BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair AB 970 (Fong) - UC and CSU Systemwide Fees. Amended: July 6, 2012 Policy Vote: Education 6-2 Urgency: No Mandate: No Hearing Date: August 6, 2012 Consultant: Jacqueline Wong-Hernandez This bill may meet the criteria for referral to the Suspense File. Bill Summary: AB 970 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. This bill also requires the Legislative Analyst's Office (LAO) to annually review and report on CSU and UC compliance with these provisions. Fiscal Impact: CSU compliance: Minor and absorbable costs to comply with notification and consultation requirements; current CSU practices are similar to these provisions. UC compliance: Minor and absorbable costs to comply with notification and consultation requirements; current UC practices are similar to these provisions. Fee revenue: Potentially substantial revenue loss to the UC and CSU, to the extent that this bill hinders or delays any future ability to raise student fees. LAO report: Minor costs, absorbable within existing resources. Background: Existing law authorizes the UC Regents and the CSU Trustees to charge various fees and prohibits certain fees from applying to specified categories of students. Existing 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) AB 970 (Fong) Page 1 Existing law confers upon the Trustees of the CSU powers, duties, and functions with respect to the management, administration, and control of the CSU system. (EC § 66066) Proposed Law: AB 970 establishes state policies applicable to resident student financial aid and mandatory systemwide fees charged at the UC and CSU. More specifically it requires that the UC and CSU: 1) Explain to students the impact that increased fees will have, as specified. 2) Consult students prior to any increase in fees so that they may provide input and ask questions regarding the need for the increase. 3) Provide students with adequate advance notice regarding fee increases. 4) Provide current and prospective students with timely information regarding financial aid, as specified. 5) Make every effort to ensure increased transparency in the uses of, and rationale for, increased fee revenue. This bill further requires the UC Regents and the CSU Trustees, 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. It further establishes the following notice, consultation, and timeframe requirements for the UC and the CSU regarding the approval and implementation of student fee increases: 1) 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. 2) 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. AB 970 (Fong) Page 2 3) Defines required "consultation" with the statewide student association. 4) Prohibits the UC Regents and CSU Trustees from adopting a fee increase until at least 45 days after a public meeting to discuss the fee. 5) Prohibits adopting a fee increase after 90 days have elapsed from the start of an academic year, except in the case of increases for summer session. 6) Provides specific exceptions to the outlined timeframe and notice requirements, as specified. 7) 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 financial aid options, as specified. 8) Requires the UC Regents and CSU Trustees, by February 1, 2013, and annually thereafter, to provide the Legislature information on: the expenditure of revenues derived from student fees; uses of institutional financial aid; and, the systemwide average total cost of attending per student. This bill also requires the LAO to annually review and report to the Legislature regarding UC's and CSU's compliance with all of the above. Related Legislation: SB 1461 (Negrete-McLeod) 2012 limited the amount by which the CSU Trustees could increase the mandatory system-wide fees for undergraduate students, in a given year, and requested the UC Regents adhere to the same limit. That bill was held under submission in this Committee. Staff Comments: The UC and CSU have both indicated that this bill's requirements are substantially similar to the processes both segments currently employ in considering and implementing student fee increases. Both segments believe that any minor changes necessary for full compliance with this bill's provisions could be accomplished within existing resources, including adherence to the bill's specific notice and timeline requirements for implementing fee increases. AB 970 (Fong) Page 3 This bill would, however, bind the CSU and UC to continue to adhere to these specific processes indefinitely. By codifying extensive procedural requirements that these segments must adhere to before they can raise student fees, this bill prevents the segments from being able to streamline their current processes in the future, and may prevent them from realizing new revenue as quickly as they might without these requirements. Additionally, by specifying a detailed process in statute, students and other interested groups could challenge fee increases if the CSU or UC were to miss a deadline or fail to follow one of the requirements in the future. This could result in delayed or lost revenue to the CSU and UC. The LAO has indicated that it can complete the required annual compliance review and report within its existing resources.