BILL NUMBER: AB 1326	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MARCH 22, 2011

INTRODUCED BY   Assembly Member Furutani

                        FEBRUARY 18, 2011

    An act to amend Section 1620 of the Education Code,
relating to local educational agencies.   An act to add
Chapter 8 (commencing with Section 99500) to Part 65 of Division 14
of Title 3 of the Education Code, and t   o add Part 21
(commencing with Section 42001) to Division 2 of the Revenue and
Taxation Code, relating to postsecondary education, and making an
appropriation therefor. 



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1326, as amended, Furutani.  County board of education:
budget hearing.   California Higher Education Endowment
Corporation: oil and gas severance tax.  
   (1) Existing law establishes the University of California, under
the administration of the Regents of the University of California,
the California State University, under the administration of the
Trustees of the California State University, and the California
Community Colleges, under the administration of the Board of
Governors of the California Community Colleges, as the 3 segments of
public postsecondary education in this state.  
   This bill would establish the California Higher Education
Endowment Corporation (CHEEC) in state government. The bill would
establish an oversight board to govern the CHEEC and would require
that board to appoint the chief executive officer of the CHEEC. The
bill would require the CHEEC to annually allocate the moneys in the
continuously appropriated California Higher Education Fund, which
would be created by the bill, to the California Community Colleges,
the California State University, and the University of California, as
specified. The bill also would authorize the board to invest the
moneys in the fund in accordance with prescribed procedures. 

   (2) Existing law imposes various taxes, including taxes on the
privilege of engaging in certain activities. The Fee Collection
Procedures Law, the violation of which is a crime, provides
procedures for the collection of certain fees and surcharges. 

   This bill would impose an oil and gas severance tax upon any
producer, except as provided, for the privilege of severing oil or
gas from the earth or water in this state for sale, transport,
consumption, storage, profit, or use, as provided, at a rate of 12.5%
of the gross value of the product. The tax would be administered by
the State Board of Equalization and would be collected pursuant to
the procedures set forth in the Fee Collection Procedures Law. The
bill would require the board to deposit all taxes, penalties, and
interest collected pursuant to these provisions in the California
Higher Education Fund, as provided.  
   Because this bill would expand application of the Fee Collection
Procedures Law, the violation of which is a crime, it would impose a
state-mandated local program.  
   (3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.  
   This bill would provide that no reimbursement is required by this
act for a specified reason. 
   Existing law requires the county board of education to hold a
public hearing, on or before July 1 of each fiscal year, on the
proposed county school service fund budget for the fiscal year.
Existing law requires the agenda for the meeting to be posted at
least 72 hours prior to the hearing and to include the location where
the budget will be available for inspection.  
   This bill would authorize the budget to be made available to the
public for inspection on the Internet. 
   Vote:  majority   2/3  . Appropriation:
 no   yes  . Fiscal committee:  no
  yes  . State-mandated local program:  no
  yes  .


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    The Legislature hereby finds and
declares all of the following:  
   (a) A recent study by the Public Policy Institute of California
stated that California's need for college-educated workers is
outpacing the state's ability to produce them, and that gap is
expected to widen in the future.  
   (b) Forty-one percent of California workers will need a bachelor's
degree to meet the state's projected economic demand in the year
2025 if current trends continue, yet changes in the California
workforce make it unlikely that this demand will be met.  
   (c) The percentage of college-educated workers has increased
significantly in recent years, from 28 percent in 1990 to 34 percent
in 2006, but the rate of increase is expected to slow because people
between 50 years of age and 64 years of age currently have the
highest levels of education, and that group will reach retirement age
by 2025.  
   (d) Groups such as Latinos will make up 40 percent of the state's
labor force by 2020, but only 12 percent of Latinos are on pace to
hold a bachelor's degree by that date.  
   (e) As the growth in the number of college-educated workers slows,
the supply of workers with a high school diploma or less education
is projected to exceed economic demand, resulting in lower wages and
fewer job opportunities for those workers, and resulting in higher
wages for college-educated workers as demand for their skills
increases.  
   (f) The lack of an educated workforce will deny the state the
ability to draw upon the critical resources that are necessary to
assist with the state's current economic crisis and to support future
economic growth.  
   (g) The current budget proposals will jeopardize the enrollment of
10,000 students into the California State University system. 
   SEC. 2.    It is the intent of the Legislature that
this act provide additional sources of higher education funding in
order to keep up with the growing demand for a skilled labor force.

