BILL ANALYSIS Ó SB 81 Page 1 (Without Reference to File) SENATE THIRD READING SB 81 (Committee on Budget and Fiscal Review) As Amended June 16, 2015 Majority vote. Budget Bill Appropriation Takes Effect Immediately SENATE VOTE: Vote not relevant SUMMARY: Contains necessary statutory and technical changes to implement the Budget Act of 2015 relating to higher education. This bill makes the following statutory changes to implement the budget: 1)Makes changes to California State University's capital outlay program to better align its reporting to the Department of Finance on proposed capital projects with the timing of Board of Trustees' decisions. 2)Responds to new federal regulations by authorizing private colleges and universities to operate in the state, and sets up a complaint process for students through the Board of Private Postsecondary Education. SB 81 Page 2 3)States that if the Commission on State Mandates determines that acts in this bill are costs mandated by the state, reimbursement would occur through the mandates process. 4)Provides $48 million one-time Proposition 98 (1988) General Fund for deferred maintenance, instructional equipment and drought resistance projects at community colleges. The funding will be distributed on a per-student basis. 5)Shifts $23 million in 2014-15 funding from the Innovation in Higher Education Awards program from the General Fund to Proposition 98 General Fund, to reflect the amount of awards distributed to community colleges. 6)Allows the University of California (UC) to use project savings from the UC Merced Classroom and Academic Office Building project to cover potential deficiencies in the construction phase of the same project. 7)Amends the Middle Class Scholarship program to exclude students with family assets over $150,000, sets a four- or five-year time limit for the program similar to limits imposed in the Cal Grant program, and allows income and asset limits to increase with the Consumer Price Index. Also reduces statutory appropriations for the program in the 2015-16, 2016-17, and 2018-19 years and states legislative intent that those savings be redirected to other higher education programs. 8)Expands the UC's capital outlay program by allowing it to use its General Fund appropriation to make availability payments on capital expenditures. Also requires the university to use this funding structure for the UC Merced 2020 project as long as work traditionally performed by UC employees continues to be performed by UC employees. 9)Creates the Basic Skills Partnership Pilot Program, which will provide five community college districts with $2-million grants to develop partnerships among schools districts, SB 81 Page 3 community colleges and California State University campuses to develop improved strategies to provide remedial education for underprepared college students. 10)Authorizes the Superintendent of Public Instruction (SPI), for purposes of participation in federal Higher Education Act of 1965 Title IV, which authorizes federal student financial assistance programs, to: a) certify by name, a regional occupational center and program, or a county office of education or an adult education program to legally authorize the center, program or county office to provide an educational program beyond secondary education, including an education program that leads to a degree or certificate; b) adopt regulations that authorize a complaint process under the Uniform Complaint Procedures (UCPs) outlined in specified regulations; and c) decertify any program no longer in compliance with specified requirements consistent federal regulations, among other provisions. 11)Requires the California Community Colleges or California State University to exempt students from nonresident tuition starting on July 1, 2015, if they the meet all of the following requirements: a) student resides in California; b) student meets the definition of "covered individual," as defined under United States Code Title 38, federal statute; c) student is eligible for education benefits under either the federal Montgomery GI Bill or Post 9/11 GI Bill program, and are continuously enrolled at the campus they attend. 12)Eliminates a reduction in the maximum amount of the Cal Grant A and B awards for students attending private, non-profit colleges or accredited for-profit colleges for two years. Students will receive $9,084 annually for tuition expenses for 2015-16 and 2016-17. In 2017-18 and thereafter, the award will be reduced to $8,056 annually. 13)Requires funds appropriated to the board of governors for the Foster Care Education Program to be used for foster parent and relative/kinship care provider education as specified by the SB 81 Page 4 chancellor, in consultation with an advisory committee. Specifies that each college receiving funds for this program shall have a plan for foster parent and relative/kinship care provider education that includes provisions of training, and comply with all reporting requirements, guidelines and other conditions specified by the chancellor. 