BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 1502
Author: Assembly Budget Committee
Amended: 6/25/12 in Senate
Vote: 21
ASSEMBLY FLOOR : Not relevant
SUBJECT : Budget Act of 2012: augmentation: Higher
Education
SOURCE : Author
DIGEST : This bill augments the appropriations to the
University of California and Hastings College of the Law by
$37,635,000 and $365,000, respectively, for purposes of the
pension contribution costs for the University of California
Retirement Plan. This bill appropriates $125,000,000 from
the General Fund to the California State University (CSU)
and $125,000,000 from the General Fund to the University of
California (UC) for the 2013-14 fiscal year if those
institutions maintain the 2011-12 mandatory systemwide
tuition and fee level for the 2012-13 academic year and if
the Schools and Local Public Safety Protection Act of 2012
(Attorney General reference number 12-0009) is approved by
the voters at the November 6, 2012, statewide general
election and the provisions of that act that modify
personal income tax rates do not become inoperative, as
specified.
ANALYSIS : The governing boards of UC and CSU have formal
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authority to set student tuition and fees for their
respective systems. Each university system collects
tuition and fees from its students. These revenues help to
support the universities' general support costs. The other
main source of funding for postsecondary education costs is
the state General Fund (GF). For example, mandatory
systemwide undergraduate tuition and fee levels for
resident undergraduates is $12,192 at UC and $5,472 at CSU.
The CSU Board of Trustees acted in late 2011 to adopt a
9.1 percent tuition and fee increase effective fall 2012.
The UC Board of Regents has not increased tuition and fee
levels for the 2012-13 academic year.
UC and Hastings employees are members of the University of
California Retirement Plan (UCRP). This plan is separate
from the California Public Employees' Retirement System
(CalPERS) and under the control of UC; UC not only controls
its pension costs but also sets benefits levels for its
employees. Prior to 1990, the state adjusted UC's GF
appropriation to reflect increases and decreases in the
employer's share of retirement contributions for
state-funded UC employees. Starting in 1990, UC halted
both employer and employee contributions because the plan
had become super-funded. This funding holiday lasted
nearly 20 years until the plan's assets had declined
considerably and contributions became necessary. In April
2010, both UC and its employees resumed contributions.
Through 2011-12, the state has not provided UC with any
funding specifically for that purpose. UC projects that
annual total state costs would peak at about $450 million
GF. The Budget Act of 2012 includes an augmentation of
$52 million, with $51.5 million and $500,000 of that total
for UC and Hastings, respectively, for employer
contributions to UCRP for state GF and tuition-funded
employees. This was the funding level proposed by the
Governor at the May Revision.
This bill includes the following provisions:
1. For 2013-14, appropriates $125 million each to UC and
CSU contingent on the following conditions: (a) the
Schools and Local Public Safety Protection Act of 2012
is approved by the voters, and (b) if UC and CSU
maintain their respective 2011-12 mandatory systemwide
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tuition and fee levels in the 2012-13 academic year.
2. For 2012-13, appropriates an additional $38 million,
split proportionally between UC and Hastings, to address
a portion of UC's and Hastings' employer pension cost
increases that are attributable to state GF and
tuition-funded employees. Of the total amount, UC will
receive $37.6 million and Hastings will receive
$365,000. This bill links the funding to existing
provisional budget bill language in UC's and Hastings'
main budget items tying the funds specifically to
contributions to UCRP for state GF and tuition-funded
employees and stating that this funding does not
constitute a state obligation to provide funding in
future years and that future funding, if any, will be
determined by the Legislature.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
Appropriates $38,000,000 from the GF for the pension
portion of the bill. Appropriates $250,000,000 to the UC
and CSU systems if those institutions maintain 2011-12
mandatory systemwide tuition and fee levels for the 2012-13
academic year and if voters approve tax initiative
provisions.
DLW:m 6/26/12 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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