   SEC. 3.    Chapter 8 (commencing with Section 99500)
is added to Part 65 of Division 14 of Title 3 of the  
Education Code   , to read:  
      CHAPTER 8.  THE CALIFORNIA HIGHER EDUCATION ENDOWMENT
CORPORATION



      Article 1.  General Provisions


   99500.  As used in this chapter, the following terms have the
following meanings:
   (a) "Board" means the oversight board described in subdivision (a)
of Section 99505.
   (b) "Corporation" means the California Higher Education Endowment
Corporation established pursuant to Section 99502.
   (c) "Director" means the chief executive officer of the
corporation appointed pursuant to Section 99506.
   (d) "Fund" means the California Higher Education Fund established
pursuant to Section 42147 of the Revenue and Taxation Code.
   (e) "Public postsecondary education institution" means the
California Community Colleges, the California State University, and
the University of California.
   99502.  The California Higher Education Endowment Corporation is
hereby established in state government for purposes of implementing
this chapter.

      Article 2.  Oversight Board


   99505.  (a) (1) The corporation shall be governed by an oversight
board, which shall be composed of the following voting members:
   (A) Two members appointed by the Board of Trustees of the
California State University.
   (B) Two members appointed by the Regents of the University of
California.
   (C) Two members appointed by the Chancellor of the California
Community Colleges.
   (D) Two members appointed by the Senate Committee on Rules.
   (E) Two members appointed by the Speaker of the Assembly.
   (F) One member appointed by the Treasurer.
   (G) One member appointed by the Superintendent of Public
Instruction.
   (H) (i) One member who is a student enrolled in the California
Community Colleges at the time of the appointment. The member
appointed pursuant to this subparagraph shall be enrolled in the
California Community Colleges for the duration of his or her term
which shall be one year.
   (ii) The Board of Governors of the California Community Colleges
shall appoint the student member from a list of three eligible
persons furnished by the Student Senate.
   (I) (i) One member who is a student enrolled in the California
State University at the time of the appointment. The member appointed
pursuant to this subparagraph shall be enrolled in the California
State University for the duration of his or her term.
   (ii) The Trustees of the California State University shall appoint
the student member from a list of three eligible persons furnished
by the California State Student Association.
   (J) (i) One member who is a student enrolled in the University of
California at the time of the appointment. The member appointed
pursuant to this subparagraph shall be enrolled in the University of
California for the duration of his or her term which shall be one
year.
   (ii) The Regents of the University of California shall appoint the
student member from a list of three eligible persons furnished by
the University of California Student Association.
   (2) (A) At least one member appointed pursuant to paragraph (1)
shall be a nonmanagement employee of the California State University.

   (B) At least one member appointed pursuant to paragraph (1) shall
be a nonmanagement employee of the University of California.
   (b) The oversight board shall also include the following ex
officio, nonvoting members:
   (1) The Chancellor of the California State University.
   (2) The President of the University of California.
   (3) The Chancellor of the California Community Colleges.
   (c) The Legislature requests that the Regents of the University of
California and the President of the University of California comply
with the membership requirements in subparagraph (B) of paragraph (1)
of subdivision (a) and paragraph (2) of subdivision (b).
   (d) Except as specified in subparagraphs (H), (I), and (J) of
paragraph (1) of subdivision (a), each of the members identified in
subdivisions (a) and (b) shall be appointed to serve a term of four
years.
   (e) The members of the board shall annually select a member to
serve as the chairperson of the board.
   99506.  (a) The board shall appoint a director, who shall be the
chief executive officer of the corporation. This position is
designated as a confidential position and is exempt from civil
service under subdivision (e) of Section 4 of Article VII of the
California Constitution.
   (b) The director shall serve at the pleasure of the board.
   (c) The board may delegate to the director any power, duty,
purpose, function, or jurisdiction that the board may lawfully
delegate, including the authority to enter into and sign contracts on
behalf of the corporation.
   (d) The director may delegate to his or her designee any power,
duty, purpose, or jurisdiction that may be lawfully delegated.
   99508.  (a) The board shall select an auditing firm to conduct
periodic audits as provided in subdivision (b) to determine if the
funding allocated pursuant to Section 99510 is being appropriately
used to fund direct classroom instruction in compliance with this
chapter. The auditing firm shall submit a report of the results of
the audit to the board.
   (b) The three segments of public postsecondary education receiving
funding from the California Higher Education Fund shall be audited
at least once every six years, with the audits occurring alternately
between the three public postsecondary education segments every two
years. An audit of a public postsecondary education segment may occur
independently of the six-year cycle if the board determines that a
more immediate audit is necessary.
   (c) The independent audits shall be funded with investment returns
from the fund.
   (d) The board shall select a different auditing firm to perform
the audits at least every six years to ensure the audits are
conducted in a fair and equitable manner.
   (e) If the board determines through the audits performed pursuant
to this section that any campus or related administrative office of
any segment that receives funding from this chapter is found to have
improperly used or otherwise improperly administered moneys allocated
under this chapter, the board shall take the following disciplinary
actions:
   (1) Upon a first finding, the board shall place the recipient
campus or related administrative office on probation status and
require the recipient campus or related administrative office to
submit a remediation plan as a condition of receiving funding under
this chapter.
   (2) Upon finding that a recipient campus or related administrative
office has subsequently mishandled funds allocated under this
chapter within five years of a finding pursuant to paragraph (1), the
board shall bar the recipient campus or related administrative
office from receiving funds made available under this chapter during
the following fiscal year.
   (3) Upon finding that a recipient campus or related administrative
office has subsequently mishandled funds allocated under this
chapter within five years of a finding pursuant to paragraph (2), the
board shall bar the recipient campus or related administrative
office from receiving funding under this chapter.
   (f) The board may allow a campus or related administrative office
that has been barred from receiving funding pursuant to paragraph (3)
of subdivision (e) to apply for funding under this chapter after
five years have passed since the campus or related administrative
office was barred from receiving funding pursuant to paragraph (3) of
subdivision (e).
   99509.  The board may adopt regulations necessary or appropriate
to implement its powers and duties under this chapter in accordance
with the Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code).

