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)









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          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.









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             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.









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          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.