BILL ANALYSIS
AB 462
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Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Anthony Portantino, Chair
AB 462 (Price) - As Introduced: February 24, 2009
SUBJECT : Public postsecondary education: systemwide fees:
limitations: tax levy.
SUMMARY : Establishes the College Affordability Act (Act) of
2009. Specifically, this bill :
1)Codifies legislative findings that California's economy needs
a strong public university system that is accessible and
affordable and that recent student fee increases make it more
difficult for California families to send their children to
college.
2)Prohibits an increase in systemwide tuition and fees for
resident undergraduates at the University of California (UC)
and the California State University (CSU) for five years,
beginning with the 2010-11 fiscal year.
3)Limits an increase in statewide tuition and fees for resident
undergraduates at UC and CSU to the annual percentage change
in the California Consumer Price Index, beginning with the
2015-16 fiscal year.
4)Imposes an additional 1% tax on that portion of a taxpayer's
taxable income in excess of $1 million for each taxable year
beginning on or after January 1, 2010.
5)Requires 60% of the funds raised by the additional tax be
deposited in the General Fund and credited to the College
Affordability Fund to be used to offset increased costs of
educating resident undergraduate students attending UC and
CSU, mitigating the need for increases in student tuition and
fees.
6)Requires the revenues allocated to UC and CSU, pursuant to
this section, to equal the ratio of the resident undergraduate
statewide mandatory revenue collected by each segment in the
2009-10 academic year and to be used to fund student
instructional materials, new technology, student scholarships
and grants, libraries, campus safety improvements, and faculty
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salaries, among other costs.
7)Creates the College Affordability Funding Accountability Panel
(Panel), comprised of six members appointed by the Governor
for two year terms as follows: two members representing
administrators, two members representing faculty, and two
members representing resident students from UC and CSU.
8)Requires the Panel to annually review the expenditure of funds
that UC and CSU receive pursuant to this Act and to provide an
accountability update to the public that details the
expenditure of these funds on a campus-by-campus basis for the
preceding fiscal year and requires UC and CSU to post the
accountability update on their Internet Web sites.
9)States that the funding provided to UC and CSU pursuant to
this Act shall be used to supplement not supplant existing
federal, state, and local funding for UC and CSU and shall not
be used for any other purpose other than those authorized
pursuant to this Act or loaned to any other public entity or
fund of that entity.
10)States that the provisions of this Act apply to UC only to
the extent that the UC Board of Regents make them applicable
and allocates UC's share of the revenues to CSU should UC
choose not to participate.
11)States that the provisions of this Act are severable.
EXISTING LAW :
1)Refers to UC and CSU fee levels (to the extent UC adopts such
fee levels) for 1999-2000 and prior years; fee levels are
typically set in the State Budget Act. Systemwide
undergraduate resident fees are currently $7,126 at UC and
$3,048 at CSU.
2)Provides that statutes related to UC fee policy (and most
other aspects of the governance and operation of UC) are
applicable only to the extent that the UC Board of Regents
make such provisions applicable.
3)Establishes the Cal Grant Entitlement Programs to provide
grant assistance for fee payment in UC, CSU, and private
institutions in California, to the extent that students are
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financially and academically eligible for such support.
FISCAL EFFECT : In its 2008 analysis of a nearly identical
initiative, the Legislative Analyst's Office estimated:
1)Annual increase in state revenues of roughly $2 billion from a
new 1% tax on high-income individuals. Of these new revenues,
60% would be allocated to undergraduate education at the
state's public universities and the remaining 40% likely would
be spent on K-14 education.
2)Reduction in public university undergraduate fee revenues
(primarily from a five-year freeze on fee levels), potentially
exceeding $1 billion by the end of the freeze period.
The Franchise Tax Board, however, estimated that the initiative
would generate $600 million in 2008-09, $1.7 billion in 2009-10,
and $1.8 billion in 2010-11.
COMMENTS : This bill failed passage by this Committee on March
31, 2009, and was granted reconsideration. Should it pass on
reconsideration, it will proceed to the Assembly Revenue and
Taxation Committee.
Purpose of this bill : According to the author, "Currently,
there is no statewide policy governing tuition, or "fees". At
the same time, support for higher education has slipped from 17%
of the state general fund budget in 1976 to 11% in 2006, and
university administrators continuously turn to student tuition
to make up the difference. Neither students nor the future of
California's economy can afford this any longer."
Recent student fee history : The state sets UC and CSU fees each
year through the Budget Act, with complementary actions on the
part of the UC Board of Regents and the CSU Board of Trustees to
adopt these fee policies. There is an implicit policy whereby
students and the state are expected to share educational costs,
but the relative proportions are dependent on the state's fiscal
situation. In recent years, UC and CSU fees have increased
7-10% per year, as the state has cut the segments' budgets as a
result of budget deficits. However, Cal Grant awards were
increased to cover these fee increases.
Is a fee backfill the best use of these funds ? Other costs,
such as living expenses, books and supplies, and transportation
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comprise the majority of the cost to attend college-80% at CSU
and 68% at UC, according to a 2006 report by the California
Postsecondary Education Commission, which also found that UC and
CSU fees still rank below their national comparison
institutions. The Cal Grant program guarantees systemwide fee
coverage for eligible students (those with family incomes below
$60,000), and UC and CSU return one-third of student fee
revenues to the institutions' financial aid programs. Would the
funds raised by this Act be better used by increasing financial
aid for low and middle income students, whose fees may already
be covered by Cal Grants or institutional grants but who need
aid to cover living expenses, books and supplies, transportation
costs, etc.?
Could this Act inadvertently limit access to UC and CSU ? If
faced with significant reductions in General Fund support that
exceed the student fee backfill provided by this bill, UC and
CSU might need to reduce enrollments, course offerings, or make
other service reductions that would limit access to these
institutions. In fact, both UC and CSU have restricted
enrollments for 2009-10 due to budget constraints.
Impact on the budget process : The state recently faced a $42
billion deficit that resulted in substantive reductions to
state-funded programs and tax increases. Many analysts believe
that statutory and court-mandated spending requirements have
exacerbated this situation by limiting lawmakers' options for
responding to economic downturns. By earmarking the surcharge
revenues largely to offset a fee freeze and then fee increase
limitation, this Act, while benefiting students, would do little
to address the state's ongoing structural budget deficit.
Recent initiative : This bill is identical to a 2007 initiative,
sponsored by The Greenlining Institute, that failed to qualify
for the November 2008 ballot.
Related legislation : An identical measure, AB 2372 (Coto) of
2008, was held in the Appropriations Committee. AB 2722
(Duvall) of 2008, which was held in the Assembly Higher
Education Committee, would have set student fees upon a
student's entrance to UC or CSU and prohibited a fee increase
for four years. AB 1038 (Feuer) of 2007, which was held in the
Assembly Appropriations Committee, would have tied student fee
increases to increased state support for UC and CSU and limited
fee increases to 7% per year.
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REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
California State Student Association
Student Senate for California Community Colleges
The Greenlining Institute (sponsor)
Opposition
California Taxpayer's Association
California State University
University of California
Analysis Prepared by : Sandra Fried / HIGHER ED. / (916)
319-3960