      Article 3.  Powers and Duties of the California Higher
Education Endowment Corporation


   99510.  The corporation may hire employees as it deems necessary
to implement this chapter.
   99512.  (a) The corporation shall annually allocate the moneys in
the California Higher Education Fund, for purposes of funding direct
classroom instruction for higher education as follows:
   (1) ____ percent to the California State University.
   (2) ____ percent to the University of California.
   (3) ____ percent to the California Community Colleges.
   (b) The board shall annually allocate a portion of the funds made
available in paragraph (2) of subdivision (a) to provide supplemental
funding for the operations of the Charles R. Drew University of
Medicine and Science.
   (c) The board shall ensure that a portion of the moneys allocated
pursuant to subdivision (a) is directed to campuses with nursing
programs located in counties it determines to have the most need.
Need in a county shall be established based on consideration of all
of the following factors:
   (1) Counties with a registered nurse to population ratio equal to
or less than 500 registered nurses per 100,000 individuals.
   (2) County unemployment rate.
   (3) County level of poverty.
   (d) The funding established pursuant to this chapter shall be used
to supplement, not supplant, existing levels of state funding for
the California State University, the University of California, and
the California Community Colleges. In any academic year, those
institutions of higher education shall receive an amount that is no
less than the average amount that has been appropriated for the
institutions of higher education during the five most recent fiscal
years preceding the enactment of this chapter.
   99514.  (a) The board has exclusive control of the investment of
the fund. Except as otherwise restricted by the California
Constitution and by law, the board may, in its discretion, invest the
assets of the fund through the purchase, holding, or sale of any
investment, financial instrument, or financial transaction, if the
investment, financial instrument, or financial transaction is prudent
in the informed opinion of the board.
   (b) The board may itself make any investment authorized by law or
sell any security, obligation, or real property in which moneys in
the fund are invested, by affirmative vote of a majority of the
board, or by the same affirmative vote, may from time to time adopt
an investment resolution that shall contain detailed guidelines by
which to designate the securities and real property that are
acceptable for purchase or sale. While the resolution is in effect,
securities and real property may be purchased for investment by an
officer or employee of the board designated by it for that purpose,
and sales of securities may be consummated by the officer or employee
under the conditions prescribed. Purchases and sales of securities
shall be reported to the board, on a monthly basis, at its next
regular meeting.
   (c) Any investment transaction decisions made during a closed
session pursuant to paragraph (16) of subdivision (c) of Section
11126 of the Government Code shall be by rollcall vote entered into
the minutes of that meeting. The board, within 12 months of the close
of an investment transaction or the transfer of system assets for an
investment transaction, whichever occurs first, shall disclose and
report the investment transaction at a public meeting.
   (d) In addition to the other investments authorized by this
article, the board may invest in real estate, leases of real estate,
and improvements on real estate for business or residential purposes
as an investment for the production of income. 
   SEC. 4.    Part 21 (commencing with Section 42001) is
added to Division 2 of the   Revenue and Taxation Code
  , to read:  

