California Legislature—2013–14 Regular Session

House Resolution No. 49

Introduced by Assembly Member Jones-Sawyer

August 4, 2014

House Resolution No. 49—Relative to higher education.

WHEREAS, The Legislature recognizes that postsecondary
education has expanded opportunities for Californians to qualify
for high-quality jobs and entry into the middle class, providing
clear benefits to this state’s economy; and

WHEREAS, In response to decreased state support, costs at the
University of California (UC) and the California State University
(CSU) have grown significantly over the past decade. In 2000, the
total cost of a year of education at UC was $15,000. By 2013, this
figure had more than doubled to $32,400. Costs at CSU are lower,
but still increased by nearly 70 percent in this period. These
increases far outpace inflation; and

WHEREAS, Tuition at California’s public institutions of higher
education has been rising far more rapidly than family incomes.
In 2000, the cost of attendance for a UC student living on campus
was 25 percent of California’s median family income. In 2009,
this cost had grown to 39 percent of median family income. Costs
at CSU also grew relative to incomes, increasing from 19 percent
of median family income in 2000 to 29 percent of median family
income in 2009; and

WHEREAS, The increasing unaffordability of a college
education has forced students to borrow more money to pay for
higher education, causing 51 percent of students graduating from
four-year institutions of higher education in California to borrow
an average of $18,879; and

WHEREAS, In the 1970s, the General Fund provided $12 for
every dollar that students paid in fees. By 2009, this amount had
fallen to $1.40 for every dollar in student fees; and

WHEREAS, High levels of student debt are damaging not only
to an individual student’s ability to succeed financially but also
will have grave consequences for the future economy of this state;
and

WHEREAS, As of spring 2011, only 83 percent of UC students
and 51.4 percent of CSU students entering as freshmen had
graduated within six years. For transfer students, only 79.6 percent
of UC students and 64.6 percent of CSU students had graduated
within four years; and

WHEREAS, By 2025, California is projected to have a shortage
of 2.3 million college graduates in the state’s workforce if the
number of young and older adults who go to college and complete
a higher education is not significantly increased; and

WHEREAS, The Legislature finds that it must halt the decrease
in the state’s support for public education and, over time, must
increase its contribution to the funding of higher education; and

WHEREAS, The Legislature finds that it must immediately
seek another approach to financing a student’s share of the cost of
higher education in the state that will not result in students
graduating from California colleges and universities burdened with
debt; and

WHEREAS, There is growing interest in a new financing
strategy; and

WHEREAS, The Legislature recognizes that it is in this state’s
interest to study and recommend a potential pilot program; and

WHEREAS, It is the intent of the Legislature that revenue
received from a Pay it Forward, Pay it Back pilot program would
be managed by the state; and

WHEREAS, It is further the intent of the Legislature that a Pay
it Forward, Pay it Back pilot program would not replace existing
forms of financial aid, including grants, scholarships, and loans,
but would instead serve as an additional option for students to
finance their education; now, therefore, be it

Resolved by the Assembly of the State of California, That the
Student Aid Commission and the Legislative Analyst are
encouraged to conduct a study of the effects of enacting, in future
legislation, a Pay it Forward, Pay it Back Pilot Program, with the
Legislative Analyst encouraged to be the lead agency in charge of
preparing the study. The study should evaluate a pilot program
designed to provide an additional option for students to finance
the costs of their education, including the costs of upfront tuition,
fees, and room and board, for enrollment at institutions of higher
education; and be it further

Resolved, That the pilot program should allow a student who is
a state resident, as determined by the respective institution, and
who otherwise qualifies for admission to that institution, to enroll
at the institution without paying upfront tuition, fees, or room and
board and provide that, in lieu of paying upfront tuition, fees, or
room and board, a student may sign a binding contract to, upon
graduation, pay 2 to 4 percent, inclusive, of his or her annual
adjusted gross income to the state or the institution for a specified
number of years; and be it further

Resolved, That the pilot program could vary by institution, in
regard to the total cost of attendance at the institution required to
be reimbursed, the portion of the total cost of attendance to be paid
by the state, the number of years that a student would be required
to make payments, as specified in the contract, and the percentage
of annual adjusted gross income to be paid by a student, as
specified in the contract; and be it further

Resolved, That the study of the pilot program should identify at
least one campus of the University of California, one campus of
the California State University, one campus of the California
Community Colleges, and one campus of a nonprofit private
postsecondary educational institution that would participate in the
pilot program. The campuses identified pursuant to this paragraph
should be regionally diverse. The study of the pilot program should
also, based on current research and projections of state subsidies,
specify the number of years and percentage of annual adjusted
gross income for a contract at each participating institution that
would reimburse the cost of a student’s attendance, suggest an
immediate source of funding for the first 15 to 20 years, inclusive,
of the pilot program, which would include the establishment of a
revolving fund for the deposit of payments made under the pilot
program, and consider the possibility of using social impact bonds,
meaning an agreement between a nongovernmental entity and an
institution of higher education under which a student’s cost of
attendance is paid for by the nongovernmental entity in exchange
for a security interest in the payments made by the student, as an
immediate funding source; and be it further

Resolved, That the study of the pilot program should be
presented for consideration by the Legislature. The Legislative
Analyst is encouraged to submit a report on the study of the pilot
program to the Assembly Committee on Higher Education and the
Senate Committee on Education on or before September 30, 2015;
and be it further

Resolved, That the Chief Clerk of the Assembly transmit copies
of this resolution to the author for appropriate distribution.