BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON EDUCATION
                              Senator Carol Liu, Chair
                                2015 - 2016  Regular 

          Bill No:              AB 1307           
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          |Author:    |McCarty                                              |
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          |Version:   |July 7, 2015                                Hearing  |
          |           |Date:    July 15, 2015                               |
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          |Urgency:   |No                     |Fiscal:    |Yes              |
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          |Consultant:|Olgalilia Ramirez                                    |
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          Subject:  Working Families Student Fee Transparency and  
          Accountability Act

            SUMMARY
          
          This bill, requires, in lieu of encouraging, the University of  
          California (UC) and the California State University (CSU) to  
          follow specified notification and consultation timeframes for  
          approving and implementing student fee increases, and requires  
          rather than urges the segments to continue to set aside a  
          portion of fee increase revenues for institutional aid. 

            BACKGROUND
          
          Existing law: 

          1)Further provides that statutes related to UC (and most other  
            aspects of the governance and operation of UC) are applicable  
            only to the extent that the Regents of UC make such provisions  
            applicable.  (Education Code  67400)

          2)Confers upon the Trustees of the CSU the powers, duties, and  
            functions with respect to the management, administration, and  
            control of the CSU system. 
            (EC  66066)

          3)Under the Working Families Student Fee Transparency and  
            Accountability Act (Act), UC and CSU follow specific notice,  
            consultation, and timeframe requirements when approving  
            student fee increases.  (EC  66028 - 66028.6)  







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            ANALYSIS
          
          This bill  requires, in lieu of encouraging, the UC and the CSU  
          to follow specified notification and consultation timeframes for  
          approving and implementing student fee increases, and requires  
          rather than urges the segments to continue to set aside a  
          portion of fee increase revenues for institutional aid.  
          Specifically this bill:

       1)Requires, instead of encourages, all of the following:

               a)        As changes in mandatory systemwide fees and  
               financial aid are being considered, the impact of these  
               changes to be explained to students.

               b)        Students be consulted via the appropriate  
               statewide student body associations before increases on  
               mandatory systemwide fees are proposed.

               c)        Adequate advance notice to be provided to  
               students regarding future mandatory systemwide fees.

               d)        All current and prospective students to be  
               provided timely information related to student financial  
               aid.

               e)        The state's public colleges and universities  
               ensure transparency in the uses of mandatory system wide  
               fee revenue and the rationale for implementing mandatory  
               systemwide fee increases. 

       2)Requires, rather than urges, California State University (CSU)  
            and University of California (UC) to maintain their commitment  
            to institutional financial aid programs by ensuring at least  
            33% of fee increase revenues charged to resident students are  
            set aside for institutional student aid.

       3)Specifies that the institutional student aid described above  
            shall be used to assist "resident students," in lieu of  
            "students," thereby excluding non-resident students from  
            receiving those benefits. 

          STAFF COMMENTS








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       1)Need for the bill. Under the Working Families Student Fee  
            Transparency and Accountability Act (Act), UC and CSU must  
            follow specific notice, consultation, and timeframe  
            requirements when approving student fee increases. According  
            to the author in November 2014, the UC Board of Regents passed  
            a 5% per year increase for a 5-year period beginning with the  
            2015-16 academic year. The author notes, with the passage of  
            this fee increase, the UC was non-compliant with several  
            statutory provisions regarding public notice and transparency  
            of proposed fee increases established by current law. 

            This bill seeks to ensure that the UC and CSU adhere to  
            notification and consultation timeframes for increase student  
            fees and attempts to codify existing CSU and UC policy which  
            allocates 33% of student fee revenue for institutional aid.   

       2)Related Legislative Analyst Office (LAO) Report.  In March 2015  
            the LAO found UC to be non-complaint with several provisions  
            under the Act including: 1) most notification and consultation  
            procedures and; 2) developing a tuition and fee policy that  
            includes a list of factors taken into account when considering  
            an increase. UC did comply with the reporting provisions by  
            publishing expenditure information and submitting the required  
            institutional financial aid reports. According to the report,  
            UC believes it is not legally obligated to comply because of  
            its constitutional autonomy. To note, CSU had not increased  
            mandatory systemwide fees; therefore, was not required to  
            follow consultation or notification procedures. The report  
            found CSU also complied with all other provisions. 

       3)Fee History.  The Maddy-Dills Act previously required fees to be:  
            (1) gradual; moderate and predictable; (2) limited fee  
            increases to not more than 10% a year, and (3) fixed at least  
            ten months prior to the fall term in which they were to become  
            effective. The policy also required sufficient financial aid  
            to offset fee increases. However, even with this policy, when  
            the state faced serious budgetary challenges the statute was  
            "in-lieued" in order to provide the institutions some  
            flexibility in dealing with the lack of state General Fund  
            support. The Maddy-Dills Act sunset in 1996 and since then,  
            the state has had no long-term policy regarding the way in  
            which mandatory student fees are determined. 