14)Codifies various reporting requirements for the Student Success and Basic Skills Students program, the Student Financial Aid Administration program, technical assistance provided to community college districts pursuant the Student Success and Support Program, and the Telecommunications and Technology program. Requires the Chancellor to annually submit reports for the prior fiscal year to the Department of Finance and the Legislature by December 31. 15)Authorizes the chancellor's office to adjust the general apportionment formula to recognize funds appropriated to address increased operating costs and to improve instruction. Further, this section authorizes the Chancellor's Office to make conforming adjustments to the community college budgetary standards and criteria, and requires the chancellor to notify the Department of Finance and the Legislature of the specific adjustments made. 16)Provides the Department of Finance the authority to modify and update Proposition 98 General Fund appropriations to California Community Colleges based on updated revenue estimates for redevelopment agencies and Education Protection Account (Proposition 30 of 2012). Proposition 98 General Funds would be used to offset any difference between a) estimated revenues for community colleges from redevelopment agencies and the Education Protection Account (Proposition 30) and b) the amounts distributed to colleges from these sources by June 30. This change will allow districts to have more certainty when preparing their fiscal plans. 17)Extends the sunset date for the Career Technical Education Pathways Program from June 30, 2015, to July 1, 2016, and SB 81 Page 5 appropriates $48 million one-time Proposition 98 funds for the program. 18)Increases the number of competitive Cal Grants by 3,250 awards for a total of 25,750 awards. Eligibility for Competitive Cal Grant awards is geared toward nontraditional students who did not go to college right after high school, do not depend on their family for financial support or are returning to college for career training. 19)Provides $6 million to the Chancellor's Office to implement Baccalaureate Pilot Program established pursuant to SB 850 (Block), Chapter 747, Statutes of 2014. These funds may be used to support professional development activities. 20)Provides $1 million from the General Fund to establish and implement a new freshman eligibility study pursuant to legislation enacted in 2015-16 to determine if admission requirements at the University of California and California State University are consistent with the state's 1960 Master Plan for Higher Education. 21)Requires the Community College Chancellor's Office to report to the California Apprenticeship Council within 30 days of each apportionment period information regarding the hourly rate paid to local educational agencies and community colleges, and the number of instruction hours allocated to and reported by each local educational agency and community college. 22)Requires the Community College Chancellor's Office to notify local education agencies and community colleges of upcoming allocation amounts within 30 days of the enactment of the Budget Act. 23)Allows the Community College Chancellor's Office to work with the Division of Apprenticeship Standards to develop and implement innovative apprenticeship programs in high-growth industries. SB 81 Page 6 24)Creates the Basic Skills and Student Outcomes Transformation Program, which will provide $60 million Proposition 98 General Fund to assist community college districts in improving the delivery of basic skills instruction. 25)Requires the Legislative Analyst's Office to study and report on whether there is a long-term need for a new California State University or UC campus, and if there is a need, where campuses would be needed. 26)Amends SB 174 (De León), Chapter 363, Statutes of 2014, and SB 798 (De León), Chapter 367, Statutes of 2014, which allows taxpayers, upon receipt of the California Educational Facilities Authority's certification, to receive an income or franchise tax credit for a specified percentage of cash contributions made to the College Access Tax Credit Fund (Fund) for the purposes of increasing the Cal Grant B access award. Amendments add a new College Access Tax Credit for one year, tax year 2017 under the Insurance Gross Premiums Tax and Corporation Tax, adds the College Access Tax Credit to the list of tax credits that can reduce the Tentative Minimum Tax under the Alternative Minimum Tax calculations for Personal Income and Corporation Tax, continuously appropriates the Fund to the California Student Aid Commission to award supplemental Cal Grants, and other technical changes. Analysis Prepared by: Mark Martin / BUDGET / (916) 319-2099 FN: 0000971 SB 81 Page 7