BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1307


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          Date of Hearing:  April 21, 2015


                       ASSEMBLY COMMITTEE ON HIGHER EDUCATION


                                 Jose Medina, Chair


          AB 1307  
          McCarty - As Amended April 14, 2015


          SUBJECT:  Working Families Student Fee Transparency and  
          Accountability Act


          SUMMARY:  Prohibits the California State University (CSU) and  
          the University of California (UC) from increasing fees above  
          2014-15 levels, except as authorized in the annual Budget Act.    
           Specifically, this bill:  


          1)Prohibits the CSU Board of Trustees (Trustees) from charging  
            more than $5,472 in systemwide tuition and fees, except as  
            authorized in the annual Budget Act, to a California resident  
            of the CSU.


          2)Prohibits the UC Board of Regents, as a condition of receipt  
            of state funding in the annual Budget Act from charging more  
            than $12,192 in systemwide tuition and fees, except as  
            authorized in the annual Budget Act, to a California resident  
            of the UC.


          3)Mandates CSU, and UC as a condition of receipt of state funds  
            for student financial assistance, compliance with specific  
            provisions of the Working Family Student Fee Transparency and  








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            Accountability Act (Student Fee Act), as follows: 


             a)   Requires, instead of encourages, as changes in mandatory  
               systemwide fees and financial aid are being considered, the  
               impact of changes to be explained to students;


             b)   Requires, instead of encourages, students to be  
               consulted before increases on mandatory systemwide fees are  
               proposed;


             c)   Requires, instead of encourages, adequate advance notice  
               to be provided to students regarding future mandatory  
               systemwide fees; 


             d)   Requires, instead of encourages, all current and  
               prospective students to be provided timely information  
               concerning student financial aid;


             e)   Requires, rather than encourages, the state's public  
               colleges and universities ensure transparency in the uses  
               of mandatory systemwide fee revenue and the rationale for  
               implementing mandatory systemwide fee increases; and, 


             f)   Requires, rather than urges, CSU and UC to maintain  
               their commitment to institutional financial aid programs by  
               ensuring at least 33% of fee increase revenues are set  
               aside for institutional student aid.


          EXISTING LAW:  Requires, under the Student Fee Act, UC and CSU  
          follow specific notice, consultation, and timeframe requirements  
          when approving student fee increases. (Education Code Section  
          66028 - 66028.6)  








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          FISCAL EFFECT:  Unknown





          COMMENTS:  Student fee policy.  Fees and General Fund (GF)  
          support work interchangeably to fund the core instructional  
          missions of the segments.  The state's portion essentially  
          subsidizes the amount paid by students in the form of fees.   
          Because of this link, fees have increased steeply during  
          difficult budget years (generally also years where a  
          down-economy makes families less able to pay for increases) and  
          then declined when state support could be provided to the  
          segments.  


          Through 1996, fees at California public postsecondary  
          institutions were governed by the Maddy-Dills Act, which  
          required fees to be gradual, moderate and predictable; increases  
          to be limited to 10% a year; and fixed at least ten months prior  
          to the fall term in which they were to become effective.   
          However, when the state faced serious budget challenges the  
          provisions of the Act were set aside in order to provide the CSU  
          Trustees and the UC Regents flexibility in dealing with the lack  
          of GF support.  In 1996, the Act was allowed to sunset.  


          In 2012, AB 970 (Fong, Chapter 620) established the Student Fee  
          Act to require UC and CSU follow specific notice and  
          consultation requirements when approving student fee increases:


          1)UC and CSU are required to follow prescribed public notice and  








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            student consultation procedures before adopting an increase in  
            mandatory systemwide tuition and fees for resident students;


          2)UC and CSU are required to develop a list of factors to  
            consider when recommending a fee increase;


          3)UC and CSU are required to provide the Legislature on annual  
            reports on tuition and fees, financial aid, and total cost of  
            attendance.  


          4)The Legislative Analyst's Office (LAO) is required to report  
            on CSU and UC compliance with the Student Fee Act. 


          Governor's multi-year plan.  Following the passage of  
          Proposition 30 in 2012, the Governor proposed a multi-year  
          funding plan that assumes no tuition fee increases over four  
          years; specifically, the plan called for 5% GF growth for CSU  
          and UC in 2013-14 and 2014-15, and 4% growth in 2015-16 and  
          2016-17.  The Governor has also indicated that UC and CSU should  
          anticipate 4% increases in 2017-18 and 2018-19.  Both CSU and UC  
          have indicated that the Governor's proposed 4% increases do not  
          sufficiently ensure access and quality.

          CSU budget request.  In response to GF support deemed inadequate  
          by CSU, since 2009, CSU indicates it has annually turned away  
          between 10,000 and 30,000 qualified California applicants.  At  
          its November 2014 meeting, the CSU Trustees voted to approve a  
          budget that does not increase student fees, but instead calls  
          for the state to provide an additional $97 million in GF  
          support.  With this additional funding, CSU would increase  
          enrollment by 3% (10,000 full-time students) and focus on  
          student success and completion initiatives.  

