BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          SB 195 (Liu) - Postsecondary Education: Statewide Goals 
          
          Amended: April 24, 2013         Policy Vote: Education 8-1
          Urgency: No                     Mandate: No
          Hearing Date: May 23, 2013      Consultant: Jacqueline  
          Wong-Hernandez
          
          SUSPENSE FILE. AS PROPOSED TO BE AMENDED.

          
          Bill Summary: SB 195 establishes statewide goals for guiding  
          budget and policy decisions in higher education, requires that  
          the Governor determine an educational administrative body to  
          convene a working group, as specified, to develop and recommend  
          specific metrics for measuring progress toward these goals, and  
          requires the administering body to report its recommendations  
          for statewide metrics to the appropriate policy and fiscal  
          committees of the Legislature, and the Governor, by January 31,  
          2014. 

          Fiscal Impact: The direct fiscal impact of this bill is unknown,  
          because the bill assigns primary responsibility for its  
          requirements to an appropriate administrative body of the  
          Governor's choosing. 
                 Working group: Participation by various entities will  
               likely result in minor workload increases. Without knowing  
               what entity is ultimately responsible for the requirements  
               of the bill, convening the working group and reporting the  
               recommendations, it is impossible to determine direct costs  
               for the lead agency/entity. 
                 Cost pressure: Potentially substantial cost pressure, to  
               the extent the metrics change funding priorities. 
          
          Background: Existing law establishes the Donahoe Higher  
          Education Act, which outlines the laws under which postsecondary  
          educational institutions operate in California. (Education Code  
          Title 3, Division 5, Part 40)

          Within the Donahoe Act, existing law establishes findings and  
          declarations based on the periodic review of the Master Plan for  
          Higher Education by the Legislature. Current law declares the  
          intent of the Legislature to outline in statute, clear, concise,  








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          statewide goals and outcomes for effective implementation of the  
          Master Plan, attuned to the public interest of the people and  
          State of California, and to expect the system as a whole and the  
          higher education segments to be accountable for attaining those  
          goals. Additionally, consistent with the spirit of the original  
          Master Plan and subsequent updates, current law declares the  
          intent of the Legislature that the governing boards be given  
          ample discretion in implementing policies and programs necessary  
          to attain those goals. 
          (Education Code § 66003)

          Proposed Law: SB 195 seeks to establish statewide goals for  
          guiding budget and policy decisions in higher education. More  
          specifically, this bill:

             1)   Outlines the following three goals for guiding budget  
               and policy decisions in higher education: a) Improved  
               student success and outcomes for graduates, as specified;  
               b) Better alignment of degrees and credentials awarded with  
               the state's economic, workforce and civic needs; c)  
               Effective and efficient use of resources in order to  
               increase high-quality postsecondary educational outcomes  
               and maintain affordability.  

             2)   Requires that metrics to measure progress toward these  
               goals be developed with the assistance of a working group  
               to be convened by an appropriate educational administrative  
               body determined by the Governor.

             3)   Outlines the composition of the working group to include  
               postsecondary education segment representatives, the  
               Department of Finance (DOF),1-3 members with expertise in  
               state accountability who are unaffiliated with any of the  
               segments of higher education, a representative of the  
               Legislative Analyst's Office (LAO), and other relevant  
               state agency representatives.

             4)   Requires the working group to develop 6-12 measures  
               derived from publicly available data sources, and that  
               these measures be disaggregated as specified.

             5)   Requires the metrics to be used for the purposes of the  
               annual reporting requirements for institutions that  
               participate in the Cal Grant program.








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             6)   Requires the educational administrative body, in  
               consultation with DOF and the LAO, to submit the  
               recommended metrics developed by the working group to the  
               appropriate legislative committees and the Governor by  
               January 31, 2014.

             7)   Declares the Legislature's intent to: a) Identify,  
               define and formally adopt appropriate metrics to be used  
               for the purpose of monitoring progress toward the state  
               goals; b) Promote progress toward the goals through budget  
               and policy decisions within higher education; and, c) Use  
               the reporting system established  per the bill's provisions  
               to help ensure the effective and efficient use of state  
               resources available to higher education. 

          Related Legislation: SB 721 (Lowenthal) 2012 was substantially  
          similar to this bill, but required the specified workgroup to be  
          convened and led by the LAO. That bill was vetoed by Governor  
          Brown. The veto message, in part, read:

               Questions about who should measure, what to measure and how  
               to measure what is learned in college are way too important  
               to be delegated to the Legislative Analyst.

          Staff Comments: This bill outlines the following three goals for  
          guiding budget and policy decisions in higher education: a)  
          Improved student success, to include, but not be limited to,  
          greater participation by demographic groups that have  
          participated at lower rates, greater completion by all students  
          and improved outcomes for graduates; b) Better alignment of  
          degrees and credentials awarded with the state's workforce and  
          civic needs; and, c) Increased efficiency so desired  
          postsecondary education outcomes can be achieved within a given  
          resource level while maintaining high quality.  

          In order to progress toward those goals, this bill requires that  
          "an appropriate educational administrative body, as determined  
          by the Governor" convene a working group, as specified, to  
          develop metrics for measuring progress toward the goals. The  
          author appears to be attempting to address the Governor's veto  
          message of the substantially similar SB 721 (Lowenthal) 2012. 

          This bill specifically requires the working group to develop  








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          6-12 measures derived from publicly available data sources. This  
          bill further requires the educational administrative body, in  
          consultation with the DOF and the LAO, to submit a report on the  
          recommended metrics to be collected and reported to legislative  
          policy committees, the Joint Legislative Budget Committee, and  
          the Governor by January 31, 2014.

          Without identifying a lead agency or entity, it is unclear what  
          costs might be incurred to convene and staff the working group.  
          Participation in the meetings by representatives of each of the  
          segments, the LAO, and the DOF will require some staff time, but  
          is likely minor and absorbable by existing staff. The process of  
          creating the metrics is unlikely to result in new costs to the  
          state.

          This bill declares the Legislature's intent to identify, define  
          and formally adopt appropriate metrics for measuring success,  
          based upon the working group recommendations, and to "promote  
          progress toward the goals through budget and policy decisions  
          within higher education." The intention of this bill appears to  
          be to use the metrics, in part, to guide funding decisions for  
          higher education. The Legislature could presumably tie funding  
          levels or program funding priorities to performance, based on  
          these metrics. The most substantial fiscal impact is likely to  
          result from the recommended metrics developed by the working  
          group.

          While the bill specifies that it intends to "ensure the  
          effective and efficient use of whatever funding is available to  
          postsecondary education", rather than specifically secure  
          additional funding, the decisions reached by the metrics could  
          result in funding shifts. To the extent that the metrics  
          encourage funding to be directed to certain areas of "success",  
          they will likely create cost pressure to provide additional  
          funding to expand programming and focus on the new priorities.  
          It is possible, however, that other areas of higher education  
          could be reduced to offset the cost of any expansions. To the  
          extent that funding decisions are made based upon the new  
          metrics, this bill will have a fiscal impact on the state.

          Recommended Amendments: If the author intends to give the  
          Governor full discretion to choose the working group leadership,  
          the author may wish to further broaden the language to "the  
          Governor's designee" instead of "educational administrative  








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          body". The author may also wish to consider allowing more than  
          one month's time for the Governor to appoint a lead, the lead to  
          convene the working group, and the working group to develop and  
          recommend specific metrics.  

          AS PROPOSED TO BE AMENDED: Amend per author to specify outcome  
          metrics categories, and to clarify terms used in the bill.