BILL ANALYSIS                                                                                                                                                                                                    Ó






                         SENATE COMMITTEE ON EDUCATION
                             Alan Lowenthal, Chair
                           2011-2012 Regular Session
                                        

          BILL NO:       AB 970
          AUTHOR:        Fong
          AMENDED:       June 25, 2012
          FISCAL COMM:   Yes            HEARING DATE:  June 27, 2012
          URGENCY:       No             CONSULTANT:Kathleen Chavira

          SUBJECT  :  UC and CSU Systemwide Fees.

           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.

           BACKGROUND  

          Authorizes the UC Regents and the CSU Trustees to charge 
          various fees and prohibits certain fees from applying to 
          specified categories of students.

          Current law further provides that statutes related to UC 
          (and most other aspects of the governance and operation of 
          UC) are applicable only to the extent that the Regents of 
          UC make such provisions applicable. (EC § 67400)

          Current law confers upon the Trustees of the CSU the 
          powers, duties, and functions with respect to the 
          management, administration, and control of the CSU system. 
          (EC § 66066)

           ANALYSIS
           
           This bill  :

          1)   Establishes state policies applicable to resident 
               student financial aid and mandatory systemwide fees 
               charged at the UC and CSU. More specifically it 
               provides that the UC and CSU should:





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                    a)             Explain to students the impact 
                    that increased fees will have on them, as 
                    specified.

                    b)             Consult students prior to any 
                    increase in fees so that they may provide input 
                    and ask questions regarding the need for the 
                    increase.

                    c)             Provide students with adequate 
                    advance notice regarding fee increases.

                    d)             Provide current and prospective 
                    students with timely information regarding 
                    financial aid, as specified.

                    e)             Make every effort to ensure 
                    increased transparency in the uses of, and 
                    rationale for, increased fee revenue.

          2)   Requires the regents and the trustees, by April 2, 
               2013, and in consultation with appropriate student 
               associations, to develop and formally adopt in an open 
               and public meeting of the regents or trustees, a list 
               of factors to be considered when developing 
               recommendations to adjust fees. 

          3)   Establishes the following notice, consultation, and 
               timeframe requirements for the UC and the CSU 
               regarding the approval and implementation of student 
               fee increases:

                    a)             Requires the UC and the CSU, 10 
                    days prior to holding a meeting to discuss or 
                    adopt a mandatory systemwide fee increase, to 
                    provide public notice that includes, at a 
                    minimum, specified information.

                    b)             Requires the UC Regents and the 
                    CSU Trustees to consult with their respective 
                    statewide student associations, at least 30 days 
                    prior to providing public notice of a proposed 
                    mandatory systemwide fee increase.

                    c)             Defines "consultation" with the 
                    statewide student association  to require 




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                    institutional representatives to provide, at 
                    least five days before a meeting:

                           i)                  A justification for a 
                         fee increase proposal, setting forth the 
                         facts supporting the fee increase.

                           ii)     A statement specifying the use of 
                         the fee revenue from the increase.

                           iii)    Potential impact to students, 
                         including changes to the minimum workload 
                         burden, institutional financial aid awards 
                         and the average student loan debt for 
                         undergraduates.

                           iv)     Alternative proposals to the fee 
                         increase.

                    d)             Prohibits the regents and trustees 
                    from adopting a fee increase until at least 45 
                    days after a public meeting to discuss the fee. 

                    e)             Prohibits the regents and trustees 
                    from adopting a fee increase after 90 days have 
                    elapsed from the start of classes for an academic 
                    year, except in the case of increases for summer 
                    session.

                    f)             Provides an exception to the 
                    outlined timeframe and notice requirements if:

                           i)                  The Governor's 
                         proposed budget reduces appropriations from 
                         the prior annual Budget Act for the UC or 
                         CSU.

                           ii)     The Legislature enacts a budget 
                         reduction for the support of UC or CSU in 
                         the middle of a fiscal year.

                           iii)    Requires that if (i) or (ii) 
                         occur:

                                   (1)                           The 
                              UC and CSU discuss a proposal for a fee 




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                              increase with their respective 
                              statewide student associations at least 
                              7 days before posting notice of action 
                              to increase the fees.

                                   (2)                           Any 
                              increase in fees is prohibited from 
                              becoming effective until at least 30 
                              days have elapsed from the date of 
                              adoption. 

                    g)             Requires, upon the adoption of a 
                    fee increase, that the UC and CSU notify 
                    matriculated students of the upcoming assessment 
                    of fees and inform students of the availability 
                    of, and procedures for obtaining, financial aid 
                    to assist with increased costs of attendance. 

