BILL ANALYSIS �
AB 970
Page 1
ASSEMBLY THIRD READING
AB 970 (Fong)
As Amended June 3, 2011
Majority vote
HIGHER EDUCATION 8-0 APPROPRIATIONS 12-2
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|Ayes:|Block, Achadjian, |Ayes:|Fuentes, Blumenfield, |
| |Brownley, Fong, Galgiani, | |Bradford, Charles |
| |Lara, Miller, Portantino | |Calderon, Campos, Davis, |
| | | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Donnelly, Norby |
| | | | |
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SUMMARY : Establishes requirements and timeframes for the
University of California (UC) and the California State University
(CSU) regarding the approval and implementation of student fee
increases, and requires the segments to report annually on their
use of student fee revenues. Specifically, this bill :
1)Requires the UC Regents and the CSU Trustees, at least 90 days
prior to providing public notice of a proposed mandatory
systemwide fee increase, to consult with the appropriate student
representatives of their respective statewide student
organizations.
2)Requires a public notice of a proposed fee increase to be
included in a noticed public agenda of the regent's and
trustee's, respectively, as defined.
3)Prohibits adoption of a fee increase prior to at least 60 days
following issuance of the notice per 2), and requires the
governing bodies, during this time period, to solicit and receive
public comments, which, along with appropriate responses to each
comment, are to be made available to the public at least 10 days
prior to the meeting where the regents or trustees propose to
adopt the fee increase.
4)Stipulates that a fee increase is not effective until at least
six months following adoption.
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5)Requires the regents and the trustees, by April 2, 2012, and in
consultation with student representatives, to develop, and adopt
in a public meeting, a methodology for adjusting fees that, at a
minimum, considers the impacts and mitigations as described.
6)Requires annual UC and CSU budgets incorporating fee changes to
be in accordance with the above methodology and to specify the
intended uses of the increased fee revenues.
7)Requires at least 33% of UC or CSU fee revenues to be used for
institutional financial aid.
8)Requires the regents and trustees, by February 1, 2012, and
annually thereafter, to provide the Legislature information on a)
the expenditure of revenues derived from student fees; b) uses of
institutional financial aid; and, c) the total cost of education
per graduate and undergraduate student, respectively, including
fixed costs, variable costs, and administrative, instructional,
and student services costs.
9)Requires the Legislative Analyst's Office (LAO) to annually
review and report to the Legislature regarding UC's and CSU's
compliance with all of the above.
10)Requires that mandatory systemwide fees be referred to in UC and
CSU policies, rules, and regulations as "systemwide fees" or
"fees" and not as "tuition."
11)Requires the California Student Aid Commission to report by July
31, 2012, on the interaction of state and federal student
financial aid programs.
FISCAL EFFECT : According to the Assembly Appropriations Committee:
1)CSU indicates that the bill's requirement to annually report on
the expenditures derived from fee revenues is a significant
change in the system's budgeting and expenditure accounting,
because CSU currently "pools" General Fund and fee revenues for
these purposes. CSU estimates one-time costs of about $4 million
to develop a new system and ongoing costs of a similar magnitude.
CSU notes that such an accounting system that forces arbitrary
divisions between activities funded with fees and those funded by
the state would be cumbersome and inefficient. CSU will also
incur one-time costs of around $100,000 to develop the required
methodology by April 2012 for adjusting student fees. Similarly,
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UC estimates one-time costs of $1.1 million and ongoing costs of
$500,000 for these tasks.
2)UC estimates cost exceeding $200,000 to reprint campus
publications and change Web sites and other communications in
order to change references to "tuition" to "fees". These costs
could be minimized if the bill were amended to specify that this
change should be made at the time any publication is updated and
reprinted.
3)Both segments will incur unknown additional administrative costs
to respond to public comments received regarding proposed fee
increases and to make these comments and responses available to
the public prior to adopting a fee increase.
4)Minor absorbable costs to the Student Aid Commission for the
report on financial aid. UC and CSU may incur minor costs to
provide information requested by the commission for the report.
COMMENTS : This bill was referred to the Assembly Higher Education
Committee and the Appropriations Committee on June 1, 2011,
pursuant to Assembly Rule 77.2, due to substantive amendments
adopted on the Assembly Floor.
Need for this bill . According to the author, "Current law
governing California's postsecondary institutions lacks needed
policies that guarantee our state will remain committed to ensuring
affordability and access at public colleges and universities, and
that all financially needy students have the assistance they need
to enroll in institutions of higher education and reach their
postsecondary education objectives." The author notes that the
state does not have a proper accounting of the total costs of
educating students at UC or CSU or the actual uses of student fee
revenues nor does the state require advance public notice to
students or require consultation with students before fees are
increased.