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            Historically, fees have fluctuated in response to the State's  
            fiscal condition and the stated needs of University of  
            California (UC) and California State University (CSU), as  
            negotiated in the budget deliberations. These conditions have  
            triggered mid-year fee increases for currently enrolled  
            students in the past. 

       4)Related Budget Activity.  SB 97 (Committee on Budget and Fiscal  
            Review, Ch. 11, 2015) among other things, states legislative  
            findings relative to the UC Regents endorsing the framework  
            for long-term funding agreed to by the Governor and the UC  
            President. The agreement freezes tuition in the 2015-16 and  
            2016-17 academic years, and specifies that the UC will  
            implement reforms to reduce the cost structure and improve  
            access, quality, and outcomes. The reforms included in the  
            framework endorsed by the Regents are intended to create  
            capacity for all campuses of the university to serve more  
            resident students, including by using funds and existing  
            resources that can be redirected to higher priorities, such as  
            those currently being used to provide financial aid to  
            nonresident students are also available to enable more  
            residents students to enter the university at all campuses. 
               
            Consistent with these legislative findings, this bill  
            requires, rather than encourages, the 33% set-aside for  
            institutional student aid must be used to assist "resident  
            students," in lieu of "students," thereby excluding  
            non-resident students from receiving those benefits.

       5)Return-to-aid.  For many years, UC and CSU have generally  
            returned 33% of student fee increases to their institutional  
            aid programs. At CSU, the grant program is known as the State  
            University Grant (SUG).  According to CSU, despite losing  
            one-third of state funding during the recent economic downturn  
            the system maintained its commitment to the SUG program and  
            has done so for more than two decades. This bill mandates 33%  
            of resident student fee revenues to be returned to aid.  
            Arguably, requiring these institutions to set aside a portion  
            of fee increases for student aid may limit their ability to  
            address quality and access issues that may arise in the  
            future. Nevertheless, given that the practice of setting aside  
            these dollars is a policy that has been adopted by CSU and UC  
            and given the historical commitment by the respective  
            governing bodies to the aid program, a mandate may be  








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            unnecessary. For this reason, staff recommends the bill be  
            amended to urge, rather than require, the institutions to  
            maintain their commitment to the 33% set aside.

       6)Prior Legislation.  SB 1461 (Negrete-Mcleod, 2012), as amended by  
            this Committee, limited the amount by which the CSU Board of  
            Trustees could increase the mandatory systemwide fees for  
            resident undergraduate students, in a given year, and  
            requested the Regents of the UC adhere to the same limit. SB  
            1461 passed out of this Committee by a vote of 8-0 in April  
            2012, but was subsequently held under submission in the Senate  
            Appropriations Committee. 

            SB 969 (Liu, 2010) placed an upper limit on mandatory  
            systemwide student fees, not to exceed a fixed percentage of  
            the cost of education as defined, and prohibited annual  
            mandatory systemwide fee increases from increasing by more  
            than the implicit price deflator for state and local  
            government for goods and services. This version of SB 969  
            combined elements of SB 969 (Florez) and SB 1199 (Liu). The  
            bill was passed by this committee by a vote of 8-0, but was  
            subsequently held on suspense in the Assembly Appropriations  
            Committee. 

            SB 969 (Florez, 2010) placed an upper limit on mandatory  
            systemwide student fees, not to exceed a fixed percentage of  
            the cost of education, as defined, prohibited student fees  
            from ever increasing beyond the amount a student paid at the  
            time of enrollment, and prohibited annual mandatory systemwide  
            fee increases for each new cohort of undergraduate students at  
            the UC, CSU, and California Community Colleges from exceeding  
            five percent of the preceding academic year. 

            SB 1199 (Liu, 2010) required the governing boards of the UC  
            and CSU to develop student fee increase methodologies  
            consistent with specified direction, and included many of the  
            same concepts found in SB 969. The bill's provisions were  
            combined with those of SB 969 and the hearing was canceled at  
            the request of the author.

            SCA 26 (Denham, 2010) amended the State Constitution and  
            imposed upon the UC a waiting period of 180 days before  
            mandatory student fees could take effect and limited annual  
            fee increases to no more than a cumulative 10% over the  








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            preceding academic year. SCA 26 failed passage in this  
            Committee by a vote of 2-2.

            SUPPORT
          
          American Federation of State, County and Municipal Employees  
          (AFSCME)
          California Faculty Association
           
            OPPOSITION
           
           California State University


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