BILL ANALYSIS �
SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW
Mark Leno, Chair
Bill No: AB 1502
Author: Committee on Budget
As Amended: June 25, 2012
Consultant: Kris Kuzmich
Fiscal: Yes
Hearing Date: June 26, 2012
Subject: Budget Act of 2012: (1) UC and CSU Systemwide
Tuition and Fee Levels and (2) Contributions to the
University of California Retirement Plan.
Summary: This bill would: (1) contingent on certain
conditions maintain UC and CSU mandatory systemwide tuition
and fees at 2011-12 levels in 2012-13; and (2) provide
additional funding in 2012-13 to address a portion of the
UC's and Hastings' employer pension contribution costs for
the University of California Retirement Plan (UCRP).
Background: The governing boards of UC and CSU have formal
authority to set student tuition and fees for their
respective systems. Each university system collects
tuition and fees from its students. These revenues help to
support the universities' general support costs. The other
main source of funding for postsecondary education costs is
the state General Fund. For example, mandatory systemwide
undergraduate tuition and fee levels for resident
undergraduates is $12,192 at UC and $5,472 at CSU. The
CSU Board of Trustees acted in late 2011 to adopt a 9.1
percent tuition and fee increase effective fall 2012. The
University of California Board of Regents has not increased
tuition and fee levels for the 2012-13 academic year.
UC and Hastings employees are members of the University of
California Retirement Plan (UCRP). This plan is separate
from CalPERS and under the control of UC; UC not only
controls its pension costs but also sets benefits levels
for its employees. Prior to 1990, the state adjusted UC's
GF appropriation to reflect increases and decreases in the
employer's share of retirement contributions for
state-funded UC employees. Starting in 1990, UC halted
both employer and employee contributions because the plan
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had become super-funded. This funding holiday lasted
nearly 20 years until the plan's assets had declined
considerably and contributions became necessary. In April
2010, both UC and its employees resumed contributions.
Through 2011-12, the state has not provided UC with any
funding specifically for that purpose. UC projects that
annual total state costs would peak at about $450 million
GF. The Budget Act of 2012 includes an augmentation of
$52 million, with $51.5 million and $500,000 of that total
for UC and Hastings, respectively, for employer
contributions to UCRP for state GF and tuition-funded
employees. This was the funding level proposed by the
Governor at the May Revision.
Proposed Law: This bill includes the following provisions:
1. For 2013-14, appropriates $125 million each to UC
and CSU contingent on the following conditions: (a)
the Schools and Local Public Safety Protection Act of
2012 is approved by the voters and (b) if UC and CSU
maintain their respective 2011-12 mandatory systemwide
tuition and fee levels in the 2012-13 academic year.
2. For 2012-13, appropriates an additional $38
million, split proportionally between UC and Hastings,
to address a portion of UC's and Hastings' employer
pension cost increases that are attributable to state
GF and tuition-funded employees. Of the total amount,
UC will receive $37.6 million and Hastings will
receive $365,000. This bill links the funding to
existing provisional budget bill language in UC's and
Hastings' main budget items tying the funds
specifically to contributions to UCRP for state GF and
tuition-funded employees and stating that this funding
does not constitute a state obligation to provide
funding in future years and that future funding, if
any, will be determined by the Legislature.
Fiscal Effect: This bill increases GF expenditures in
2012-13 by $38 million.
Support: Unknown
Opposed: Unknown
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