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: AB 970 Page 2 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 AB 970 Page 3 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 AB 970 Page 4 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. AB 970 Page 5 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 | -------------------------------------------- |--------------+--------------+--------------| | | | | AB 970 Page 6 | 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 | AB 970 Page 7 | | | 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. AB 970 Page 8 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 AB 970 Page 9 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.