Amended in Assembly June 13, 2013

Senate Bill No. 88

Introduced by Committee on Budget and Fiscal Review

January 10, 2013

begin delete An act relating to the Budget Act of 2013. end delete begin insert An act to add Sections 69515.5, 89762, 92493, 92494, 92495, 92495.5, and 92496 to, to add Article 22 (commencing with Section 70020) to Chapter 2 of Part 42 of Division 5 of, to add Article 10 (commencing with Section 89290) and Article 10.5 (commencing with Section 89295) to Chapter 2 of Part 55 of Division 8 of, to add Article 7.5 (commencing with Section 92670) and Article 7.7 (commencing with Section 92675) to Chapter 6 of Part 57 of Division 9 of, Title 3 of, the Education Code, and to add Section 13313 to the Government Code, relating to education finance, and making an appropriation therefor, to take effect immediately, bill related to the budget. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 88, as amended, Committee on Budget and Fiscal Review. begin delete Budget Act of 2013. end delete begin insert Education finance: higher education. end insert

begin insert

(1) Existing law establishes the Student Aid Commission as the primary state agency for the administration of state-authorized student financial aid programs available to students attending all segments of postsecondary education. Under existing law, the commission, among other things, administers the Cal Grant Program, the Student Opportunity and Access Program, the Assumption Program of Loans for Education, the Graduate Assumption Program of Loans for Education, the Public Interest Attorney Loan Repayment Program, and the California State Work-Study Program. The commission also oversees the state’s participation in the Federal Family Education Loan Program.

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This bill would authorize the commission to enter into an agreement with a public agency of a state other than California, or a private entity related to an agency of another state, to assist the other agency or entity in implementing financial aid programs, including assistance with processing grants, fellowships, and loans through the use of automated information systems. The bill would create a Financial Aid Technical Assistance Fund, and would make moneys in the fund available to the commission, upon appropriation by the Legislature, for purposes of the bill. The bill would require the commission to establish fees for services provided under the bill, and would require that the fees be deposited in the fund. The bill would authorize the use of residual moneys in the fund for improvement of financial aid services for California. The bill would require the commission, beginning October 1, 2014, to submit an annual report, as prescribed, to the Department of Finance and the Joint Legislative Budget Committee detailing the total revenues collected in the fund, by service provided and applicable fee collected, and the use of the moneys in the fund.

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(2) Existing law provides for a public postsecondary education system in this state. This system consists of the University of California, the California State University, and the California Community Colleges. Existing law authorizes these institutions to require that mandatory systemwide fees and tuition, among other fees, be paid by students at these institutions.

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This bill would establish the Middle Class Scholarship Program under the administration of the Student Aid Commission. The bill would provide that, subject to an available and sufficient appropriation, commencing with the 2014-15 academic year, undergraduate students enrolled at the University of California or the California State University would receive a scholarship award that, combined with other publicly funded student financial aid, as defined, received by an eligible student, would be up to 40% of the amount charged to that student for mandatory systemwide tuition in that fiscal year if the student meets the following conditions: has an annual household income that does not exceed $150,000; satisfies specified requirements for a Cal Grant award; is a resident of this state or exempt from paying nonresident tuition; files specified financial aid forms; makes timely application or applications for publicly funded student financial aid, as defined, for which he or she is eligible; and maintains at least a 2.0 grade point average.

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The bill would provide that a student whose annual household income exceeds $100,000, but does not exceed $150,000, and who otherwise meets the program requirements, would receive a scholarship award that is reduced in accordance with prescribed calculations.

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The bill would require, in order for students enrolled in their respective segments to remain eligible to receive financial aid under the bill, that the University of California and the California State University maintain their respective institutional need-based grant program policies and maintain their funding amounts at a level that, at a minimum, is equal to the level maintained during the 2013-14 academic year.

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The bill would require the Student Aid Commission to annually determine if the amounts appropriated under the bill in each fiscal year are sufficient to cover the costs of the scholarships as projected to be awarded pursuant to the program. The bill would require, if those amounts are not sufficient for this purpose, that the scholarships be reduced proportionately by an equal percentage for all recipients of scholarships under the bill.

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The bill would establish the Middle Class Scholarship Fund, and would specify amounts to be transferred, upon the order of the Director of Finance, from the General Fund to the Middle Class Scholarship Fund for annual appropriation to the Student Aid Commission for allocation for purposes of the bill. The bill, beginning with the 2014-15 fiscal year, would require the Department of Finance to include in the Governor’s Budget proposal a fund condition statement for the Middle Class Scholarship Fund for the fiscal year of the proposed budget and the 2 immediately preceding fiscal years.

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(3) Existing law establishes the California State University, under the administration of the Trustees of the California State University, as one of the segments of public postsecondary education in this state.

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This bill would require the California State University to report biennially to the Legislature and the Department of Finance, beginning on or before October 1, 2014, and on or before October 1 of each even-numbered year through 2020, on the total costs of education at the university on a systemwide and campus-by-campus basis, as specified.

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This bill, commencing with the 2013-14 academic year, would require the California State University to report, by March 1 of each year, on specified performance measures, including various calculations of graduation rates and amounts spent per degree, for the preceding academic year.

