BILL ANALYSIS
SB 969
Page 1
Date of Hearing: June 22, 2010
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Marty Block, Chair
SB 969 (Liu) - As Amended: June 1, 2010
SUBJECT : Public postsecondary education: student fee policy.
SUMMARY : Establishes various state policies regarding mandatory
systemwide resident student fees (fees) and financial aid at
California's public universities. Specifically, this bill :
1)Establishes various principles regarding fee policy, including
that the state shall bear the preponderance of responsibility
for funding postsecondary education; that fee increases should
be gradual, moderate, and predictable; that changes in fees
should take into consideration the total cost of education and
that student financial aid policy should mitigate negative
impacts on financially needy students; that adequate advance
notice of fee changes and timely information regarding
financial aid should be provided to students; and that
revenues derived from fees should remain within the respective
university system's budget.
2)Prohibits the University of California (UC) from charging fees
of more than 40% of the average total cost of education for
that academic year.
3)Prohibits the California State University (CSU) from charging
fees of more than 30% of the average total cost of education
for that academic year.
4)Prohibits UC Board of Regents (Regents) and CSU Board of
Trustees (Trustees) from increasing fees for continuing
students by an amount exceeding the percentage change in the
state per capita personal income and provides that the
increased fee amount shall not exceed the aforementioned
student fee limits.
5)Provides that an increase in fees adopted by UC or CSU after
July 1, 2011, shall not become effective before six months
after the date of adoption.
6)Requires UC Regents and CSU Trustees to adopt a rational and
transparent methodology for adjusting fees that is consistent
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with the aforementioned fee principles, requires the
methodologies to be developed in consultation with appropriate
student representatives, requires the UC Regents and the CSU
Trustees to formally adopt the methodologies in open public
meetings, and provides that annual budgets of the segments
shall be drafted on the basis that fees will change in
accordance with the methodologies.
7)Requires UC and CSU to employ appropriate procedures to notify
students of fees to be assessed in the upcoming academic year
and to simultaneously provide students with information
concerning the availability of and procedures for obtaining
financial aid.
8)Requires the California Postsecondary Education Commission
(CPEC) to review and report annually, by March 1, to the
Director of Finance and the Legislature on compliance with the
policies required in this bill and as well as any findings,
conclusions, and recommendations.
9)Defines the various terms used in this bill, including:
a) "Average total cost of education" means the amount
calculated by dividing the total cost of education by the
total number of full-time equivalent students enrolled at
that segment;
b) "Total cost of education" means the sum of
appropriations and projected revenues from the General
Fund, higher education fees and income, and the California
State Lottery Education Fund;
c) "Mandatory systemwide fees" means the fees that all
students enrolled in UC or CSU are required to pay in order
to enroll in courses for the academic term pursuant to any
law or any policy adopted by the governing boards of the
respective segments; and
d) "State per capita personal income" means calendar fourth
quarter California personal income for the prior fiscal
year, as estimated by the Bureau of Economic Analysis of
the United States Department of Commerce, divided by the
California civilian population, as estimated by the
Department of Finance.
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10)Establishes that the provisions of this bill only apply to UC
to the extent that the UC Regents adopt a resolution making
these provisions applicable and requests that the UC Regents
adopt policies consistent with those outlined in this bill.
11)Makes the provisions of this bill operative on July 1, 2011.
EXISTING LAW: Provides that statutes related to UC are
applicable only to the extent that the UC Regents make such
provisions applicable. Confers upon the CSU Trustees the
powers, duties, and functions with respect to the management,
administration, and control of the CSU system. Establishes a
policy governing student fees at the California Community
Colleges (CCC) and establishes, effective fall of the 2009-10
academic year, a $26 per unit per semester fee. Establishes the
Cal Grant Programs to provide financial aid for fee payment in
California colleges and universities to the extent that students
are financially and academically eligible.
FISCAL EFFECT : According to the Senate Appropriations
Committee, estimates of the future costs of this bill cannot be
established with complete certainty. However, it is likely that
the bill would have a major impact on the state's General Fund
resources.
COMMENTS : Purpose of this bill : According to the author, faced
with a state budget deficit and cuts in state support for higher
education, CSU and UC students are being subjected to
significant, and for many, unaffordable increases in fees.
According to the author, rising costs have been particularly
hard on lower- and middle-income families. This diminished
capacity for students and their families to afford a college
education occurs at the same time the state faces an increasing
demand for a college-educated workforce in order to compete in
the national and international marketplace. The author believes
that tying student fees to the overall cost of educating a
student will provide predictability for families, the
universities, and the state. Additionally, the author asserts
that creating a process for establishing and adjusting fees will
provide a measure of transparency and accountability for
university operations.