          4)   Urges the Regents and the Trustees to maintain their 
               commitment to institutional financial aid by ensuring 
               that at least 33% of increases to existing mandatory 
               systemwide fees be used for institutional financial 
               aid.

          5)   Requires the regents and trustees, by February 1, 
               2013, and annually thereafter, to provide the 
               Legislature information on the:  

                    a)             Expenditure of revenues derived 
                    from student fees.

                    b)             Uses of institutional financial 
                    aid. 

                    c)             Systemwide average total cost of 
                    attending per student.  

          6)   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.

          7)   Makes a number of technical, clarifying and conforming 
               changes. 






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           STAFF COMMENTS  

           1)   Need for the bill  .  According to the author, this 
               bill, unlike prior measures, does not focus on how 
               much the state or students should pay for their 
               education or how much they can be raised in any given 
               year.  This bill focuses upon the process by which 
               student fee increases are considered at the UC and 
               CSU, in an effort to ensure transparency and 
               accountability around the costs of educating students 
               and the uses of student fee revenues.  In addition, 
               the author is concerned that the state does not 
               require any consultation with students or advance 
               notification of fee increases to students and 
               families. 

           2)   Fee history.   The Maddy-Dills Act previously required 
               fees to be (1) gradual, moderate and predictable, (2) 
               limited fee increases to not more than 10 percent a 
               year, and (3) fixed at least ten months prior to the 
               fall term in which they were to become effective. The 
               policy also required sufficient financial aid to 
               offset fee increases. However, even with this policy, 
               when the state faced serious budgetary challenges the 
               statute was "in-lieued" in order to provide the 
               institutions some flexibility in dealing with the lack 
               of state General Fund support. The Maddy-Dills Act 
               sunset in 1996 and, since then, the state has had no 
               long-term policy regarding the way in which mandatory 
               student fees are determined. 

               Historically, fees have fluctuated in response to the 
               State's fiscal condition and the stated needs of UC 
               and CSU, as negotiated in the budget deliberations. 
               The charts below illustrate the fluctuation in fees at 
               the UC and the CSU over the last several years.


           -------------------------------------------- 
          |                     UC                     |
          |            Mandatory Systemwide            |
          |                Student Fees                |
          |          Resident Undergraduates           |
           -------------------------------------------- 
          |--------------+--------------+--------------|
          |              |              |              |




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          |     Year     |  Fee Amount  |   Percent    |
          |              |              | Change from  |
          |              |              |  Prior year  |
          |--------------+--------------+--------------|
          |   1996-97    |    $3,799    |     N/A      |
          |--------------+--------------+--------------|
          |   1997-98    |    $3,799    |     0.0%     |
          |--------------+--------------+--------------|
          |   1998-99    |    $3,609    |    -5.0%     |
          |--------------+--------------+--------------|
          |   1999-00    |    $3,429    |    -5.0%     |
          |--------------+--------------+--------------|
          |   2000-01    |    $3,429    |     0.0%     |
          |--------------+--------------+--------------|
          |   2001-02    |    $3,429    |     0.0%     |
          |--------------+--------------+--------------|
          |   2002-03    |    $3,834    |    11.8%     |
          |--------------+--------------+--------------|
          |   2003-04    |    $4,984    |    30.0%     |
          |--------------+--------------+--------------|
          |   2004-05    |    $5,684    |    14.0%     |
          |--------------+--------------+--------------|
          |   2005-06    |    $6,141    |     8.0%     |
          |--------------+--------------+--------------|
          |   2006-07    |    $6,141    |     0.0%     |
          |--------------+--------------+--------------|
          |   2007-08    |    $6,636    |     8.1%     |
          |--------------+--------------+--------------|
          |   2008-09    |    $7,126    |     7.4%     |
          |--------------+--------------+--------------|
          |   2009-10    |    $8,958    |    25.7%     |
          |--------------+--------------+--------------|
          |   2010-11    |   $10,302    |    15.0%     |
          |--------------+--------------+--------------|
          |   2011-12    |   $12,192    |    18.3%     |
           -------------------------------------------- 

           -------------------------------------------- 
          |                    CSU                     |
          |           Mandatory Systemwide             |
          |               Student Fees                 |
          |          Resident Undergraduates           |
           -------------------------------------------- 
          |--------------+--------------+--------------|
          |              |              |              |
          |     Year     |  Fee Amount  |   Percent    |