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This bill would require the contributions of the California State University to the Public Employees’ Retirement Fund to be based on pensionable compensation and the rates set forth in the annual Budget Act and to be paid out of the total appropriation of the university in the annual Budget Act. The bill would specify that, beginning in the 2013-14 fiscal year and each fiscal year thereafter, annual adjustments to the appropriation for the pension contributions of the California State University would be based on the university’s pensionable payroll for the 2013-14 fiscal year, as identified by the Controller’s office.

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This bill would authorize the Director of Finance to defer payment of General Fund moneys, in a cumulative amount not to exceed $250,000,000 annually, appropriated to the California State University in the annual Budget Act, for payment in May or June of the same fiscal year for which the original payment would have been made.

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(4) Existing law creates the University of California, administered by the Regents of the University of California, as one of the segments of public postsecondary education in the state. The University of California operates campuses at Berkeley, Davis, Irvine, Los Angeles, Merced, Riverside, San Diego, San Francisco, Santa Barbara, and Santa Cruz.

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Existing law authorizes the University of California to issue revenue bonds, secured by a specified pledge of revenues.

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This bill would authorize the University of California to pledge its annual General Fund support appropriation, less certain amounts, to secure the payment of its general revenue bonds or commercial paper associated with the general revenue bond program. The bill would authorize the university to fund debt service for capital expenditures, as defined, from its General Fund support appropriation, as specified. The bill would provide that these provisions do not require the Legislature to make an appropriation from the General Fund to the university in any specific amount. The bill would also authorize the university to fund pay-as-you-go capital outlay projects from its General Fund support appropriation, as specified.

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This bill would require the University of California, if it is able to reduce annual debt service costs by refunding, defeasing, or retiring general obligation bonds or State Public Works Board lease revenue bonds pursuant to these provisions, to annually contribute an equal amount to reduce the existing unfunded liability of the University of California Retirement Plan.

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This bill would require the University of California to report to the Joint Legislative Budget Committee and the Department of Finance if it plans to use any of its support appropriation for capital outlay projects in each fiscal year, as specified. The bill would require the committee and the department to review the report by specified dates, and would authorize the department to approve capital outlay projects pursuant to specified procedures. The bill would also require the university to submit a progress report by April 1 of each year to the committee and the department detailing the scope and funding of each project.

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The bill would require the university to manage its general revenue bond program so that not more than 15% of its General Fund support appropriation, less a prescribed amount, is used for the total of the following: debt service for specified capital expenditures, pay-as-you-go capital outlay, and State Public Works Board rental payments.

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This bill would require the University of California to report biennially to the Legislature and the Department of Finance, beginning on or before October 1, 2014, and on or before October 1 of each even-numbered year through 2020, on the total costs of education at the university on a systemwide and campus-by-campus basis, as specified.

end insert begin insert

This bill, commencing with the 2013-14 academic year, would require the University of California to report, by March 1 of each year, on specified performance measures, including various calculations of graduation rates and amounts spent per degree, for the preceding academic year.

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This bill would appropriate $375,000 from the 1996 Higher Education Capital Outlay Bond Fund to the University of California for the purpose of funding the equipment phase of the Science and Engineering Building at the Merced campus, as specified, during the 2013-14 fiscal year, with the appropriation available for encumbrance until June 30, 2016, subject to the enactment of a resolution by the Regents of the University of California requiring the payment of prevailing wage rates by the contractors and subcontractors working on this project, and all other capital outlay projects undertaken by the University of California that are funded using nonstate funds or are otherwise not financed with the funds appropriated for this project, during the 2013-14 fiscal year.

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This bill would require the University of California to allocate and encumber from a specified appropriation the amount necessary to pay in full all amounts that are reasonably anticipated to become due and payable during the 2013-14 fiscal year for lease revenue and general obligation bond debt service. The bill would require the Controller to transfer funds from the specified appropriation in accordance with specified schedules.

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This bill would allocate $15,000,000 from a specified appropriation in the Budget Act of 2013 to the Regents of the University of California for the School of Medicine at the University of California, Riverside, for specified purposes.

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The bill would require, on or before April 1 of each year, the University of California to provide progress reports and specified information consistent with the published mission and vision of the University of California, Riverside, School of Medicine to the relevant policy and fiscal committees of the Legislature pertaining to funding, recruitment, hiring, and outcomes for the University of California, Riverside, School of Medicine.

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The bill would declare that the absence of language in the Budget Act of 2013 specifying that the University of California and the Hastings College of the Law shall use budgeted funds for retirement costs is not an indication of legislative support for, or acceptance of, increased retirement costs being paid for by employees of the University of California and the Hastings College of the Law.

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(5) This bill would declare that it is to take effect immediately as a bill providing for appropriations related to the Budget Bill.

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This bill would express the intent of the Legislature to enact statutory changes relating to the Budget Act of 2013.

end delete

Vote: majority. Appropriation:  begin delete no end delete begin insert yes end insert . Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 69515.5 is added to the end insert begin insert Education Code end insert begin insert ,
to read: end insert

begin insert

begin insert 69515.5. end insert   

(a) The commission may enter into an agreement
with a public agency of a state other than California, or a private
entity related to an agency of another state, to assist the other
agency or entity in implementing student financial aid programs,
including providing assistance with processing grants, fellowships,
and loans through the use of automated information systems. The
commission may receive payment, reimbursement, or other
resources as consideration for services provided pursuant to
agreements entered into under this section.