Affordability . On February 15, 2011, the Assembly Higher Education
Committee held an oversight hearing on "Ensuring Affordability at
California's Colleges and Universities," during which several
themes emerged:
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1)General Fund support for higher education has declined since
2007-08, and new fee revenue has offset those reductions. (LAO)
2)While student fees remain lower than most states, the high cost
of living in California raises the overall cost of attendance.
(California Postsecondary Education Commission)
3)Financial aid programs have generally been spared, and about half
of students receive need-based aid to cover full tuition costs.
Further on average, UC and CSU students graduate with modest
student debt. (LAO and The Institute for Student Access and
Success)
Systemwide fees . There are several types of systemwide fees
charged by UC and CSU, and this bill would apply to each of those
fees, including application, undergraduate, graduate, teacher
credential, doctoral, and professional program fees.
Fee history . Through 1996, fees at California public postsecondary
institutions were governed by the Maddy-Dills Act (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 10 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 in the early to mid-1990s, these
provisions were set aside, typically through "notwithstanding"
language in budget trailer bills, in order to provide flexibility
to UC and CSU in dealing shortfalls in 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.
Fees and the budget . 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, 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 UC and
CSU, as illustrated during the recent economic downturn as fees
have increased at UC by 68% and at CSU by 76% since 2007 (see chart
below). Both segments announced at their recent board meetings
that fee increases will be considered if the segments face
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additional significant cuts beyond the recently approved $500
million reduction to each segment's 2011-12 budget.
University Funding and Tuition Since 2007-08
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| Academic Year |UC Budget | UC Fee | CSU | CSU Fee |
| |Reduction | Change | Budget | Change |
| | | |Reduction | |
|--------------------+----------+----------+----------+----------|
|2007-08 | None | 8.7% | None | 10.0% |
|--------------------+----------+----------+----------+----------|
|2008-09 | $201 | 7.4% | $172 | 10.0% |
|--------------------+----------+----------+----------+----------|
|2009-10 | $610 | 9.3% | $610 | 32.1% |
|--------------------+----------+----------+----------+----------|
|2009-10 midyear fee | -- | 15.0% | -- | -- |
|increase | | | | |
|--------------------+----------+----------+----------+----------|
|2010-11 | None | 15.0% | None | 5.0% |
|--------------------+----------+----------+----------+----------|
|2010-11 midyear fee | -- | -- | -- | 5.0% |
|increase | | | | |
|--------------------+----------+----------+----------+----------|
|2011-12 | $500 | 8.1% | $500 |10.0% |
| | | | | |
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Public notice and consultation . The bill's timelines for
consultation, public notification, and delayed implementation of
fee increases would require this process to begin at least 11
months prior to the start of any academic year for which fee
increases are proposed. To the extent actual state General Fund
support provided to UC and/or CSU through the Budget Act is less
than the segments assume in preparing their budget proposals (which
also would include revenues from fee increases adopted pursuant to
this bill), the segments would have to compensate for lower total
funding levels through increased efficiencies, program reductions,
enrollment reductions, and/or other cost saving measures. However,
as was the case when a prior statutory fee policy was in effect
(see Fee history above), subsequent budget-related legislation
could "notwithstand" the requirements of this bill, thus allowing
for a supplemental fee increase to fully or partially address a
funding shortfall. The author has agreed to further define the
student consultation process.
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Return-to-aid . This bill requires allocation of at least 33% of
all mandatory fee revenues to institutional financial aid.
Longstanding practice and policy at UC and CSU, however, has been
to set aside 33% of new fee revenue for this purpose. CSU
indicates that, since 28% of its fee revenue currently is used for
institutional aid, complying with the bill would require a shift of
$92 million from other parts of its budget to financial aid. The
impact at UC would be about $95 million. The author indicates that
his intent is to mirror current practice, however, and has
committed to provide such clarification in subsequent amendments.
This provision applies to undergraduate, graduate, and professional
programs, where a one-size-fits-all approach may not be appropriate
or in the state's best interests.
Terminology: fees v. tuition . This bill would prohibit UC and CSU
from changing the terminology of systemwide "fees" to "tuition."
California has a long-held policy that its public higher education
institutions be tuition-free. However, various "fees" have been
adopted over time, which have become increasingly significant. The
segments believe these fees now resemble what would otherwise be
labeled "tuition" (i.e., student charges for teaching expenses),
and in November 2010, the UC Regents and the CSU Trustees voted to
change their respective terminologies from systemwide "fees" to
"tuition."
Analysis Prepared by : Sandra Fried / HIGHER ED. / (916) 319-3960
FN: 0001253