (Contract or Regular and Other) Classified Salaries: Instructional Aides (Regular Status and Other)  Classified Salaries: Non-Instructional Aides (Regular Status and Other) Employee Benefits for Academic Salaries and Classified Salaries  Supplies and Materials Other Operating Expenses  Equipment Replacement 

  - Less Exclusions
Activity to Exclude:
Instructional Staff-Retirees’ Benefits and Retirement Incentives
Student Health Services Above Amount Collected
Student Transportation
Non-Instructional Staff-Retirees’ Benefits and Retirement Incentives 
Object to Exclude:
Rents and Leases
Lottery Expenditures: 
Academic Salaries, Classified Salaries, Employee Benefits
Supplies & Materials
Capital Outlay
Other Outgo

What is included in Classroom Instruction Activities?

The direct costs of classroom instruction are recorded within instructional activities 0100, Agriculture and Natural Resources through 4900, Interdisciplinary Studies (see the Budgeting and Accounting Manual for a detailed list). Costs of instruction include expenses incurred in offering credit and noncredit courses approved, either individually or as a part of some larger program, by the Chancellor’s Office. Also included are the salaries, benefits, and related expenses of those coordinators, supervisors, departmental chairpersons and their support staff whose duties are directly related to specific instructional activities. Directors or coordinators whose duties are not related to direct instructional activities, such as directors of EOPS and DSPS and their support staff, are not recorded in these activities but rather in the appropriate administrative and support activity to which their efforts are directed. 

Activity 5900, Instructional Staff-Retirees’ Benefits and Retirement Incentives, includes expenditures on behalf of retired faculty and prepayments for retirement incentives and benefits that cannot be identified to specific disciplines. Examples of these payments could be to a State retirement system, to a self insurance fund, joint powers authority or private insurer. Activity 5900 is to be used only to record amounts expended for a district’s share of retirees’ health and other post-employment benefits (OPEB) costs and for retirement incentive pay for instructors, and instructional aides whose salaries qualified for inclusion as salaries of classroom instructors (California Code of Regulations (CCR) § 59204).

Expenditures for the operation of Learning Center (Learning Resource Center), Activity 6110, are included.  A learning center is defined as the specific location set aside for the general student body and faculty to supplement instructional activities and provide educational enrichment for students. Activities in the learning center may generate Full-Time Equivalent Students (FTES) for State funding purposes if all requirements for generating FTES are met. Direct costs incurred in generating FTES must be reported in the appropriate instructional activity.

Academic Salaries

Instructional Salaries for Contract or Regular (1100)

Expenditures for the full or prorated portions of salaries of all employees in contract or regular faculty positions. Contract employee means an employee of a district who is employed on the basis of a contract in accordance with Education Code sections (EC §) 87601, 87605, 87608, or 87608.5. Regular employee means an employee of a district who is employed in accordance with EC §§§§ 87601, 87608, 87608.5, or 87609.

This object also includes the following expenditures:

• Prorated salaries of contract or regular instructors working a reduced load or whose assignment includes both instructional and Non-Instructional duties.
• Pro-rated salaries of administrators having a teaching assignment as part of their regular work assignment. 
• Salaries of instructors on sabbatical leave. 
• Extra duty days or assignments paid as a part of an instructor’s regular salary. 

Salaries of instructors designated as temporary employees pursuant to EC §87477 and overload and stipend pay for instructors designated as contract employees or as regular employees are recorded within Object 1300, Instructional Salaries, Other, or Object 1400 Non-Instructional Salaries, Other, as appropriate.

Authorized duties of academic employees whose salaries are to be reported in this object account include, but are not limited to:

• Classroom instruction to students.
• Preparation for and evaluation of classroom work. 
• Extracurricular activities that arise out of, or are extensions of, classroom work.
• Duties ordinarily assigned to faculty personnel in connection with the custody and control of students in situations other than in the classroom (work experience programs or field trips).
• Intermittent duties as assigned either individually or in connection with committee work, in-service training, or institutes whose purpose is the evaluation or improvement of the educational program in the district.

Instructional Salaries, Other (1300)
Expenditures for the full or prorated portions of salaries of instructors who have not been designated as contract or regular employees. Included are the salaries of instructors designated as temporary employees pursuant to EC §87477 and overload and stipend pay for instructors designated as contract employees or as regular employees.