(b) The commission shall establish fees for services it provides
pursuant to this section in order to recover, at a minimum, the full
costs of providing those services, including all direct and indirect
costs.

(c) The Financial Aid Technical Assistance Fund is hereby
created in the State Treasury, and moneys in the fund shall be
available, upon appropriation by the Legislature to the commission,
for the direct and indirect costs of providing assistance to agencies
and entities of other states with implementation of Dream Act
programs and to improve financial aid services for California.
The commission shall deposit the proceeds of the fees established
under this section into the fund. Only the moneys received for
purposes of this section shall be deposited into the fund. The fund
shall be credited with all of the investment income earned by the
moneys deposited in the fund. Moneys in the fund are not part of
the General Fund as defined in Section 16300 of the Government
Code.

(d) The commission shall use moneys deposited in the fund for
all costs associated with providing technical assistance to agencies
of states other than California, and related private entities,
pursuant to this section, and moneys remaining in the fund after
those costs are retired shall be used to improve student financial
aid services for California. Prior to the expenditure of these
residual funds, the commission shall submit a detailed expenditure
plan for approval by the Department of Finance as part of the
annual budget process.

(e) Beginning October 1, 2014, the commission shall submit an
annual report to the Department of Finance and the Joint
Legislative Budget Committee detailing the total revenues collected
in the fund, by service provided and applicable fee collected, and
the use of the moneys in the fund.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Article 22 (commencing with Section 70020) is added
to Chapter 2 of Part 42 of Division 5 of Title 3 of the end insert begin insert Education
Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 22. end insert   Middle Class Scholarship Program

 

begin insert 70020. end insert   

The Middle Class Scholarship Fund is hereby
established in the State Treasury. Moneys in the fund shall be
allocated, in accordance with this article, to make higher education
more affordable.

begin insert 70021. end insert   

The Middle Class Scholarship Program is hereby
established under the administration of the Student Aid
Commission. For purposes of this article, “commission” means
the Student Aid Commission.

begin insert 70022. end insert   

(a) (1) Subject to an available and sufficient
appropriation, commencing with the 2014-15 academic year, an
undergraduate student enrolled in the California State University
or the University of California who meets the requirements of
paragraph (2) is eligible for a scholarship award as described in
that paragraph.

(2) Each academic year, except as provided in paragraphs (3)
and (4), a student shall receive a scholarship award in an amount
that, combined with other publicly funded student financial aid
received by an eligible student, is up to 40 percent of the amount
charged to that student in that academic year for mandatory
systemwide tuition, if all of the following requirements are met:

(A) The student’s annual household income does not exceed
one hundred fifty thousand dollars ($150,000). For purposes of
this article, annual household income shall be calculated in a
manner that is consistent with the requirements applicable to the
Ortiz-Pacheco-Poochigian-Vasconcellos Cal Grant Program
(Chapter 1.7 (commencing with Section 69430)) and Section 69506.

(B) The student satisfies the eligibility requirements for a Cal
Grant award pursuant to Section 69433.9, except that a student
who is exempt from nonresident tuition under Section 68130.5
shall not be required to satisfy the requirements of subdivision (a)
of Section 69433.9.

(C) The student is exempt from paying nonresident tuition.

(D) The student completes and submits a Free Application for
Federal Student Aid (FAFSA) application. If the student is not able
to complete a FAFSA application, the student submits an
application determined by the commission to be equivalent to the
FAFSA application for purposes of this article.

(E) The student makes a timely application or applications for
publicly funded student financial aid from programs for which he
or she is eligible, other than the program established by this article.
For purposes of this article, “publicly funded student financial
aid” shall be defined as the federal Pell Grant Program, the Cal
Grant Program, and institutional need-based grants.

(F) The student maintains at least a 2.0 grade point average in
a manner that is consistent with the requirements applicable to
the Ortiz-Pacheco-Poochigian-Vasconcellos Cal Grant Program
(Chapter 1.7 (commencing with Section 69430)).

(3) The scholarship award under this article to a student whose
annual household income is greater than one hundred thousand
dollars ($100,000), and who otherwise meets the requirements of
paragraph (2), shall be reduced by 0.6-percent increments, from
a maximum 40 percent of mandatory systemwide tuition for an
academic year to a minimum 10 percent of mandatory systemwide
tuition for an academic year, per one thousand dollars ($1,000)
of annual household income in excess of one hundred thousand
dollars ($100,000), provided that no scholarship award shall be
provided to a student with an annual household income of one
hundred fifty thousand dollars ($150,000) or more. This reduction
shall be in addition to any reduction required by subdivision (e)
of Section 70023.

(4) For the 2014-15, 2015-16, and 2016-17 academic years,
the maximum amount of a student’s scholarship award shall be
35 percent, 50 percent, and 75 percent, respectively, of the total
scholarship award amount that the student would otherwise be
eligible to receive.

(b) In order for students enrolled in their respective segments
to remain eligible to receive a scholarship under this article, the
University of California and the California State University shall
maintain their respective institutional need-based grant program
policies, and shall maintain their funding amounts at a level that,
at a minimum, is equal to the level maintained during the 2013-14
academic year.

