BILL ANALYSIS
SB 969
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Date of Hearing: June 30, 2010
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Marty Block, Chair
SB 969 (Liu) - As Amended: June 28, 2010
SENATE VOTE : 26-7
SUBJECT : Public postsecondary education: student fee policy.
SUMMARY : Establishes various policies regarding mandatory
systemwide undergraduate resident student fees (fees).
Specifically, this bill :
1)Establishes 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)Establishes Legislative intent that the fees charged to
students should not exceed the percentage of average total
cost of education students paid at the University of
California (UC) and the California State University (CSU) in
the first semester of the 2010-2011 academic year. Provides
that this provision shall not be construed to require the UC
Board of Regents (Regents) or the CSU Board of Trustees
(Trustees) to reduce the fee level below the 2010-11 academic
year.
3)Provides that in academic years where the annual budget act
has provided UC and CSU with resources to fund cost of living
adjustments and enrollment growth, the UC Regents and CSU
Trustees shall not increase fees for continuing students by an
amount exceeding the percentage change in the state per capita
personal income.
4)Provides that an increase in fees adopted by UC or CSU after
July 1, 2011, shall not become effective before six months
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after the date of adoption. Provides for exceptions in years
when state appropriations are not authorized by the State
Budget Act by September 30; in these years increases in fees
shall not become effective before 90 days after the date of
adoption.
5)Requires UC Regents and CSU Trustees to adopt a rational and
transparent methodology for adjusting fees, requires the
methodologies to be developed in consultation with student
representatives, requires the methodologies to be adopted in
open public meetings, and provides that annual budgets of UC
and CSU shall be drafted on the basis that fees will change in
accordance with the methodologies and shall specify the
purposes for which any revenues derived from an increase in
fees will be used.
6)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.
7)Requires, beginning with the 2011-2012 academic year, the UC
Regents and CSU Trustees to annually report to the Legislative
Analyst's Office (LAO) estimates of the total cost of
education, categorized specifically by per student
undergraduate and graduate education costs.
8)Requires, beginning with the 2012-2013 academic year, the LAO
to report annually to the Legislature on compliance with the
policies required in this bill, any findings and
recommendations, and an assessment of the information on cost
of education as provided by UC and CSU.
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;
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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.
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 : Unknown. This bill has been substantially
amended from the version approved by the Senate Appropriations
Committee.
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
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demand for a college-educated workforce in order to compete in
the national and international marketplace. The author believes
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
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.
------------------------------ ------------------------------ ------------------------------ -------------------------------
Limiting fee increases : The volatility of the factors that are
used to determine fee amounts make it difficult to plan for
educational costs, and fees tend to move contrary to the average
student's ability to pay. 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.
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. The segments would be prohibited
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from raising fees in years where the per capita personal income
declined. To address concerns that limiting student fee
increases without ensuring adequate funds are provided through
the budget act would constrain resources for the segments, the
author has added a provision to clarify that fee increase
limitations will only be in effect in years where the budget act
provides for cost of living adjustments and enrollment growth
funding.
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. To address these issues, recent amendments to this
bill provide that in years where state appropriations have not
been authorized in the State Budget Act by September 30, fee
increases may not take effect until 90-days after the date of
adoption.
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? Additionally,
are there different costs for graduate and undergraduate
education? To address questions regarding the true "cost of
education" this bill has been amended to require UC and CSU to
report to the LAO on the cost of education categorized by per
student graduate and undergraduate education. The LAO is
required to assess this data and report to the Legislature
annually.
What would be the impact of implementing the Legislative intent
expressed in this bill ? This bill establishes legislative
intent that student fee amounts not rise above the percentage of
educational costs paid by students in the first semester of the
2010-2011 academic year. While this provision is non-binding,
if UC and CSU were prohibited from raising fees above existing
percentages and adequate General Fund support was not provided
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by the State, what would the result be on student access and
educational quality? As demonstrated this year, when faced with
significant reductions in state support, UC and CSU might need
to reduce enrollments, limit course offerings, or make other
service reductions that would limit access to these
institutions, as well as prolong a student's time-to-degree.
Arguments in opposition : UC notes that fee increases are not
adopted solely to combat higher costs, but to effectively fill
in for declines in state funding. UC believes that the intent
language in this bill to freeze the ratio of fees to the annual
cost of education at the 2010-2011 level will "create an
untenable situation for the University in times of fiscal
crisis." UC argues, in regards to fee increase limitations, the
bill fails to provide a base year for determining whether the
State has provided sufficient funding for cost of living
adjustments and enrollment growth. UC believes the appropriate
base year for this determination should be 2007-08, adjusted for
inflation. UC argues that the language suspending the six-month
notification requirement, and allowing for a 90-day
notification, for fee increases makes no allowance for
unanticipated mid-year budget cuts. CSU argues that the 90-day
limitation could, depending on when the budget act is passed,
force fee increases to be delayed a full semester, thus
significantly reducing the potential revenue derived from the
fee increase. CSU notes that, while these amendments move in
the right direction, they fail to address core concerns and
issues.
REGISTERED SUPPORT / OPPOSITION :
Support
None on File
Opposition
California State University
University of California
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960