          UC budget request.  UC indicates that despite inadequate GF  
          support in recent years, it has accepted all eligible students;  








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          although, not necessarily accepted to the campus or campuses to  
          which they applied.  UC contends that it is currently serving  
          7,000 "unfunded" California students.  On November 20, 2014, the  
          UC Board of Regents voted to increase (1) tuition, (2) student  
          services fees, and (3) professional degree supplemental tuition  
          by 5% in each academic year from 2015-16 through 2019-20.  The  
          resident undergraduate tuition increase would raise tuition and  
          fees from the current $12,192 to $15,564 by 2019-20.  UC  
          indicates that, depending on the level of state funding  
          received, charges may increase by a smaller amount or remain  
          flat over the course of the five-year period.  

          Governor's January budget proposal.  In January of 2015,  
          Governor Brown proposed, consistent with the multi-year plan, a  
          4% increase in GF support for UC and CSU.  The plan specifies  
          that the 4% increase for UC is contingent upon keeping tuition  
          at 2011-12 levels in 2015-16, not increasing nonresident  
          enrollment in 2015-16, and taking action to control costs.  Of  
          note, Assembly and Senate leadership have called for increasing  
          funding to UC and CSU above the Governor's proposed increases.  

          UC response to Administrative and Legislative concerns. On  
          February 18, 2015, UC President Napolitano announced that UC  
          would not implement the proposed tuition increase for the 2015  
          summer quarter.  On March 3, 2015, President Napolitano told the  
          Assembly Budget Subcommittee No. 2 on Education Finance that UC  
          campuses have been instructed to keep enrollment of California  
          students flat, and placing "unfunded students" on waitlists and  
          offering deferred enrollment.  President Napolitano also  
          indicated that UCLA and Berkeley would cap nonresident  
          enrollment next year at this year's current levels.     

          UC noncompliance with the Student Fee Act. On March 25, 2015,  
          the LAO released its annual report regarding UC and CSU  
          compliance with the Student Fee Act.  LAO found that CSU has not  
          increased resident mandatory systemwide charges in the past year  
          and therefore was not required to follow any consultation or  
          notification procedures required by existing law. UC, on the  
          other hand, was deemed by LAO to be not in compliance with most  








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          of the provisions of the law.  According to the LAO, UC reported  
          it is not legally obligated to comply with the law because of  
          its constitutional autonomy.  LAO noted that of the six  
          statutory requirements regarding public notice and student  
          consultation, UC failed to comply with four requirements. 


          Increasing fees, reducing access, controlling costs.  As  
          previously noted, student fee levels are tied to GF support.  In  
          budget years where GF support is not provided, traditionally UC  
          and CSU have responded through (1) increasing student fees, or  
          (2) reducing California resident enrollment (or both).   
          Arguably, controlling and reducing higher education costs is an  
          alternative; however, it is unclear how this alternative would  
          affect education quality.  This bill would prohibit CSU and UC  
          from increasing fees absent approval in the Budget Act.  The  
          Committee may wish to consider, if adequate GF support is not  
          provided and the Legislature does not authorize a fee increase,  
          the effect on CSU and UC access and quality.  





          The author and committee may wish to consider the following  
          amendments:



          66028.7.
          (a) Notwithstanding any other law, the trustees shall not  
           implement an increase   charge more than five thousand four  
          hundred seventy-two dollars ($5,472)  in systemwide tuition and  
          fees  , except as authorized in the annual Budget Act,  to a  
          California resident student of the California State University,  
           if the Legislative Analyst has determined, in the report  
          required pursuant to section 66028.6(b), that the trustees  
          failed to comply with the requirements of this article prior to  
          the approval of the increase.  








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          (b) Notwithstanding Section 67400, as a condition of the receipt  
          of state funding in the annual Budget Act, the regents shall not  
           implement an increase   charge more than twelve thousand one  
          hundred ninety-two dollars ($12,192)  in systemwide tuition and  
          fees  , except as authorized in the annual Budget Act,  to a  
          California resident student of the University of California,  if  
          the Legislative Analyst has determined, in the report required  
          pursuant to section 66028.6(b), that the regents failed to  
          comply with the requirements of this article prior to the  
          approval of the increase.  


           (c)  An increase in systemwide tuition and fees for California  
          resident students adopted pursuant to subsection (a) or (b) may  
          be rescinded by the Legislature in the annual Budget Act.


           Related legislation.  AB 42 (Kim), pending in this committee,  
          finds and declares the intent of the Legislature to increase  
          funding to the UC, CSU, and CCC to ensure that increases in  
          mandatory systemwide fees or tuition are not required during the  
          period when the higher tax rates imposed by the Schools and  
          Local Public Safety Protection Act of 2012 will be in effect;  
          and, prohibits, from the 2015-16 fiscal year to the 2018-19  
          fiscal year, mandatory systemwide fees or tuition charged at  
          CCC, CSU and UC from exceeding the 2014-15 levels.





          REGISTERED SUPPORT / OPPOSITION:




          Support








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          None on File




          Opposition


          California State University




          Analysis Prepared by:Laura Metune / HIGHER ED. / (916) 319-3960