(c) The University of California and the California State
University shall report on the implementation of this article as
part of the report made pursuant to Section 66021.1.

begin insert 70023. end insert   

(a) For each academic year, the commission shall
determine an amount sufficient, when combined with Cal Grants,
Pell Grants, and institutional need-based grants received by
eligible students from other sources, to provide scholarships to
eligible students in the amounts described in paragraphs (2) and
(3) of subdivision (a) of Section 70022. The University of California
and the California State University shall provide the commission
with any financial aid data that are necessary for the determination
of these amounts.

(b) The commission shall annually determine if the amounts
appropriated under this section in each fiscal year are sufficient
to cover the costs of the scholarships as projected to be awarded
pursuant to the program. If those amounts are not sufficient for
this purpose, the scholarships shall be reduced proportionately
by an equal percentage for all recipients of scholarships under
this article.

(c) The commission may adopt regulations necessary to carry
out the purposes of this article under subdivision (b) as emergency
regulations in accordance with Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code. For purposes of the Administrative Procedure Act, including
Section 11349.6 of the Government Code, the adoption of those
regulations shall be deemed to be an emergency and necessary
for the immediate preservation of the public peace, health and
safety, or general welfare, notwithstanding subdivision (e) of
Section 11346.1 of the Government Code. Notwithstanding
subdivision (e) of Section 11346.1 of the Government Code, any
regulation adopted pursuant to this section shall not remain in
effect more than 180 days unless the commission complies with
all provisions of Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code, as
required by subdivision (e) of Section 11346.1 of the Government
Code.

(d) The unencumbered balance, as of June 30 of each fiscal
year, of the amount appropriated from the Middle Class
Scholarship Fund pursuant to paragraph (1) of subdivision (e)
shall revert to the General Fund.

(e) (1) Upon order of the Director of Finance, the following
amounts shall be transferred from the General Fund to the Middle
Class Scholarship Fund, and are hereby appropriated to the
commission for allocation pursuant to this article:

(A) For the 2014-15 fiscal year, one hundred seven million
dollars ($107,000,000).

(B) For the 2015-16 fiscal year, one hundred fifty-two million
dollars ($152,000,000).

(C) For the 2016-17 fiscal year, two hundred twenty-eight
million dollars ($228,000,000).

(D) For the 2017-18 fiscal year and for each fiscal year
thereafter, three hundred five million dollars ($305,000,000).

(2) An annual appropriation to the commission is hereby
established in the amounts and for the fiscal years described in
paragraph (1) to carry out the purposes of this section and Section
70022.

(3) The funds transferred and appropriated pursuant to
paragraph (1) shall only be available for encumbrance in the fiscal
year in which they are transferred, and the General Fund shall
have no liability or any obligation beyond the transfers explicitly
authorized in paragraph (1) unless a subsequent transfer or
allocation is required pursuant to statute.

(4)  In any fiscal year, additional appropriations may be enacted
pursuant to statute to carry out the purposes of this article.

(5) (A) Beginning with the Governor’s Budget proposal for the
2014-15 fiscal year, and in the Governor’s Budget for each fiscal
year thereafter, the Department of Finance shall include a fund
condition statement for the Middle Class Scholarship Fund for the
fiscal year of the proposed budget and the two immediately
preceding fiscal years prepared in accordance with existing law.

(B) Upon order of the Director of Finance and commencing
with the 2013-14 fiscal year, if the May Revision projects a budget
deficit for the next fiscal year, the amount specified in paragraph
(1) for the fiscal year for which the budget deficit is projected may
be reduced by up to 33 percent. Upon order of the Director of
Finance, beginning with the 2016-17 fiscal year, and each year
thereafter, if the May Revision projects a deficit for the next fiscal
year, the amount specified in paragraph (1) may be reduced to an
amount greater than or equal to two hundred million dollars
($200,000,000).

(f) Subject to an appropriation in the annual Budget Act for its
purposes, the commission may begin implementation of, and
establish outreach services relating to, this article.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Article 10 (commencing with Section 89290) is added
to Chapter 2 of Part 55 of Division 8 of Title 3 of the end insert begin insert Education
Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 10. end insert   Expenditures for Undergraduate and Graduate
Instruction and Research Activities

 

begin insert 89290. end insert   

(a) The California State University shall report
biennially to the Legislature and the Department of Finance, on
or before October 1, 2014, and on or before October 1 of each
even-numbered year thereafter, on the total costs of education at
the California State University.

(b) The report prepared under this section shall identify the
costs of undergraduate education, graduate academic education,
graduate professional education, and research activities. All four
categories listed in this subdivision shall be reported in total and
disaggregated separately by health sciences disciplines, disciplines
included in paragraph (10) of subdivision (b) of Section 89295,
and all other disciplines. The university shall also separately report
on the cost of education for postbaccaulaureate teacher education
programs. For purposes of this report, research for which a student
earns credit toward his or her degree program shall be identified
as undergraduate education or graduate education, as appropriate.

(c) The costs shall also be reported by fund source, including
all of the following:

(1) State General Fund.

(2) Systemwide tuition and fees.

(3) Nonresident tuition and fees and other student fees.

(d) For any report submitted under this section before January
1, 2017, the costs shall, at a minimum, be reported on a systemwide
basis. For any report submitted under this section on or after
January 1, 2017, the costs shall be reported on both a systemwide
and campus-by-campus basis.

(e) A report to be submitted pursuant to this section shall be
submitted in compliance with Section 9795 of the Government
Code.

