BILL ANALYSIS �
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SENATE THIRD READING
SB 88 (Budget and Fiscal Review Committee)
As Amended June 13, 2013
Majority vote. Budget Bill Appropriation Takes Effect
Immediately
SENATE VOTE :Vote not relevant
SUMMARY : Contains necessary statutory and technical changes to
implement the Budget Act of 2013 relating to higher education.
Specifically, this bill :
1)Establishes 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)Requires 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)Requires 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
different disciplines.
4)Allows 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
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process is created requiring UC to provide reports to the
Department of Finance and Joint Legislative Budget Committee
on upcoming capital projects.
5)Requires 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 includes a requirement that the
university provide an annual progress report on the School of
Medicine.
6)Creates 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)Provides 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)Allows the Department of Finance to adjust payment schedules
to CSU based on the state's cash flow needs.
9)States 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)Requires that of the state General Fund support provided to
the UC, the university shall pay lease revenue and general
obligation bond debt service.
11)Allocates $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)Contains an appropriation allowing this bill to take effect
immediately upon enactment.
COMMENTS : This is a trailer bill containing necessary statutory
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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
deficit.
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
FN: 0001191