Background : Through 1996, fees at California public
postsecondary institutions were governed by the Maddy-Dills Act,
which was enacted by the Legislature in 1985 to provide for a
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statewide fee policy. The Act 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. The policy also required
sufficient financial aid to offset fee increases. Even with
this policy, when the state faced serious budgetary challenges
the provisions of the Act were set aside in order to provide the
institutions some flexibility in dealing with the lack of state
General Fund support. In 1996, the Act was allowed to sunset,
and since that time, the state has had no statutory long-term
policy to set fees.
The state sets UC and CSU fees each year through the Budget Act
with complementary actions on the part of the UC Regents and the
CSU Trustees to adopt these fee policies. There is an implicit
policy whereby students and the State are expected to share
educational costs, but the relative proportions are dependent on
the State's fiscal situation. As a result, as shown in the
tables below, fees have increased steeply during difficult
budget years and then gradually declined when the state's fiscal
situation improved and more General Fund support could be
provided to the public higher education segments.
------------------------------ ------------------------------ ------------------------------ -------------------------------
Issues to consider : The volatility of the factors that are used
to determine fee amounts make it difficult to plan for
educational costs and tend to move contrary to the average
student's ability to pay. Thus, in years where families see
their incomes rise, fees often go down, and in years where
families are faced with stagnant or decreased income, fees go
up. The establishment of a moderate and predictable fee policy
would assist families in planning for college. However, the
committee should consider other potential implications of the
fee policy outlined in this bill.
1)Capping student fees : This bill establishes legislative
intent regarding the partnership between students, families,
and the State in funding higher education. Further, this bill
establishes limits on student fee amounts, limiting UC fees to
40% of the cost of education and CSU fees to 30% of the cost
of education. However, the bill is silent on any minimum
level of State support for the operational costs of the
segments. If UC and CSU are prohibited from raising fees, but
adequate General Fund support is not provided by the State,
what will the result be on student access and educational
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quality? As demonstrated this year, when faced with
significant reductions in General Fund support, UC and CSU
might need to reduce enrollments, course offerings, or make
other service reductions that would limit access to these
institutions, as well as prolong a student's time-to-degree.
As shown in the tables below, in order to fall below fee
limits prescribed by this bill fees would need to be reduced
(resulting in an overall reduction in segment funding),
General Fund support would need to be increased (by
potentially increased General Fund revenues or reducing
funding to other State supported programs), or some
combination of the two would need to occur.
University of California California
State University
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*General Fund, student fee revenue, and federal stimulus funding
**Governor's Proposed Budget
2)Limiting fee increases : This bill would allow UC and CSU to
increase fees for continuing students but by not more than the
change in the state per capita personal income and not above
the overall fee limits. The segments would be prohibited from
raising fees in years where the per capita personal income
declined. Between 2007 and 2008, according to data from the
Bureau of Economic Analysis, California's per capita personal
income grew by just over 1%, yet fees increase from 2006-07 to
2007-08 by 8.1% at UC and 10% at CSU. Between 2008 and 2009,
California's per capita personal income declined by 5.7% at
the same time that fees increased at both CSU and UC.
Limiting student fee increases, no matter how
well-intentioned, will constrain an already depleting resource
base for our higher education segments.
3)Notice to students of fee increases : This bill provides that
fee increases adopted by UC or CSU may not take effect until
six months after the date of adoption. However, as noted
previously in this analysis, fee increases are directly tied
to outcomes of budget negotiations. In years where the annual
Budget Act is late, will it be possible for the UC and CSU to
honor the six-month waiting period before implementing fee
increases? According to CSU, a six-month delay in fee
increases would have cost the system $177 million in revenue
during the 2009-10 fiscal year.
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4)Cost of education : This bill defines the "cost of education"
as the sum of appropriations and projected revenues from the
General Fund, fee revenue, and the Lottery Fund. Is the
amount that the State has determined through budget
deliberations that it can afford to spend on higher education
an adequate representation of the actual "cost" of education?
5)The role of financial aid : The Cal Grant Entitlement Programs
provide grant assistance for fee payment in UC, CSU and
private institutions in California, to the extent that
students are financially and academically eligible for such
support. In addition, the federal government provides aid for
students through Pell Grants and various loan programs. CSU
and UC campuses also directly administer some financial aid
programs, including specialized grants, loans and work study
in order to mitigate the impact of higher fees and other costs
on undergraduate students with financial need. This bill would
establish limits on student fees without taking into account
available student aid or examining the student's ability to
pay. It is also unclear what result limiting funding to UC
and CSU might have on their ability to continue to provide
institutional aid programs, which are funded by returning a
percentage of fee revenue to these programs.
REGISTERED SUPPORT / OPPOSITION :
Support
None on File
Opposition
California Federation of Teachers
California State University, Office of the Chancellor
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960