(f) Pursuant to Section 10231.5 of the Government Code, the
requirement for submitting a report under this section shall be
inoperative on January 1, 2021, pursuant to Section 10231.5 of
the Government Code.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Article 10.5 (commencing with Section 89295) is added
to Chapter 2 of Part 55 of Division 8 of Title 3 of the end insert begin insert Education
Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 10.5. end insert   Reporting of Performance Measures

 

begin insert 89295. end insert   

(a) For purposes of this section, the following terms
are defined as follows:

(1) The “four-year graduation rate” means the percentage of
a cohort that entered the university as freshmen that successfully
graduated within four years.

(2) The “six-year graduation rate” means the percentage of a
cohort that entered the university as freshmen that successfully
graduated within six years.

(3) The “two-year transfer graduation rate” means the
percentage of a cohort that entered the university as junior-level
transfer students from the California Community Colleges that
successfully graduated within two years.

(4) The “three-year transfer graduation rate” means the
percentage of a cohort that entered the university as junior-level
transfer students from the California Community Colleges that
successfully graduated within three years.

(5) “Low-income students” means students who receive a Pell
Grant at any time during their matriculation at the institution.

(b) Commencing with the 2013-14 academic year, the California
State University shall report, by March 1 of each year, on the
following performance measures for the preceding academic year,
to inform budget and policy decisions and promote the effective
and efficient use of available resources:

(1) The number of transfer students enrolled annually from the
California Community Colleges, and the percentage of transfer
students as a proportion of the total undergraduate student
population.

(2) The number of low-income students enrolled annually and
the percentage of low-income students as a proportion of the total
student population.

(3) The systemwide four-year and six-year graduation rates for
each cohort of students and, separately, for low-income students.

(4) The systemwide two-year and three-year transfer graduation
rates for each cohort of students and, separately, for each cohort
of low-income students.

(5) The number of degree completions annually, in total and
for the following categories:

(A) Freshman entrants.

(B) Transfer students.

(C) Graduate students.

(D) Low-income students.

(6) The percentage of first-year undergraduates who have
earned sufficient course credits by the end of their first year of
enrollment to indicate they will complete a degree in four years.

(7) For all students, the total amount of funds received from all
sources identified in subdivision (c) of Section 89290 for the year,
divided by the number of degrees awarded that same year.

(8) For undergraduate students, the total amount of funds
received from all sources identified in subdivision (c) of Section
89290 for the year expended for undergraduate education, divided
by the number of undergraduate degrees awarded that same year.

(9) The average number of course credits accumulated by
students at the time they complete their degrees, disaggregated by
freshman entrants and transfers.

(10) (A) The number of degree completions in science,
technology, engineering, and mathematics (STEM) fields,
disaggregated by undergraduate students, graduate students, and
low-income students.

(B) For purposes of subparagraph (A), “STEM fields” include,
but are not necessarily limited to, all of the following: computer
and information sciences, engineering and engineering
technologies, biological and biomedical sciences, mathematics
and statistics, physical sciences, and science technologies.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 89762 is added to the end insert begin insert Education Code end insert begin insert , to read: end insert

begin insert

begin insert 89762. end insert   

(a) The contributions of the California State University
to the Public Employees’ Retirement Fund, as provided by Section
20822 of the Government Code, shall be based on pensionable
compensation and the rates set forth in the Budget Act, and shall
be paid out of the California State University total appropriation
in the annual Budget Act.

(b) Beginning in the 2013-14 fiscal year and each fiscal year
thereafter, annual adjustments to the budget allocation for
California State University pension contributions shall be based
on the university’s actual 2013-14 fiscal year pensionable payroll,
as identified by the Controller’s office, by funding source and state
member categories, and the incremental change in the rates set
forth in the annual Budget Act.

(c) Budget adjustments under this section shall not be made for
subsequent changes in payroll.

(d) Pension funding for the university shall be identified
annually in the Budget Act.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 92493 is added to the end insert begin insert Education Code end insert begin insert , to read: end insert

begin insert

begin insert 92493. end insert   

(a) The University of California may pledge, along
with its other revenues, its annual General Fund support
appropriation less the amount of that appropriation that is required
to fund general obligation bond payments and the State Public
Works Board rental payments, to secure the payment of any of the
university’s general revenue bonds or commercial paper associated
with the general revenue bond program. To the extent the university
pledges any part of its support appropriation as a source of
revenue securing any obligation, it shall provide that this
commitment of revenue is subject to annual appropriation by the
Legislature. The university may fund debt service for capital
expenditures defined in subdivision (b) from its General Fund
support appropriation pursuant to Sections 92495 and 92495.5.
The state hereby covenants with the holders of the university’s
obligations secured by the pledge of the university permitted by
this section that, so long as any of the obligations referred to in
this subdivision remain outstanding, the state will not impair or
restrict the ability of the university to pledge any support
appropriation or support appropriations that may be enacted for
the university. The university may include this covenant of the state
in the agreements or other documents underlying the university’s
obligations to this effect.

(b) For purposes of this section, “capital expenditures” shall
mean (1) the costs to design, construct, or equip academic facilities
to address seismic and life safety needs, enrollment growth, or
modernization of out-of-date facilities, and renewal or expansion
of infrastructure to serve academic programs, or (2) the debt
service amount associated with refunding, defeasing, or retiring
State Public Works Board lease revenue bonds.

(c) Nothing in this section shall require the Legislature to make
an appropriation from the General Fund in any specific amount
to support the University of California.

