BILL ANALYSIS Ó AB 1307 Page 1 Date of Hearing: May 6, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 1307 (McCarty) - As Amended April 23, 2015 ----------------------------------------------------------------- |Policy |Higher Education |Vote:|10 - 3 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill: 1)Prohibits the California State University (CSU) Trustees and AB 1307 Page 2 the University of California (UC) Regents from implementing mandatory tuition increases to California resident students if the Legislative Analyst determines that the Trustees or the Regents, respectively, failed to comply with the notice and consultation requirements of the Working Families Student Fee and Accountability Act. 2)Authorizes the rescinding in the annual Budget Act of a tuition increase to California resident students adopted by the Trustees or the Regents. 3)Requires UC, as a condition of receiving state funds, to comply with the Act. FISCAL EFFECT: Failure to comply with the Student Fee Act or rescission by the Legislature of an enacted UC or CSU tuition increase will create some combination of significant General Fund cost pressure, to backfill the system's lost tuition revenue with state funds, and requiring UC or CSU to raise other revenues, such as through increases in nonresident fees and/or enrollment, and/or to reduce operating costs, such as through reducing resident enrollment or other cost elements. COMMENTS: 1)Background. Student fees and state General Fund 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 risen steeply during difficult budget years-generally also years where a down-economy makes it more AB 1307 Page 3 challenging for some students and families that do not receive Cal Grants and thus have to pay for the increases-and then declined when state support could be provided to the segments. 2)Student Fee Act. AB 970 (Fong)/Chapter 620, Statutes of 2012, established the Student Fee Act to require UC and CSU follow certain requirements when approving student fee increases for resident students, specifically: a) Follow prescribed public notice and student consultation procedures before adopting an increase; b) Develop a list of factors to consider when recommending a fee increase; c) Provide the Legislature annual reports on tuition and fees, financial aid, and total cost of attendance. d) The Legislative Analyst's Office (LAO) is required to report on CSU and UC compliance with the Act. On March 25, 2015, the LAO released its annual report regarding UC and CSU compliance with the 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 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. 3)Purpose. This bill requires compliance with the Student Fee AB 1307 Page 4 Act as a condition to CSU or UC increasing resident tuition, and provides for legislative rescission of a tuition increase through the Budget Act. Given UC's claim of exemption from the Act, the bill conditions their receipt of state funds on compliance with the Act. Analysis Prepared by:Chuck Nicol / APPR. / (916) 319-2081