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          |              |              | Change from  |
          |              |              |  Prior year  |
          |--------------+--------------+--------------|
          |   1996-97    |    $1,584    |     N/A      |
          |--------------+--------------+--------------|
          |   1997-98    |    $1584     |     0.0%     |
          |--------------+--------------+--------------|
          |   1998-99    |    $1,506    |    -4.9%     |
          |--------------+--------------+--------------|
          |   1999-00    |    $1,428    |    -5.2 %    |
          |--------------+--------------+--------------|
          |   2000-01    |    $1,428    |     0.0%     |
          |--------------+--------------+--------------|
          |   2001-02    |    $1,428    |     0.0%     |
          |--------------+--------------+--------------|
          |   2002-03    |    $1,500    |     5.0%     |
          |--------------+--------------+--------------|
          |   2003-04    |    $2,046    |    36.4%     |
          |--------------+--------------+--------------|
          |   2004-05    |    $2,334    |    14.1%     |
          |--------------+--------------+--------------|
          |   2005-06    |    $2,520    |     8.0%     |
          |--------------+--------------+--------------|
          |   2006-07    |    $2,520    |     0.0%     |
          |--------------+--------------+--------------|
          |   2007-08    |    $2,772    |    10.0%     |
          |--------------+--------------+--------------|
          |   2008-09    |    $3,048    |    10.0%     |
          |--------------+--------------+--------------|
          |   2009-10    |    $4,026    |    32.1%     |
          |--------------+--------------+--------------|
          |   2010-11    |    $4,429    |    10.0%     |
          |--------------+--------------+--------------|
          |   2011-12    |    $5,472    |    23.5%     |
          |              |              |              |
           -------------------------------------------- 

           3)   Technical amendment  .  This bill provides an exception 
               to the notice and timeframe requirements in the event 
               of cuts in the Governor's proposed budget from the 
               prior year, or in the event of mid-year cuts.  
               Consistent with the intent of the author, staff 
               recommends the bill be amended to additionally allow 
               for an exception in the event the Governor implements 
               mid-year cuts. 





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           4)   Prior legislation . The Legislature has considered 
               several bills that proposed a number of variations on 
               a fee policy. Most recently, these have included:

               a)        SB 1461 (Negrete-Mcleod), as amended by this 
                    committee, limited the amount by which the 
                    California State University (CSU) Board of 
                    Trustees could increase the mandatory system-wide 
                    fees for resident undergraduate students, in a 
                    given year, and requested the Regents of the 
                    University of California (UC) adhere to the same 
                    limit. SB 1461 passed out of this committee by a 
                    vote of 8-0 in April 2012, but was subsequently 
                    held under submission in the Senate 
                    Appropriations Committee. 

               b)        SB 969 (Liu, 2010) placed an upper limit on 
                    mandatory systemwide student fees, not to exceed 
                    a fixed percentage of the cost of education as 
                    defined, and prohibited annual mandatory 
                    systemwide fee increases from increasing by more 
                    than the implicit price deflator for state and 
                    local government for goods and services. This 
                    version of SB 969 combined elements of SB 969 
                    (Florez) and SB 1199 (Liu). The bill was passed 
                    by this committee by a vote of 8-0, but was 
                    subsequently held on suspense in the Assembly 
                    Appropriations Committee. 

               c)        SB 969 (Florez, 2010) placed an upper limit 
                    on mandatory systemwide student fees, not to 
                    exceed a fixed percentage of the cost of 
                    education, as defined, prohibited student fees 
                    from ever increasing beyond the amount a student 
                    paid at the time of enrollment, and prohibited 
                    annual mandatory systemwide fee increases for 
                    each new cohort of undergraduate students at the 
                    UC, CSU, and California Community Colleges from 
                    exceeding five percent of the preceding academic 
                    year. 

               d)        SB 1199 (Liu, 2010) required the governing 
                    boards of the UC and CSU to develop student fee 
                    increase methodologies consistent with specified 
                    direction, and included many of the same concepts 
                    found in SB 969. The bill's provisions were 




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                    combined with those of SB 969 and the hearing was 
                    canceled at the request of the author.

               e)        SCA 26 (Denham, 2010) amended the State 
                    Constitution and imposed upon the UC a waiting 
                    period of 180 days before mandatory student fees 
                    could take effect, and limited annual fee 
                    increases to no more than a cumulative 10 percent 
                    over the preceding academic year. SCA failed 
                    passage in this committee by a vote of 2-2.

               f)        SB 917 (Denham, 2010) was similar to SCA 26, 
                    however the application of the provisions in the 
                    measure would have affected the CSU. The bill 
                    failed passage in this committee by a vote of 
                    2-2.
               AB 69 (Duvall, 2009) was almost identical to this 
                    bill. That bill was never heard and was 
                    subsequently amended to address a different 
                    issue. 

           SUPPORT  

          None received on this version.

           OPPOSITION

           None received on this version.