BILL ANALYSIS Ó
AB 970
Page 1
Date of Hearing: June 13, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 970 (Fong) - As Amended: June 3, 2011
Policy Committee: Higher
EducationVote:8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes requirements and timeframes for the
University of California (UC) and the California State
University (CSU) regarding the approval and implementation of
student fee increases, and requires the segments to report
annually on their use of student fee revenues. Specifically,
this bill:
1)Requires the UC Regents and the CSU Trustees, at least 90 days
prior to providing public notice of a proposed mandatory
systemwide fee increase, to consult with the appropriate
student representatives of their respective statewide student
organizations.
2)Requires a public notice of a proposed fee increase to be
included in a noticed public agenda of the regent's and
trustee's, respectively, and to include, at a minimum:
a) Justification for the fee increase.
b) An analysis of the impacts of the increase on access,
persistence, and graduation of historically
underrepresented students and low- middle-income students,
and measures to mitigate the impacts.
c) A statement specifying the purposes of the additional
fee revenues.
3)Prohibits adoption of a fee increase prior to least 60 days
following issuance of the notice per (2), and requires the
governing bodies, during this time period, to solicit and
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receive public comments, which, along with appropriate
responses to each comment, are to be made available to the
public at least 10 days prior to the meeting where the regents
or trustees propose to adopt the fee increase.
4)Stipulates that a fee increase is not effective until at least
six months following adoption.
5)Requires the regents and the trustees, by April 2, 2012, and
in consultation with student representatives, to develop, and
adopt in a public meeting, a methodology for adjusting fees
that, at a minimum, considers the impacts and mitigations as
described in (2)(b).
6)Requires annual UC and CSU budgets incorporating fee changes
to be in accordance with the above methodology and to specify
the intended uses of the increased fee revenues.
7)Requires at least 33% of UC or CSU fee revenues to be used for
institutional financial aid.
8)Requires the regents and trustees, by February 1, 2012 and
annually thereafter, to provide the Legislature information on
(a) the expenditure of revenues derived from student fees, (b)
uses of institutional financial aid, (c) the total cost of
education per graduate and undergraduate student,
respectively, including fixed costs, variable costs, and
administrative, instructional, and student services costs.
9)Requires the Legislative Analyst's Office (LAO) to annually
review and report to the Legislature regarding UC's and CSU's
compliance with all of the above.
10)Requires that mandatory systemwide fees be referred to in UC
and CSU policies, rules, and regulations as "systemwide fees"
or "fees" and not as "tuition."
11)Requires the California Student Aid Commission to report by
July 31, 2012 on the interaction of state and federal student
financial aid programs.
FISCAL EFFECT
1)The bill's timelines for consultation, public notification,
and delayed implementation of fee increases would require this
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process to begin at least 11 months prior to the start of any
academic year for which fee increases are proposed. To the
extent actual state GF support provided to UC and/or CSU
through the Budget Act is less than the segments assume in
preparing their budget proposals (which also would include
revenues from fee increases adopted pursuant this bill), the
segments would have to compensate for lower total funding
levels through increased efficiencies, program reductions,
and/or other cost saving measures. However, as was the case
when a prior statutory fee policy was in effect (see Comment
#2 below), subsequent budget-related legislation could
"notwithstand" the requirements of this bill, thus allowing
for a supplemental fee increase to fully or partially address
a funding shortfall.
2)The bill requires allocation of at least 33% of all mandatory
fee revenues to institutional financial aid. Longstanding
practice and policy at UC and CSU, however, has been to set
aside 33% of new fee revenue for this purpose. CSU indicates
that, since 28% of its fee revenue currently is used for
institutional aid, complying with the bill would require a
shift of $92 million from other parts of its budget to
financial aid. The impact at UC would be about $95 million.
The author indicates that his intent is to mirror current
practice, however, and has committed to provide such
clarification in subsequent amendments.
3)CSU indicates that the bill's requirement to annually report
on the expenditures derived from fee revenues is a significant
change in the system's budgeting and expenditure accounting,
because CSU currently "pools" General Fund and fee revenues
for these purposes. CSU estimates one-time costs of about $4
million to develop a new system and ongoing costs of a similar
magnitude. CSU notes that such an accounting system that
forces arbitrary divisions between activities funded with fees
and those funded by the state would be cumbersome and
inefficient. CSU will also incur one-time costs of around
$100,000 to develop the required methodology by April 2012 for
adjusting student fees.
Similarly, UC estimates one-time costs of $1.1 million and
ongoing costs of $500,000 for these tasks.