      PART 21.  FAIR SHARE FOR FAIR TUITION ACT


   42001.  This part shall be known, and may be cited, as the Fair
Share for Fair Tuition Act.
   42002.  For purposes of this part, the following definitions shall
apply:
   (a) "California Higher Education Fund" or "CHEF" means the account
that is created by Section 42147.
   (b) "Gas" means all natural gas, including casing head gas, and
all other hydrocarbons not defined as oil in subdivision (e).
   (c) "Gross value" means the sale price at the mouth of the well,
including any bonus, premium, or other thing of value, paid for the
oil or gas, as determined by a rolling 30-day average daily value, as
established by the market price of the product. The board shall
determine the base indexes from which the average shall be
calculated. If the oil or gas is exchanged for something other than
cash, if there is no sale at the time of severance, or if the
relation between the buyer and the seller is such that the
consideration paid, if any, is not indicative of the true value or
market price, then the board shall determine the value of the oil or
gas subject to the tax based on the cash price paid to the producer
for like quality oil or gas in the vicinity of the well.
   (d) "Higher education" means the California Community Colleges,
the California State University, and the University of California.
   (e) "Oil" means petroleum, or other crude oil, condensate, casing
head gasoline, or other mineral oil that is mined, produced, or
withdrawn from below the surface of the soil or water in this state.
   (f) "Political subdivision of the state" includes any local public
entity, as defined in Section 900.4 of the Government Code.
   (g) "Producer" means any person that takes oil or gas from the
earth or water in this state in any manner; any person that owns,
controls, manages, or leases any oil or gas well in the earth or
water of this state; any person that produces or extracts in any
manner any oil or gas by taking it from the earth or water in this
state; any person that acquires the severed oil or gas from a person
or agency exempt from property taxation under the United States
Constitution or other laws of the United States or under the
California Constitution or other laws of the State of California; and
any person that owns an interest, including a royalty interest, in
oil or gas or its value, whether the oil or gas is produced by the
person owning the interest or by another on the person's behalf by
lease, contract, or other arrangement.
   (h) "Product" means either a barrel of oil, which means 42 United
States gallons of 231 cubic inches per gallon computed at a
temperature of 60 degrees Fahrenheit or gas, as measured per 1,000
cubic feet (mcf) at a base pressure of 15.025 pounds per square inch
absolute and at a temperature base of 60 degrees Fahrenheit.
   (i) "Production" means the total gross amount of oil or gas
produced, including the gross amount attributable to a royalty or
other interest.
   (j) "Severed" or "severing" means the extraction or withdrawing
from below the surface of the earth or water of any oil or gas,
regardless of whether the extraction or withdrawal shall be by
natural flow, mechanical flow, forced flow, pumping, or any other
means employed to get the oil or gas from below the surface of the
earth or water, and shall include the extraction or withdrawal by any
means whatsoever of oil or gas upon which the tax has not been paid,
from any surface reservoir, natural or artificial, or from a water
surface.
   (k) "Stripper well" means a well that has been certified by the
Division of Oil, Gas, and Geothermal Resources in the Department of
Conservation as an oil well incapable of producing an average of more
than 10 barrels of oil per day during the entire taxable month or a
gas well that is incapable of producing more than 60,000 cubic feet
of gas per day. Once a well has been certified as a stripper well,
that stripper well shall remain certified as a stripper well until
the well produces an average of more than 10 barrels of oil per day
during an entire taxable month.
   42010.  There is hereby imposed an oil and gas severance tax upon
any producer for the privilege of severing oil or gas from the earth
or water in this state for sale, transport, consumption, storage,
profit, or use, at the rate of 12.5 percent of the gross value of the
product, and the tax shall be applied equally to all portions of the
gross value of the product.
   42011.  Except as otherwise provided in this part, the tax shall
be upon the entire production in this state, regardless of the place
of sale or to whom sold or by whom used, or the fact that the
delivery may be made to points outside the state.
   42012.  The tax imposed by this part shall be in addition to any
other taxes imposed by law, including, without limitation, any ad
valorem taxes imposed by the state, or any political subdivision of
the state, or any local business license taxes that may be incurred
as a privilege of severing oil or gas from the earth or water or
doing business in that locality. There shall be no exemption from the
payment of an ad valorem tax related to equipment, material, or
other property by reason of the payment of the gross severance tax
pursuant to this part.
   42013.  (a) The tax imposed by this part shall not be passed
through to consumers by way of higher prices for oil, natural gas,
gasoline, diesel, or other oil or gas consumable byproducts, such as
propane and heating oil. The board shall monitor and, if necessary,
investigate any instance where producers or purchasers of the oil or
gas have attempted to gouge consumers by using the tax as a pretext
to materially raise the price of oil, natural gas, gasoline, diesel,
or other oil or gas consumable byproducts, such as propane and
heating oil.
   (b) This section applies when not superseded by federal law.
   42014.  Two or more producers that are corporations and are owned
or controlled directly or indirectly, as defined in Section 25105, by
the same interests shall be considered as a single producer for
purposes of application of the tax prescribed in this part.
   42015.  There shall be exempted from the imposition of the oil and
gas severance tax imposed pursuant to this part, oil or gas produced
by a stripper well in which the average value of oil or gas is less
than three-quarters of the average gross value of the product as of
the first day of the previous calendar quarter.
   42016.  There shall be exempted from the imposition of the oil and
gas severance tax imposed pursuant to this part, all oil or gas
owned or produced by any political subdivision of this state,
including that political subdivision's proprietary share of oil or
gas produced under any unit, cooperative, or other pooling agreement.

