BILL ANALYSIS �
SB 88
Page 1
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 process is created
requiring UC to provide reports to the Department of Finance and
SB 88
Page 2
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 and
technical changes regarding higher education to implement the Budget
Act of 2013. By enacting the Middle Class Scholarship, this bill
SB 88
Page 3
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
*This bill is pending in the Assembly Budget Committee.
FN: 0001191