Classified Salaries

Instructional Aides, Regular Status (2200)
Expenditures for the full and prorated portions of salaries paid to instructional aides (defined in EC §88243) who have been designated as regular employees. Overtime paid to instructional aides who have regular status is recorded within Object 2400, Instructional Aides, Other. These expenditures must be separated into the following subobjects: Direct Instruction or Other.

Direct Instruction
Expenditures for the full and prorated portions of salaries paid to employees who are (a) assigned by governing board designation the basic title of “Instructional Aide”, or any other appropriate title that denotes the employees’ duties include instructional tasks, and (b)employed to assist instructors in classroom instruction tasks during any portion of their duties (per EC §84362, the 50 Percent Law). Employees providing students with assistance and training in computer labs can be classified as instructional aides if they qualify under EC §84362.

An employee shall be deemed to be under the supervision of an instructor for the purpose of EC §84362 if the employee performs duties under the direction of an instructor.

Other
Although EC §88240 et seq. (and related regulations in CCR §59200 et seq.), are liberal in their definition of instructional aide, the intent of EC §84362 (the 50 Percent Law) restricts instructional aide salaries, that may be claimed as “salaries of classroom instructors” to salaries for the direct instruction of students. Therefore, instructional aide salaries must be segregated into those that participate in direct instruction of students and all others.

Instructional Aides, Other (2400)
Expenditures for the full and prorated portions of salaries of instructional aides (defined in EC §88243) that do not have regular status as well as overtime paid to instructional aides who have regular status. Such instructional aide salary expenditures must be separated into the following subobjects: Direct Instruction and Other.

Direct Instruction
Expenditures for the full and prorated portions of salaries paid to employees who are (a) assigned by governing board designation the basic title of “Instructional Aide” or any other appropriate title which denotes that the employees’ duties include instructional tasks, and (b) employed to assist instructors in classroom instructional tasks during any portion of their duties (per EC §84362, the 50 Percent Law). Employees providing students with assistance and training in computer labs can be classified as instructional aides if they qualify under EC §84362.

An employee shall be deemed to be under the supervision of an instructor for the purpose of EC §84362 if the employee performs duties under the direction of an instructor.

Other
Although EC §88240 et seq., are liberal in their definition of instructional aide, the intent of EC §84362 (the 50 Percent Law) restricts instructional aide salaries that may be claimed as “salaries of classroom instructors” to those for the direct instruction of students. Therefore, instructional aide salaries must be segregated into those that participate in the direct instruction of students and all others.

Employee Benefits for Direct Instruction Only (Academic Instructors and Instructional Aides)

Expenditures as retirement contributions for employees providing or assisting in providing instruction to students. Applicable costs are for instructors and direct instruction-related instructional aides whose salaries are reported within Objects 1100, 1300, 2200 (Direct Instruction), and 2400 (Direct Instruction).

Supplies and Materials

Other Operating Expenses

Contract Services (5000)
This object also includes contract services for another entity contracted expenses for Instructional Services Agreements (ISA’s). 
May include only direct instructional costs associated with Instructional Services Agreements.

Equipment Replacement

Instructional salary costs will not include equipment replacement.

What is included in the Current Expense of Education? 

Expenditures incurred for current expense of education are recorded within instructional activities 0100 through 5900, 6110 and will also include non-instructional (administrative and support activities) 6000-6790 [Instructional Administration, Instructional Support Services, Admissions and Records, Student Counseling and Guidance, Other Student Services, Operation and Maintenance of Plant, Planning, Policymaking and Coordination, and General Institutional Support Services.]

Academic Salaries

Instructional Salaries for Contract or Regular (1100)  (see above)
Instructional Salaries, Other (1300) (see above)
Non-Instructional Salaries for Contract or Regular (1200)
Expenditures for the full and prorated portions of salaries of employees on contract for regular Non-Instructional academic positions. Districts shall record such Non-Instructional salaries within the applicable sub-object: Education Administrators and Other.

Educational Administrators
Expenditures for the salaries of educational administrators. EC §87002 and CCR §53402 define “educational administrator” as an administrator who is employed in an academic position designated by the governing board of the district as having direct responsibility for supervising the operation of or formulating policy regarding the instructional or student services program of the college or district. Educational administrators include, but are not limited to, chancellors, presidents, and other supervisory or management employees designated by the governing board as educational administrators.

