BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 94
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          (  Without Reference to File  )

          AB 94 (Budget Committee)
          As Amended  June 13, 2013
          Majority vote.  Budget Bill Appropriation Takes Effect  
          |ASSEMBLY:  |     |(May 13, 2013)  |SENATE: |37-0 |(June 15,      |
          |           |     |                |        |     |2013)          |
                    (vote not relevant)                

          Original Committee Reference:    BUDGET  

           SUMMARY  :  Contains necessary statutory and technical changes to  
          implement the Budget Act of 2013 relating to higher education.  

           The Senate amendments  delete the Assembly version of this bill,  
          and instead:

          1)Establish the Middle Class Scholarship, which will provide up  
            to 40% off of tuition at the University of California and  
            California State University for students whose family income  
            is less than $100,000 but who do not qualify for other  
            financial aid programs.  Students with family income less than  
            $150,000 will also receive reduced tuition.  The program will  
            begin providing scholarships in 2014-15, and includes a  
            three-year ramp-up phase until full implementation.  Program  
            costs are capped at $305 million annually.

          2)Require the University of California and California State  
            University to begin reporting on specific performance  
            measurements in 2013-14.  Measurements include 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.

          3)Require the University of California and California State  
            University 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  


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            different disciplines.

          4)Allow the University of California (UC) to restructure its  
            capital debt service, which could allow the university to cut  
            costs on debt service and free up funding for other support  
            services.  The university would not be allowed to spend more  
            than 15% of its state support budget on capital costs, and  
            some savings generated through restructuring would be required  
            to be spent on UC pension costs.  Additionally, a review  
            process is created requiring UC to provide reports to the  
            Department of Finance and Joint Legislative Budget Committee  
            on upcoming capital projects.

          5)Require that of the state General Fund support provided to the  
            UC, $15 million shall be provided for planning and startup  
            costs associated with the School of Medicine at the University  
            of California Riverside.  Also include a requirement that the  
            university provide an annual progress report on the School of  

          6)Create a new fund within the California Student Aid 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.

          7)Provide state General Fund support for California State  
            University (CSU) retirement costs based on the 2013-14  
            payroll.  Increased payroll or pension costs beyond the  
            2013-14 baseline will be absorbed by other CSU funds.

          8)Allow the Department of Finance to adjust payment schedules to  
            CSU based on the state's cash flow needs.

          9)State legislative intent that the absence of language in the  
            Budget Act of 2013 requiring the University of California to  
            use budgeted funds for retirement costs is not an indication  
            of legislative support for increasing retirement costs for  
            university employees.

          10)Require that of the state General Fund support provided to  
            the UC, the university shall pay lease revenue and general  
            obligation bond debt service.


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          11)Allocate $375,000 from the 1996 Higher Education Capital  
            Outlay Bond Fund to the University of California for funding  
            equipment at the UC Merced Science and Engineering Building 2.

          12)Contain an appropriation allowing this bill to take effect  
            immediately upon enactment. 

           COMMENTS  :  This is a trailer bill containing necessary statutory  
          and technical changes regarding higher education to implement  
          the Budget Act of 2013.  By enacting the Middle Class  
          Scholarship, this bill will benefit as many as 130,000  
          University of California and California State University  
          students by providing discounted tuition.  The program supports  
          families who have been impacted the most by increasing tuition  
          at UC and CSU.  The bill allows the California Student Aid  
          Commission to administer the program and develop regulations,  
          and also gives the Department of Finance discretion to reduce  
          spending in years in which the May Revision projects a budget  

          This bill also will provide important information regarding  
          performance and costs at UC and CSU by requiring regular reports  
          on costs associated with education, and regular reports on  
          performance measurement, allowing the public and policymakers  
          better data to understand funding needs and outcomes at both  
          university systems.

          The bill also provides the UC with a new tool to manage its own  
          debt service costs and infrastructure needs, by allowing UC to  
          restructure debt service costs.  UC officials believe this will  
          allow them to save money in the short-term, which could allow  
          more funding for capital projects and support services.

           Analysis Prepared by  :    Mark Martin / BUDGET / (916) 319-2099

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