BILL ANALYSIS Ó AB 1348 Page 1 Date of Hearing: May 1, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 1348 (John A. Perez) - As Introduced: February 22, 2013 Policy Committee: Higher EducationVote:13-0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill establishes a new state oversight and coordinating body for higher education. Specifically, this bill: 1)Establishes the California Higher Education Authority, to be governed by a 13-member board of directors, appointed as specified. Board members would be paid $100 per day of official business plus travel expenses. 2)Establishes the authority's responsibilities, including: a) Developing and monitoring the state's postsecondary education goals and reporting on the postsecondary education segments' progress toward their long-term goals. b) Measuring and reporting on the segments' efficiency and effectiveness in serving the state's needs. c) Providing oversight and advice on postsecondary capital outlay decisions. d) Developing and recommending finance policies to the governor and Legislature regarding such issues as allocation of appropriations among the segments, student fee policy, and financial aid policy. e) Reviewing and making recommendations to the governor and Legislature regarding major capacity decisions, such as state- or fee-funded mission changes or new centers or campuses. AB 1348 Page 2 f) Acting as a postsecondary education information clearinghouse for the Legislature, governor, and other agencies, and developing and maintaining a comprehensive database, with specified capabilities. 3)Transfers to the authority, by July 1, 2014, the data management responsibilities of the former California Postsecondary Education Commission (CPEC). 4)Authorizes the authority to require the governing boards and institutions of postsecondary education to submit specified data and requires the authority to furnish related information to the governor and the Legislature upon request. FISCAL EFFECT In its last full year of operation, CPEC's General Fund operating budget was $1.9 million for the equivalent of 18 positions. The new authority established in this bill would likely have a budget of similar magnitude. In addition, the authority would incur one-time information technology costs in the range of $200,000. COMMENTS 1)Background . AB 770 (Vasconcellos) of 1973 created CPEC and made it responsible for the planning and coordination of postsecondary education. CPEC was charged with providing analysis, advice, and recommendations to the Legislature and the governor on statewide policy and funding priorities. As part of his 2011-12 budget, Governor Brown proposed eliminating CPEC. Both houses rejected this proposal, but the governor exercised his line item veto to remove all General Fund support for CPEC, describing the commission as "ineffective." In his veto message, however, the governor acknowledged the need for coordinating and guiding state higher education policy and requested that stakeholders explore alternative ways these functions could be fulfilled. On November 18, 2011, CPEC closed its office and ceased operations. Its federal Teacher Quality Improvement grant program was transferred to the California Department of Education (CDE) and its extensive data resources were transferred to the California Community Colleges (CCC) Chancellor's Office. AB 1348 Page 3 Over the last decade, a substantial number of policy analysts, legislators, and researchers expressed dissatisfaction with the effectiveness of CPEC and its capacity-in part due to budget reductions-to exercise its statutory responsibilities. Another contributing factor to CPEC's perceived lack of effectiveness was its governance. CPEC was seen to be dominated by the segment representatives who advocated a consensus approach to decision making. In a 2003 review, the Legislative Analyst's Office (LAO) contended that the role CPEC was expected to play "requires a critical perspective on higher education issues and sometimes arriving at conclusions with which the segments may strongly disagree." 2)Purpose . In a January report, "Improving Higher Education Oversight," the LAO contends the state needs higher education oversight that enables policymakers and others to monitor how efficiently and effectively the postsecondary system is serving the state's needs, and make changes to improve its performance. The Analyst recommends that the new entity have independence from the public higher education segments, have a more unified governing board appointment process and be assigned limited and clear responsibilities. AB 1348 is based on the LAO recommendations. According to the author, ""Coordination, oversight and accountability in higher education are key to ensuring that taxpayer dollars are being utilized in the most efficient and effective manner possible and that students are progressing toward their educational goals without encountering unnecessary barriers?" The author intends that, unlike CPEC, the California Higher Education Authority would be charged with the responsibility and assigned the authority and fiscal capacity to carry out its mission. 3)Prior Legislation . Last year, AB 2190 (John A. Perez), an identical bill, was held on this committee's Suspense file. SB 721 (Lowenthal), which was vetoed in 2012, was the latest in a long line of unsuccessful legislative attempts to establish an accountability framework for higher education. SB 1138 (Liu), which required the CDE and the State Board of Education to assume CPEC's data management responsibilities, was held on Suspense last year in Senate Appropriations. AB 1348 Page 4 Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081