4)UC estimates cost exceeding $200,000 to reprint campus
publications and change websites and other communications in
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order to change references to "tuition" to "fees". These costs
could be minimized if the bill were amended to specify that
this change should be made at the time any publication is
updated and reprinted.
5)Both segments will incur unknown additional administrative
costs to respond to public comments received regarding
proposed fee increases, and to make these comments and
responses available to the public prior to adopting a fee
increase.
6)Minor absorbable costs to the Student Aid Commission for the
report on financial aid. UC and CSU may incur minor costs to
provide information requested by the commission for the
report.
COMMENTS
This bill was referred to the Assembly Higher Education
Committee and to this committee on June 1, 2011, pursuant to
Assembly Rule 77.2, due to substantive amendments adopted on the
Assembly Floor.
1)Purpose . According to the author, "Current law governing
California's postsecondary institutions lacks needed policies
that guarantee our state will remain committed to ensuring
affordability and access at public colleges and universities,
and that all financially needy students have the assistance
they need to enroll in institutions of higher education and
reach their postsecondary education objectives." The author
notes that the state does not have a proper accounting of the
total costs of educating students at UC or CSU or the actual
uses of student fee revenues nor does the state require
advance public notice to students or require consultation with
students before fees are increased. The author believes that
AB 970 will lead to a partnership and better communication
between the segments, the Legislature, students, and the
public to ensure transparency and accountability with respect
to the need for, and uses of, student fees.
This bill is co-sponsored by the California State Student
Association and the University of California Student
Association, who argue that students have experienced
skyrocketing fee increases while existing financial aid
programs have been put at risk, balancing their budgets on the
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backs of students and making financial planning impractical
for students and families. The sponsors believe this bill
maintains the promise of affordability and access to higher
education by adding stability and predictability for setting
mandatory systemwide fees.
2)Background . The Maddy-Dills Act (1985) required student fee
increases to be gradual, moderate and predictable, limited
increases to 10% in any year, and required adoption of fee
increases at least 10 months prior to their taking effect in
the fall term. The bill also required significant financial
aid to offset fee increases. Even with this policy, when the
state faced serious budgetary challenges in the early to
mid-1990s, these provisions were set aside, typically through
"notwithstanding" language in budget trailer bills, in order
to provide flexibility to UC and CSU in dealing shortfalls in
state General Fund support. The Act was allowed to sunset, and
since that time, the state has had no statutory long-term
policy to set fees.
The state's ongoing, difficult budget situation has led to
sharp growth in student fees at both UC and CSU. Most
recently, fees at CSU have increased by10% annually since
2007-08, except in 2009-10, when they increased by 32.1%. At
UC, fees increased by 25.7% in
2009-10, 15% in 2010-11, and 8.1% for 2011-12. Over the last
decade, UC fees have increased by 224% and CSU fees by 242%.
The trend has been that the fees increase dramatically when
the state faces difficult budget times and grow slowly, if at
all, during relatively good years for the state's General
Fund. This means that families face higher costs of education
at the same time they are more likely to face financial
struggles at home and face more moderate costs during times of
relatively strong employment and income growth.
3)Opposition . UC and CSU both argue that the bill, by
establishing such an early timeline for proposing and adopting
fee increases, disregards the relationship between state
General Fund support and student fee levels. CSU states that
the bill "restricts our ability to respond to and manage
annual budgets that are often not adopted before academic and
enrollment decisions are made."
Proponents respond that the bill will require the segments to
plan ahead, which is something they have started doing, as
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evidenced by the 2011-12 fee increases approved by the regents
and trustees in November 2010. Proponents also acknowledge
that if state appropriations to UC and CSU were to be less
than anticipated, the Legislature would have the authority to
notwithstand this bill's provisions, but such action would be
the result of a public dialogue between the Legislature and
the segments.
Both UC and CSU also raise several other policy-related
objections to the bill.
4)Clarification needed . In amending the Donahoe Higher Education
Act, the bill's requirements on UC are inconsistent with this
Act, whose provisions apply to UC only to the extent the
provisions are adopted by the regents.
5)Prior Legislation .
a) In 2010, SB 969 (Liu), which required UC and CSU to
develop a fee methodology and required adoption of fee
increases at least three months prior to implementation,
died in the Assembly.
b) In 2006, AB 1072 (Liu), a bill establishing student fee
policies at UC and CSU, was held on Suspense in Senate
Appropriations.
c) In 2004, a similar bill (AB 2710, Liu) was vetoed, with
Governor Schwarzenegger arguing that the bill was
inconsistent with the terms of his Higher Education
Compact.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081