Other
Expenditures for the salaries of academic employees, other than educational administrators, in contract or regular Non-Instructional academic positions. This includes librarians, counselors, community college health professionals, disabled students programs, and services professionals, extended opportunity programs and services professionals, and faculty on Non-instructional assignments. Sabbatical Leave for these employees is also included.

Any release time or additional stipends paid for coordinators, supervisors, and departmental chairs are Non-Instructional and recorded in Object 1200.

Non-Instructional Salaries for Other (1300)
Expenditures for the full or prorated portions of salaries of instructors who have not been designated as contract or regular employees. Included are the salaries of instructors designated as temporary employees pursuant to EC §87477 and overload and stipend pay for instructors designated as contract employees or as regular employees.

Classified Salaries

Non-Instructional Aides, Regular Status (2100)
Expenditures for the full and prorated portions of salaries of employees in regular classified and other regular nonacademic positions. EC §88001 defines “regular” as a classified employee who has probationary or permanent status. This object may include, but is not limited to, the salaries of administrators not designated as academic administrators by the district governing board, professionals,  supervisors, purchasing agents, clerical, maintenance workers, custodians, gardeners, telephone operators, security personnel, and data processing staff.

Administrators and Supervisors
Expenditures for salaries of administrators and supervisors as defined in EC §84362.

Other
Expenditures for salaries of employees in regular classified positions that are not designated as administrators and supervisors.

Non-Instructional Salaries, Other (2300)
Expenditures for the full and prorated portions of salaries of nonacademic employees that do not have regular status or who are paid for special work in excess of their regular work schedule, as well as overtime paid to nonacademic employees who have regular status. This object may include, but is not limited to, the salaries of student help, clerical staff, administrative personnel, professional staff, maintenance workers, custodians, gardeners, food service staff, telephone operators, transportation staff, and security personnel. Districts shall record such nonacademic salaries within the appropriate subobject: Administrators and Supervisors and Other.

Administrators and Supervisors
Expenditures for the salaries of nonacademic administrators and supervisors as defined in EC §84362.

Other
Expenditures for the salaries of employees in classified positions or other nonacademic
positions that are not designated as administrators and supervisors.

Instructional Aides, Regular Status (2200) (see above)
Instructional Aides, Other (2400) (see above)

Employee Benefits 

All expenditures for employee benefits through the applicable activities.

Supplies and Materials

This object is used to record all expenditures for instructional and Non-Instructional supplies and materials, software, books, magazines, periodicals, and including costs of freight, sales/use tax and handling charges.

Other Operating Expenses and Services 

This object is used to record all expenditures for services, leases, rents, travel, and other operating expenses. It may include audit, contract services, depreciation, dues and membership fees, election, insurance, legal, personal and consultant services, postage, repairs and maintenance, self-insurance claims, conferences, and utilities and housekeeping services.

Equipment Replacement (6420)

This object may include equipment replacement. Expenditures for the identical replacement of equipment (necessitated by normal use) on a piece-for-piece basis to perform the same function(s). Equipment that differs in capacity, function, or quality shall be considered new equipment.

Exclusions:

Activities to Exclude

• Instructional Staff-Retirees’ Benefits and Retirement Incentives (from both numerator and denominator)
• Student Health Services Above Amount Collected
• Student Transportation
• Non-instructional Staff-Retirees’ Benefits and Retirement Incentives

Objects to Exclude

• Rents and Leases (5060)

Lottery Expenditures (Unrestricted)

• Academic Salaries, Classified Salaries, Employee Benefits (from both the numerator and denominator)
• Supplies & Materials
• Capital Outlay
• Other Outgo

All districts reporting deficiencies on the Fifty Percent Law report in the CCFS-311 Annual Financial and Budget Report in a given fiscal year will be reported in the following Board of Governors March meeting agenda item on the Fifty Percent Law, whether or not an application for exemption is filed.  If a district spent less than fifty percent of the Current Expense of Education for the Salaries of Classroom Instructors and wishes to be given consideration for an exemption, the district governing board must file an application for exemption and the subsequent related local governing board findings.

The application and findings should be submitted to FiscalStandards@cccco.edu as follows:

CCFS-350A - Application for Exemption from the Fifty Percent Law is due no later than the September 15 following the end of the fiscal year.

CCFS-350B - Findings of the Local Governing Board Regarding the Fifty Percent Law is due no later than the December 1 following the end of the fiscal year.