(d) The ability to utilize its support appropriation as stated in
this section shall not be used as a justification for future increases
in student tuition, additional employee layoffs, or reductions in
employee compensation at the University of California.

end insert

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 92494 is added to the end insert begin insert Education Code end insert begin insert , to read: end insert

begin insert

begin insert 92494. end insert   

(a) The University of California may fund
pay-as-you-go capital outlay projects from its General Fund
support appropriation pursuant to Sections 92495 and 92495.5.

(b) For purposes of this section, “capital outlay project” shall
mean the costs to design, construct, or equip academic facilities
to address seismic and life safety needs, enrollment growth, or
modernization of out-of-date facilities, and renewal or expansion
of infrastructure to serve academic programs.

end insert

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 92495 is added to the end insert begin insert Education Code end insert begin insert , to read: end insert

begin insert

begin insert 92495. end insert   

(a) Commencing with the 2013-14 fiscal year and for
each fiscal year thereafter, if the University of California plans to
use any of its support appropriation in the annual budget for the
subsequent fiscal year for capital expenditures pursuant to Section
92493, as defined in paragraph (1) of subdivision (b) of that
section, or for capital outlay projects pursuant to Section 92494,
it shall simultaneously submit, on or before September 1 nine
months before the commencement of that fiscal year, a report to
the Joint Legislative Budget Committee and the Department of
Finance. This report shall detail the scope of each capital outlay
project or expenditure and how it will be funded, and it shall
provide the same level of detail as a capital outlay budget change
proposal. The Department of Finance shall review the report and
submit a list of preliminarily approved projects to the Joint
Legislative Budget Committee by February 1. The Department of
Finance shall submit a final list of approved projects to the
University of California no earlier than April 1, three months
before the commencement of the fiscal year of the planned
expenditures. The University of California shall not proceed with
any capital expenditures pursuant to Section 92493, as defined in
paragraph (1) of subdivision (b) of that section, or capital outlay
projects pursuant to Section 92494, prior to receiving approval
from the Department of Finance pursuant to this subdivision.

(b) For the 2013-14 fiscal year only, if the University of
California plans to use any of its support appropriation in the
annual budget for the 2013-14 fiscal year for capital expenditures
pursuant to Section 92493, as defined in paragraph (1) of
subdivision (b) of that section, or for capital outlay projects
pursuant to Section 92494, it shall simultaneously submit, on or
before August 1 of that fiscal year, a report to the Joint Legislative
Budget Committee and the Department of Finance. This report
shall detail the scope of each capital outlay project or expenditure
and how it will be funded, and it shall provide the same level of
detail as a capital outlay budget change proposal. The Department
of Finance shall review the report and submit a list of preliminarily
approved projects to the Joint Legislative Budget Committee by
November 1 of that fiscal year. The Department of Finance shall
submit a final list of approved projects to the University of
California no earlier than December 1 of that fiscal year. The
University of California shall not proceed with any capital
expenditures pursuant to Section 92493, as defined in paragraph
(1) of subdivision (b) of that section, or capital outlay projects
pursuant to Section 92494, prior to receiving approval from the
Department of Finance pursuant to this subdivision.

(c) Notwithstanding subdivision (b), the University of California
may use the authority provided in Section 92493 for the Merced
Classroom and Academic Office Building, as specified in Provision
3 of Item 6440-001-0001 of Section 2.00 of the Budget Act of 2013.

(d) Notwithstanding Section 10231.5 of the Government Code,
commencing with the 2014-15 fiscal year, on or before February
1 of each fiscal year, the University of California shall
simultaneously submit a progress report to the Joint Legislative
Budget Committee and the Department of Finance detailing the
scope, funding, and current status of each capital expenditure
undertaken pursuant to Section 92493, as defined in paragraph
(1) of subdivision (b) of that section, and for each capital outlay
project undertaken pursuant to Section 92494.

end insert

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 92495.5 is added to the end insert begin insert Education Code end insert begin insert , to
read: end insert

begin insert

begin insert 92495.5. end insert   

The university shall manage its general revenue bond
program in a manner so that not more than 15 percent of its
General Fund support appropriation, less the amount of that
appropriation that is required to fund general obligation bond
payments and State Public Works Board rental payments, is used
for the total of all of the following:

(a) Debt service for capital expenditures pursuant to Section
92493.

(b) Pay-as-you-go capital outlay pursuant to Section 92494.

(c) State Public Works Board rental payments.

end insert

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 92496 is added to the end insert begin insert Education Code end insert begin insert , to
read: end insert

begin insert

begin insert 92496. end insert   

If the university is able to reduce annual debt service
costs by refunding, defeasing, or retiring general obligation bonds
or State Public Works Board lease revenue bonds, as described
in Section 92493, the university shall annually contribute an equal
amount to reduce the existing unfunded liability of the University
of California Retirement Plan.

end insert

begin insert

begin insert SEC. 11. end insert   

end insert

begin insert Article 7.5 (commencing with Section 92670) is added
to Chapter 6 of Part 57 of Division 9 of Title 3 of the end insert begin insert Education
Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 7.5. end insert   Expenditures for Undergraduate and Graduate
Instruction and Research Activities

 

begin insert 92670. end insert   

(a) The University of California shall report biennially
to the Legislature and the Department of Finance, on or before
October 1, 2014, and on or before October 1 of each
even-numbered year thereafter, on the total costs of education at
the University of California.

