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, SB 195 (Liu) Page 1 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. SB 195 (Liu) Page 2 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 SB 195 (Liu) Page 3 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 SB 195 (Liu) Page 4 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.