Within two weeks of the public hearing or by the date the district is required to transmit its findings to the Chancellor’s Office, whichever is later, the academic employee organization(s) may submit an additional written statement opposing the application and requesting a hearing by the Chancellor.

Student Supports and Fifty Percent Law - Self Analysis Tool (EXCEL)

The information provided below is a list of suggestions and guidelines to fine-tune the calculation of the 50% Law equation. It contains guidance on various aspects such as budgeting, expense allocation, object code usage, and optimizing fund utilization. It's important to consult relevant financial regulations, generally accepted accounting principles and GASB pronouncements, as well as other guidelines specific to your institution for accurate and up-to-date information. 

Fine Tuning Your 50% Law Equation

• Make sure your unrestricted lottery dollars are used for non-instructional expenses (energy, insurance, etc.)
• Charge appropriate salaries to parking/transportation.  If you have parking make sure you are charging security, custodial, maintenance, etc. to this area.
• Charge custodial to appropriate funds (bookstore, food service, child development) based on their workload.
• For managers who oversee auxiliary services, be sure to allocate the appropriate proportion of their salary and benefits to these funds.
• Utilize activity code 6800 (please review the BAM carefully) for community service.  A portion of the VPs and/or President may be charged to this activity code.  This is for the time the leadership team spends working in the community developing relationships.  
• Purchase/finance solar.  Debt service payments are outside the 50% Law while monthly energy costs are part of the equation.  
• Invest funds in energy efficiency projects.  Use “one-time” money to reduce “ongoing” expenditures.
• Be sure to charge library databases to object code 6300 “Library Books” as non-print media.
• If you have a capital improvement project that is being funded with general fund dollars and it includes supplies, services, and/or personnel, move the funds and the costs to the capital fund for tracking. Remember, projects must be at least $5,000.
• Be sure to code ALL instruction to instructional salaries.  This includes administrators and non-instructional faculty, like counselors and librarians who teach.  If a course is taught by an administrator or non-instructional faculty, reclass the salary and proportional benefit expense to an instructional object code.  Don’t forget that portion of their medical benefits if taught during the course of the day as part of their normal load.
• Be sure to code as instructional those “intermittent duties…in connection with committee work…whose purpose is the evaluation or improvement of the educational program.”  For example, curriculum development.
• If a grant has the flexibility, charge appropriate non-instructional costs to the grant in order to move these expenditures to the restricted fund.  
• Review all purchase orders during the year to ensure equipment is not coded to an open P.O. for supplies.
• Refunds and abatements should not be recorded as revenue in the general fund; if they directly offset expenses, then record as a credit to expense which will reduce the denominator.
• Ensure the indirect cost rate for grants is accurate and includes the appropriate amount of non-instructional expenses.
• When recording the liability for “compensated absences”, be sure to code the appropriate portion to instructional salaries and benefits.
• Software purchases with an initial useful life in excess of one year may be classified as equipment object code 6400.  Also, perpetual license agreement costs should be coded to object code 6400. 
• Be sure to account for ALL Instructional Service Agreements (ISAs) as instructional costs even though coded under the 5000 object code.
• Take advantage of any and all exclusions: excess health center costs above fee revenue, excess transportation costs above fee revenue, rents and leases, etc.
• Whenever possible, negotiate utilities and/or custodial services to be included in a lease agreement as rent and not paid as a separate cost.
• Most, if not all, equipment purchases should be considered NEW and not “replacement” since even if the equipment replaces another, something will be different about it.   “Equipment that differs in capacity, function, or quality shall be considered new equipment.”    
• Be sure to use object 7600 when purchasing items for students like bus tickets, childcare vouchers, bookstore vouchers, car expenses, etc.
• Review instructional aide job specs and ensure proper coding. Remember, employees providing students with assistance and training in computer labs can be classified as instructional aides (object code 2400) if under the supervision of an instructor.
• Charge a portion of student accident insurance to athletics.
• If you charge an allowance for doubtful accounts, part of this expense should be coded to the other funds for which the revenue was not received, i.e the transportation fund, the associated students fund, the child development center fund, etc.
• Record the portion of the salaries and benefits  (e.g., Facilities and Information Technology managers, facilities planners and support staff) as it supports capital and technology improvements, equipping of building in activity 7100 Physical Property and Related acquisitions.