(b) The report shall identify the costs of undergraduate
education, graduate academic education, graduate professional
education, and research activities. All four categories listed in this
subdivision shall be reported in total and disaggregated separately
by health sciences disciplines, disciplines included in paragraph
(10) of subdivision (b) of Section 92675, and all other disciplines.
For purposes of this report, research for which a student earns
credit toward his or her degree program shall be identified as
undergraduate education or graduate education.

(c) The costs shall also be reported by fund source, including
all of the following:

(1) State General Fund.

(2) Systemwide tuition and fees.

(3) Nonresident tuition and fees and other student fees.

(4) University of California General Funds, including interest
on General Fund balances and the portion of indirect cost recovery
and patent royalty income used for core educational purposes.

(d) For any report submitted under this section before January
1, 2017, the costs shall, at a minimum, be reported on a systemwide
basis. For any report submitted under this section on or after
January 1, 2017, the costs shall be reported on both a systemwide
and campus-by-campus basis.

(e) A report to be submitted pursuant to this section shall be
submitted in compliance with Section 9795 of the Government
Code.

(f) Pursuant to Section 10231.5 of the Government Code, the
requirement for submitting a report under this section shall be
inoperative on January 1, 2021, pursuant to Section 10231.5 of
the Government Code.

end insert

begin insert

begin insert SEC. 12. end insert   

end insert

begin insert Article 7.7 (commencing with Section 92675) is added
to Chapter 6 of Part 57 of Division 9 of Title 3 of the end insert begin insert Education
Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 7.7. end insert   Reporting of Performance Measures

 

begin insert 92675. end insert   

(a) For purposes of this section, the following terms
are defined as follows:

(1) The “four-year graduation rate” means the percentage of
a cohort that entered the university as freshmen that successfully
graduated within four years.

(2) The “two-year transfer graduation rate” means the
percentage of a cohort that entered the university as junior-level
transfer students from the California Community Colleges that
successfully graduated within two years.

(3) “Low-income students” means students who receive a Pell
Grant at any time during their matriculation at the institution.

(b) Commencing with the 2013-14 academic year, the University
of California shall report, by March 1 of each year, on the
following performance measures for the preceding academic year,
to inform budget and policy decisions and promote the effective
and efficient use of available resources:

(1) The number of transfer students enrolled annually from the
California Community Colleges, and the percentage of transfer
students as a proportion of the total undergraduate student
population.

(2) The number of low-income students enrolled annually and
the percentage of low-income students as a proportion of the total
student population.

(3) The systemwide four-year graduation rates for each cohort
of students and, separately, for each cohort of low-income students.

(4) The systemwide two-year transfer graduation rates for each
cohort of students and, separately, for each cohort of low-income
students.

(5) The number of degree completions annually, in total and
for the following categories:

(A) Freshman entrants.

(B) Transfer students.

(C) Graduate students.

(D) Low-income students.

(6) The percentage of first-year undergraduates who have
earned sufficient course credits by the end of their first year of
enrollment to indicate they will complete a degree in four years.

(7) For all students, the total amount of funds received from all
sources identified in subdivision (c) of Section 92670 for the year,
divided by the number of degrees awarded that same year.

(8) For undergraduate students, the total amount of funds
received from the sources identified in subdivision (c) of Section
92670 for the year expended for undergraduate education, divided
by the number of undergraduate degrees awarded that same year.

(9) The average number of course credits accumulated by
students at the time they complete their degrees, disaggregated by
freshman entrants and transfers.

(10) (A) The number of degree completions in science,
technology, engineering, and mathematics (STEM) fields,
disaggregated by undergraduate students, graduate students, and
low-income students.

(B) For purposes of subparagraph (A), “STEM fields” include,
but are not necessarily limited to, all of the following: computer
and information sciences, engineering and engineering
technologies, biological and biomedical sciences, mathematics
and statistics, physical sciences, and science technologies.

end insert

begin insert

begin insert SEC. 13. end insert   

end insert

begin insert Section 13313 is added to the end insert begin insert Government Code end insert begin insert , to
read: end insert

begin insert

begin insert 13313. end insert   

(a) Notwithstanding any other law, in order to achieve
effective cash management of state resources, the Director of
Finance may defer payment of General Fund moneys, in a
cumulative amount not to exceed two hundred fifty million dollars
($250,000,000) annually, appropriated to the California State
University in the annual Budget Act.

(b) The payment of the amount deferred shall be in May or June,
as established by the Director of Finance, of the same fiscal year
that the original payment would have been made.

end insert

begin insert

begin insert SEC. 14. end insert   

end insert begin insert

(a) Three hundred seventy-five thousand dollars
($375,000) is hereby appropriated from the 1996 Higher Education
Capital Outlay Bond Fund to the University of California for the
purpose of funding the Merced Campus (1) 99.11.050-Science and
Engineering Building 2--Equipment phase during the 2013-14
fiscal year, with this appropriation to be available for encumbrance
until June 30, 2016, if the requirements of subdivision (b) are met.

end insert begin insert

(b) The funds appropriated under subdivision (a) shall only be
available for expenditure if the Regents of University of California
act, by resolution, to require the payment of prevailing wage rates
by the contractors and subcontractors working on this project,
and all other capital outlay projects undertaken by the University
of California that are funded using nonstate funds or are otherwise
not financed with the funds appropriated for this project, during
the 2013-14 fiscal year.

