BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2600


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          Date of Hearing:  April 12, 2016


                       ASSEMBLY COMMITTEE ON HIGHER EDUCATION


                                 Jose Medina, Chair


          AB 2600  
          (Lackey) - As Amended March 16, 2016


          SUBJECT:  University of California:  California Institute for  
          Aerospace


          SUMMARY:  Requests the University of California (UC) Regents  
          establish the California Institute for Aerospace.  Specifically,  
          this bill:  


          1)Finds and declares all of the following:


             a)   California's aerospace industry is a world leader and a  
               powerful, reliable source of employment, innovation, and  
               export income, directly employing several hundred thousand  
               California workers.


             b)   The enactment of a state aerospace tax credit in 2014  
               has positioned California to receive thousands of new jobs  
               researching, designing, building, and testing the Long  
               Range Strike Bomber following the awarding of the contract  
               by the United States Air Force in 2015.


             c)   In order to maximize the state's potential for creating  








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               new research, design, and manufacturing jobs as a result of  
               this contract, NASA's recently announced New Aviation  
               Horizons initiative for aeronautics research and  
               development, and the numerous aerospace-related companies  
               already operating in the state, the creation of the  
               California Institute for Aerospace by the University of  
               California would greatly amplify the state's role in the  
               industry and improve public-private partnerships for  
               innovative research.


             d)   The model provided by the Collaborative Center for  
               Aerospace Sciences, a joint research venture of the United  
               States Air Force Research Laboratory and the University of  
               California, Los Angeles, is an example of the partnerships  
               the California Institute for Aerospace could form and  
               expand.


             e)   Throughout the history of the UC, many industries have  
               grown in partnership utilizing innovative research  
               conducted by the university.


          2)Requests the UC Regents establish the California Institute for  
            Aerospace in order to achieve all of the following goals:


             a)   Grow California's economy and the aerospace industry by  
               creating new opportunities for jobs in aerospace research  
               and design.


             b)   Utilize public-private partnerships to perform  
               innovative research in aerospace technology.


             c)   Strengthen California's position as a global leader in  
               the aerospace industry by increasing the amount of  








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               research, development, and design taking place in the  
               state.


             d)   Maximize California's role in designing and building the  
               Long Range Strike Bomber.


             e)   Develop California's next generation of engineers and  
               technicians through expanded career technical education  
               opportunities within the aerospace industry.


             f)   Act as an incubator for aerospace-focused small  
               businesses and technology companies.


          (b) Requests the UC Regents locate the California Institute for  
          Aerospace at a satellite campus within 20 miles of Edwards Air  
          Force Base or United States Air Force Plant 42 so that it will  
          be in close proximity to a large part of California's current  
          aerospace research and development.


          (c) Provides that this bill shall only be implemented to the  
          extent that the UC Regents determine that adequate funding for  
          its purposes has been provided from federal, local, or private  
          sector sources, has been appropriated in the annual Budget Act  
          or in another statute, or has been provided from a combination  
          of these sources.


          EXISTING LAW:  Establishes UC as a public trust and confers the  
          full powers of the UC upon the UC Regents.  The Constitution  
          establishes that the UC is subject to legislative control only  
          to the degree necessary to ensure the security of its funds and  
          compliance with the terms of its endowments.  Judicial decisions  
          have held that there are three additional areas in which there  
          may be limited legislative intrusion into university operations:  








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          authority over the appropriation of state moneys; exercise of  
          the general police power to provide for the public health,  
          safety and welfare; and, legislation on matters of general  
          statewide concern not involving internal university affairs.   
          (Constitution of California, Article IX, Section 9)

          FISCAL EFFECT:  Unknown.

          COMMENTS:  Background.  In 2014, the Legislature debated a  
          series of bills relative to the aerospace industry, a brief  
          history of the industry was included in those bill analyses:  

            The aerospace industry began in California with a few  
            aircraft builders around World War I, and then vastly  
            expanded in the mobilization for World War II.  The industry  
            steadily grew during the Cold War encompassing a wide range  
            of activities, including military and civilian aircraft,  
            reconnaissance and communications satellites, strategic  
            missiles, and space exploration.  By the 1980s, about 40% of  
            the aerospace business resided in southern California, and  
            the industry employed close to a half-million people.  One  
            of the region's strongest selling points for aerospace was  
            its environment: the clear blue skies and ample open spaces  
            were ideal for testing new aircraft.  California also was  
            home to a variety of related industries, particularly  
            petroleum, as well as top-notch research universities and a  
            large labor pool. 

            Defense spending peaked at $557 billion in 1985 (in constant  
            fiscal 2009 dollars) and then began a downward trend.  The  
            collapse of the Soviet Union and the end the Cold War led to  
            more than 50 major defense companies consolidating into only  
            six.  According to the Employment Development Department's  
            Labor Market Information Division, employment in the  
            Aerospace Production and Manufacturing sector declined from  
            139,300 in 1993 to 70,800 in 2013.  Most of the decline  
            occurred before 2004.  However, further job decline is  
            likely because defense spending is expected to fall due to  
            the implementation of federal budget cuts.








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          Purpose of this bill.  According to the author, "California's  
          aerospace companies in 2012 contributed $62 billion in tax  
          revenues, equivalent to more than a third of the state budget.  
          Employing a highly skilled and specialized workforce of more  
          than half a million people in commercial, military and civil  
          capacities, the aerospace industry's statewide economic impact  
          in 2012 exceeded $100 billion, with average annual aerospace  
          industry wages among the nation's highest."  The author argues  
          "California institutes have been tremendous resources for  
          research in various industries. They have successfully  
          addressed critical issues facing the globe in the fields of  
          biology, physics, chemistry, economics, and medicine."   
          According to the author, "with a small investment, such  
          institutes provide a substantial economic impact on their  
          surrounding areas and the entire state by accelerating  
          research and product development. This institute would  
          strengthen California's position as a global leader in the  
          aerospace industry, increase public-private partnerships and  
          fully maximize our role in designing and building the Long  
          Range Strike Bomber."

          Issues to consider.  The committee may wish to consider where  
          the creation of a UC Institute for Aerospace falls within  
          Legislative priorities.  Additionally, the committee may wish to  
          consider whether this bill necessary in light of AB 2664  
          (Irwin), which provides funding to UC to expand the  
          infrastructure necessary to increase innovation and  
          entrepreneurship for the purpose of creating economic  
          development for California.  AB 2664 is supported by UC and  
          committee staff understands that it represents their priority  
          for innovation and economic development activities.  Could  
          Legislative support for the creation of a UC Aerospace  
          Institute, as outlined in this bill, divert UC from its existing  
          focus?  

          REGISTERED SUPPORT / OPPOSITION:










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          Support


          Antelope Valley Board of Trade




          Opposition


          None on File




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