   42017.  The tax imposed by this part is due and payable to the
board quarterly on or before the last day of the month next
succeeding each calendar quarter.
   42018.  (a) Any producer that fails to pay any tax within the time
required shall pay, in addition to the amount of tax owed, interest
at the rate of 11/2 percent per month, or fraction thereof, from the
date on which the tax became due and payable to and including the
date of payment.
   (b) Every payment on a delinquent tax owed pursuant to this part
shall be applied as follows:
   (1) First, to any interest due on the tax.
   (2) Second, to any penalty imposed by this part.
   (3) Third, the balance, if any, to the tax due.
   42019.  Each producer shall prepare and file with the board a
return in the form prescribed by the board containing information as
the board deems necessary or appropriate for the proper
administration of this part. The return shall be filed on or before
the last day of the calendar month following the calendar quarter to
which it relates, together with a remittance payable to the board for
the amount of tax due for that period.
   42022.  The board may prescribe those forms and reporting
requirements as are necessary to implement the tax, including, but
not limited to, information regarding the location of the well by
county, the gross amount of oil or gas produced, the price paid
therefor, the prevailing market price of oil or gas, and the amount
of tax due.
   42145.  The board shall administer and collect the tax imposed by
this part pursuant to the Fee Collection Procedures Law (Part 30
(commencing with Section 55001)). For purposes of this part, the
references in the Fee Collection Procedures Law to "fee" shall
include the tax imposed by this part and references to "feepayer"
shall include a person required to pay the tax imposed by this part.
   42146.  The board shall, upon appropriation, be reimbursed for
expenses incurred in the administration and collection of the tax
imposed by this part.
   42147.  The California Higher Education Fund is hereby created in
the State Treasury. Notwithstanding Section 13340 of the Government
Code, moneys in the fund are continuously appropriated, without
regard to fiscal years, to the California Higher Education Endowment
Corporation established by Section 99502 of the Education Code.
   42168.  With the exception of payments of refunds and
reimbursement to the board for expenses incurred in the
administration and collection of the tax imposed by this part,
                                       all taxes, interest,
penalties, and other amounts collected pursuant to this part shall be
deposited into the California Higher Education Fund.
   42169.  The provisions of this part are severable. If any
provision of this part or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application. 
   SEC. 5.    No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution. 
   SEC. 6.    Section 4 of this act shall become
operative on the first day of the first calendar quarter commencing
more than six months after this act is enacted.  
  SECTION 1.    Section 1620 of the Education Code
is amended to read:
   1620.  On or before July 1 of each fiscal year, the county board
of education shall hold a public hearing on the proposed county
school service fund budget for that fiscal year (the "budget year").
The public hearing shall be held prior to the adoption of the budget
by the county board of education, and shall occur not less than three
days following the availability of the proposed budget for public
inspection. The agenda for that hearing shall be posted at least 72
hours prior to the hearing and shall include the location where the
budget will be available for inspection. The budget may be made
available to the public for inspection on the Internet. At the
hearing, any taxpayer directly affected by the county school service
fund budget may appear before the county board of education and speak
on the proposed budget or any item therein.