end insert

begin insert

begin insert SEC. 15. end insert   

end insert begin insert

(a) The University of California shall allocate and
encumber from the appropriation made pursuant to Item
6440-001-0001 of Section 2.00 of the Budget Act of 2013 the
amount necessary to pay in full all amounts that are reasonably
anticipated to become due and payable during the fiscal year for
lease revenue and general obligation bond debt service.

end insert begin insert

(b) Notwithstanding Section 16326 of the Government Code,
the Controller shall transfer funds appropriated pursuant to Item
6440-001-0001 of Section 2.00 of the Budget Act of 2013 in
accordance with schedules to be submitted as follows:

end insert begin insert

(1) The State Public Works Board shall submit a schedule or
schedules for rental, fees, and insurance associated with its lease
revenue bonds issued on behalf of the University of California.
Notwithstanding the payment dates in any related facility lease or
indenture, a schedule may provide for an earlier transfer of funds
to ensure debt requirements are met and base rental payments are
paid in full when due.

end insert begin insert

(2) (A) The Department of Finance shall submit a schedule or
schedules to reimburse the General Fund in an amount equal to
the required general obligation bond debt service costs attributed
to the University of California. Notwithstanding the payment dates
in any related debt service schedule for a bond issuance, a schedule
submitted by the Department of Finance may provide for an earlier
transfer of funds to ensure debt requirements are paid in full when
due.

end insert begin insert

(B) The Department of Finance shall submit a revised schedule
of reimbursements, as needed, to authorize the return of any funds
to Item 6440-001-0001 of Section 2.00 of the Budget Act of 2013
that were previously transferred pursuant to this act and that are
not needed to fully reimburse debt service costs in the 2013-14
fiscal year. Any funds returned pursuant to this subparagraph may
be carried over and expended in the 2014-15 fiscal year.

end insert

begin insert

begin insert SEC. 16. end insert   

end insert begin insert

(a) Of the moneys appropriated in Item
6440-001-0001 of Section 2.00 of the Budget Act of 2013, the sum
of fifteen million dollars ($15,000,000) is allocated to the Regents
of the University of California for the School of Medicine at the
University of California, Riverside.

end insert begin insert

(b) Funds provided pursuant to subdivision (a) shall be available
for planning and startup costs associated with academic programs
to be offered by the School of Medicine at the University of
California, Riverside, including all of the following:

end insert begin insert

(1) Academic planning activities, support of academic program
offerings, and faculty recruitment.

end insert begin insert

(2) The acquisition of instructional materials and equipment.

end insert begin insert

(3) Ongoing operating support for faculty, staff, and other
annual operating expenses for the School of Medicine at the
University of California, Riverside.

end insert begin insert

(c) The additional funds provided by this section for the School
of Medicine at the University of California, Riverside, shall only
be used for the purposes specified in subdivision (b), and shall not
be redirected or otherwise expended, nor shall these funds be used
to supplant other funding of that school.

end insert begin insert

(d) On or before April 1 of each year, the University of
California shall provide progress reports to the relevant policy
and fiscal committees of the Legislature pertaining to funding,
recruitment, hiring, and outcomes for the School of Medicine at
the University of California, Riverside. Specifically, the report
shall include, but not be limited to, information consistent with
the published mission and vision for the School of Medicine at the
University of California, Riverside, in all of the following areas:

end insert begin insert

(1) The number of students who have applied, been admitted,
or been enrolled, broken out by race, ethnicity, and gender.

end insert begin insert

(2) The number of full-time faculty, part-time faculty, and
administration, broken out by race, ethnicity, and gender.

end insert begin insert

(3) Funding and progress of ongoing medical education pipeline
programs, including the UCR/UCLA Thomas Haider Program in
Biomedical Sciences.

end insert begin insert

(4) Operating and capital budgets, including detail by funding
source. The operating budget shall include a breakdown of
research activities, instruction costs, administration, and executive
management.

end insert begin insert

(5) Efforts to meet the health care delivery needs of California
and the inland empire region of the state, including, but not limited
to, the percentage of clinical placements, graduate medical
education slots, and medical school graduates in primary care
specialties who are providing service within California’s medically
underserved areas and populations.

end insert begin insert

(6) A description of faculty research activities, including
information regarding the diversity of doctoral candidates, and
identifying activities that focus on high priority research needs
with respect to addressing California’s medically underserved
areas and populations.

end insert

begin insert

begin insert SEC. 17. end insert   

end insert begin insert

The absence of language in the Budget Act of 2013
specifying that the University of California and the Hastings
College of the Law shall use budgeted funds for retirement costs
is not an indication of legislative support for, or acceptance of,
increased retirement costs being paid for by employees of the
University of California and the Hastings College of the Law.

end insert

begin insert

begin insert SEC. 18. end insert   

end insert begin insert

This act is a bill providing for appropriations related
to the Budget Bill within the meaning of subdivision (e) of Section
12 of Article IV of the California Constitution, has been identified
as related to the budget in the Budget Bill, and shall take effect
immediately.

end insert

begin delete

SECTION 1.  

It is the intent of the Legislature to enact statutory
changes relating to the Budget Act of 2013.

end delete

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CORRECTIONS:

Text--Page 23.

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