BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair SB 1052 (Steinberg) - California Open Education Resources Council Amended: As Introduced Policy Vote: Education 7-1 Urgency: No Mandate: See staff comments Hearing Date: May 24, 2012 Consultant: Jacqueline Wong-Hernandez SUSPENSE FILE. AS PROPOSED TO BE AMENDED. Bill Summary: SB 1052 establishes the 9-member California Open Education Resources Council (COERC), which will be responsible for a variety of tasks geared toward reducing textbook costs for the 50 most widely taken lower division courses. Fiscal Impact: Substantial one-time costs for COERC activities. Significant on-going costs to maintain and update digital files. COERC: The scope of the Council costs will depend on the degree to which the workload can be absorbed by existing staff to the Intersegmental Committee of Academic Senates. At a minimum, there will be significant costs to staff the Council, to complete the required activities, to create and execute the competitive bid process, to create contracts with the entities that ultimately produce the content, and to establish procedures for segment use of the final products. Digital textbooks: The state will pay for the creation/procurement of 50 high-quality, open source, digital textbooks. The specific costs will be driven by the market for the 50 courses for which textbooks will be sought. These digital files will be (as is detailed in companion bill SB 1053) stored and administered on an ongoing basis. Revenue loss: Upon implementation, there will likely be a significant loss of state sales tax revenues, to the extent that students were previously purchasing textbooks for the 50 courses from sales tax-generating businesses in SB 1052 (Steinberg) Page 1 California. Additionally, there will likely be a substantial revenue loss to campus bookstores, which are often self-supporting and, in some cases, support other campus activities. Background: This bill attempts to ameliorate the high costs college students in California's public postsecondary institutions pay for textbooks. It seeks to diminish the financial burden on students by requiring textbooks for the 50 most common lower division courses to be available on reserve at the campus library and by enabling instructional materials for those courses to be available through Open Education Resources (OER). OERs are educational materials such as textbooks, research articles, videos, assessments, or simulations that are either licensed under an open copyright license or are in the public domain. OERs provide no-cost access and permission to revise, reuse, remix, or redistribute the materials. Proposed Law: This bill establishes the COERC, and specifies the Council's composition and activities. Membership will include: 3 faculty selected by the academic senate of the University of California (UC) , 3 faculty selected by the academic senate of the California State University (CSU), and 3 faculty selected by the academic senate of the California Community Colleges (CCC). This bill requires the COERC to: 1)Develop a list of the 50 most widely taken lower division courses in the public postsecondary education segments. 2)Create and administer a standardized, rigorous review and approval process for open source materials developed pursuant to this legislation. 3)Promote strategies for the production, access, and use of open source materials. 4)Require publishers of these textbooks to, as a condition of the purchase of textbooks, to provide the campus with at least 3 copies of the textbook at no cost, for placement on reserve at the campus library. 5) Establish a competitive bid process in which interested parties may apply for funds to produce 50 high-quality affordable, digital open source textbooks and related materials in 2013. SB 1052 (Steinberg) Page 2 This bill also specifies requirements for the textbooks/materials themselves. Related Legislation: SB 1053 (Steinberg), which would establish the California Digital Open Source Library, to be jointly administered by the UC, CSU, and the CCC for the purpose of housing the OERs, is a companion bill to this measure. SB 48 (Alquist) Chapter 161/2009 requires any individual firm, partnership, or corporation that offers textbooks for sale at the UC, CSU, the CCC, or a private postsecondary education institution in California, to the extent practicable, make them available for sale in electronic format by January 1, 2020. Staff Comments: The costs of this bill will be primarily driven by the decisions and activities of the newly-created COERC. The Council is required to make a number of decisions and complete a variety of tasks that will require substantial professional support. It is not clear that the COERC membership identified in the bill would have the ability to execute the tasks required without considerable outside expertise and administrative support, and the bill does not specify who has the authority to provide that needed assistance, nor how it will be funded. The bill, as written, provides that 9 faculty members, none of whom is described as being the "chair" or convener of the Council, will make numerous decisions that would be impractical to have completed by these faculty without some level of support. For example, the bill requires the COERC to "create and administer a standardized, rigorous review and approval process for open source materials developed pursuant to this legislation", and to "promote strategies for the production, access, and use of open source materials." Typically, a council with extensive duties would have a support staff to create agendas and prepare materials, and at least one full-time outside consultant to lead the project and complete the work agreed upon by the council members. This bill further requires the COERC to establish a competitive bid process in which interested parties may apply for funds to produce 50 high-quality affordable, digital open source textbooks and related materials, to verify that those materials meet the specifications of the bill, and to ultimately decide on SB 1052 (Steinberg) Page 3 the materials that the state will purchase. It is likely that attorneys will be needed to write and negotiate the contracts with the individuals or organizations creating the digital textbooks. It is unclear who will have the authority to determine the terms of those contracts, or the responsibility for payments. Additionally, subject matter experts will be needed to help determine which digital textbooks should be purchased across the 50 courses, as this will be a substantial investment in resources that will be used across the segments. Moreover, this bill places additional requirements on the CCCs, in terms of both COERC work and implementing the new OER practice, the extent of which will be determined by the COERC. These requirements may constitute reimbursable mandates on the CCCs. The exact cost of commissioning the digital textbooks cannot be known, but will be substantial. The bill specifies that the Council will commission OERs, specifically; in addition to the large scale of work, the producers are selling the state their rights to their own intellectual property. While individual students likely stand to save considerable money on their own textbook expenses, the bill does not indicate where the funding will come from for the state to purchase the digital textbooks that will be used by all of those individual students. Proposed Author Amendments: The proposed amendments would place the COERC under the administration of the existing Intersegmental Committee of Academic Senates. The amendments also make the bill operative only if funds are appropriated in the Budget Act, or if federal or private funds are made available, or any combination thereof.