BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 94|
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THIRD READING
Bill No: AB 94
Author: Assembly Budget Committee
Amended: 6/13/13 in Senate
Vote: 21
ASSEMBLY FLOOR : Not relevant
SUBJECT : Budget Act of 2013: Higher Education
SOURCE : Author
DIGEST : This bill contains various policy changes related to
higher education and creates a new student aid program.
ANALYSIS :
This bill:
Middle Class Scholarship . Establishes the Middle Class
Scholarship that is capped, at full implementation, at $305
million. This scholarship program will be available to provide
scholarships of up to 40% of tuition for the California State
University (CSU) and University of California (UC) students,
annually, to families with incomes up to $150,000. Scholarship
awards will be phased in over four years, starting in 2014-15
with freshman entrants. Eligibility will be limited to students
that meet all Cal Grant program requirements except for the
income and asset test, and have a minimum of a 2.0 grade point
average. Scholarships will provide tuition coverage on a
sliding scale, with income of up to $100,000 receiving 40%
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tuition coverage, and a reduction of tuition coverage by
approximately 0.6% for every additional $1,000 of income up to
$150,000. If sufficient money is not available to provide
specified scholarship amounts, scholarships will be prorated
proportionately among all recipients.
In the first three years of implementation, starting in 2014-15,
the scholarship program's statutory appropriations will be
capped at $107 million, $152 million, and $228 million. Statute
will provide authority to prorate spending down to $200 million
and by one-third in the first three years of implementation if
the May Revision projects a budget deficit for the upcoming
fiscal year. As an institutional requirement for participating
in the Middle Class Scholarship, the UC and CSU is required to
preserve current fee policies and the 2013-14 amount of student
fee revenue that is set-aside as institutional aid.
Performance Measures . Requires the CSU and UC to report the
following information annually, starting in March 2014, with
2012-13 data as follows: graduation rates, community college
transfer rates, number of degrees earned by low-income students,
and number of degrees in STEM (Science, Engineering, Technology
and Mathematics) fields.
Cost of Higher Education Reporting . Requires the UC and CSU to
provide bi-annual reports describing the costs related to
undergraduate, graduate and professional school education. The
reports will allow for a better understanding of how much the
university systems spend on instruction and research, and the
difference in educational costs among different disciplines.
Capital Outlay Flexibility . Provides UC with increased
flexibility to pursue capital outlay projects outside of the
annual budget process, after approval by the Department of
Finance (DOF) and review by the Joint Legislative Budget
Committee. Further provides the UC with the authorization to
pledge up to 15% of the state funds provided in its General Fund
support budget, less general obligation debt payments and lease
payments, towards capital outlay, lease revenue bond debt
financed and pay as you go, inclusive. Requires that any
savings achieved by the UC, through the restructuring of debt,
be used to support pension costs.
University of Riverside Medical School . Requires that of the
state General Fund support provided to the UC in the 2013-14
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Budget Act, $15 million, shall be provided for planning and
startup costs associated with the School of Medicine at the UC
Riverside. Also includes a requirement that the university
provide an annual progress report on the School of Medicine.
Creates New Fund . Creates a new fund within the California
Student Aid Commission (Commission) to allow the Commission to
contract with other out-of-state agencies seeking to implement
the Dream Act. By assisting other states in developing outreach
and application materials, the Commission anticipates improving
its own Dream Act administration for California students.
Retirement Contributions . Provides state General Fund support
for CSU retirement costs, based on the 2013-14 payroll.
Increased payroll or pension costs beyond the 2013-14 baseline
will not be automatically funded for the CSU.
Cash Flow . Allows DOF to adjust payment schedules to CSU, based
on the state's cash flow needs.
Legislative Intent Language . States legislative intent that the
absence of language in the Budget Act of 2013 requiring the UC
and the Hastings College of Law to use budgeted funds for
retirement costs is not an indication of legislative support for
increasing retirement costs for university employees.
Debt Service Payments . Requires that of the state General Fund
support provided to the UC, the university shall pay lease
revenue and general obligation bond debt service.
UC, Merced Equipment Appropriation . Allocates $375,000, from
the 1996 Higher Education Capital Outlay Bond Fund, to the UC
for funding equipment at the UC Merced Science and Engineering
Building 2.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Budget and Fiscal Review Committee, this
bill has the following impacts on state costs:
Authorizes $305 million statutory appropriation, at full
implementation, for the Middle Class Scholarship and
potentially additional support costs for the Commission,
for implementation of this program.
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Potentially millions of dollars in savings to the state
from requiring the UC to manage its lease revenue debt
program for infrastructure projects from within its
existing support appropriation.
Potentially millions of dollars in savings to the state
from not providing the CSU with future annual adjustments
for increased retirement obligations beyond 2013-14 actual
costs.
Authorizes appropriation of $375,000 in 1996 Higher
Education Capital Outlay Bond funds for equipment purchases
for the UC Merced Science and Engineering Building 2.
PQ:ej 6/14/13 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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