BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Alan Lowenthal, Chair
2011-2012 Regular Session
BILL NO: SB 1461
AUTHOR: Negrete McLeod
INTRODUCED: February 24, 2012
FISCAL COMM: Yes HEARING DATE: April 18, 2012
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : Public postsecondary education: tuition and mandatory
systemwide fees.
SUMMARY
This bill requires the CSU, and requests the UC to determine
undergraduate tuition and systemwide fees for each incoming
class and prohibits increase of these fees, except for annual
adjustments to reflect changes in the Consumer Price Index, for
each incoming class for at least four academic years.
BACKGROUND
The Maddy-Dills Act previously required fees to be (1) gradual,
moderate and predictable, (2) limited fee increases to not more
than 10 percent a year, and (3) 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. However, even with this policy, when the state faced
serious budgetary challenges the statute was "in-lieued" in
order to provide the institutions some flexibility in dealing
with the lack of state General Fund support. The Maddy-Dills Act
sunset in 1996 and, since then, the state has had no long-term
policy regarding the way in which mandatory student fees are
determined. Currently, fees derive from the state's current
fiscal condition and the stated needs of UC and CSU, as
negotiated in the budget deliberations.
Current law further provides that statutes related to UC (and
most other aspects of the governance and operation of UC) are
applicable only to the extent that the Regents of UC make such
provisions applicable. (EC � 67400)
Current law confers upon the Trustees of the CSU the powers,
duties, and functions with respect to the management,
administration, and control of the CSU system. (EC � 66066)
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ANALYSIS
This bill :
1) Requires the CSU to determine the amounts of undergraduate
tuition and mandatory systemwide fees for each incoming
first-year class.
2) Prohibits the fees for an incoming first-year class from
being increased for at least four academic years.
3) Authorizes the tuition and fees determined by the CSU to
annually increase to reflect any changes in the Consumer
Price Index during the previous academic year.
4) Requests the UC to comply with these same requirements
STAFF COMMENTS
1) Rationale for the bill . According to the author, this bill
will bring some transparency and predictability to the
tuition increases that students have faced over the last
few years. Families should be given the opportunity to know
how much an education should cost up front. The
predictability of a multi-year tuition and fee schedule
would especially help middle income families (who the
author asserts are most affected by rising costs) cope with
and plan for college expenses.
2) Is there a problem? Yes. Historically, fees have fluctuated
in response to the State's fiscal condition. When state
revenues are up, fees have decreased or been frozen, as
they were in 2006-07, and when revenue is down, student
fees have increased. Families find that when their incomes
go up, fees go down, and when they are faced with stagnant
or decreased income, their fees go up. The charts below
illustrate the fluctuation in fees at the UC and the CSU
over the last several years.
--------------------------------------------
| UC |
| Mandatory Systemwide |
| Student Fees |
| Resident Undergraduates |
--------------------------------------------
|--------------+--------------+--------------|
| | | |
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| Year | Fee Amount | Percent |
| | | Change from |
| | | Prior year |
|--------------+--------------+--------------|
| 1996-97 | $3,799 | N/A |
|--------------+--------------+--------------|
| 1997-98 | $3,799 | 0.0% |
|--------------+--------------+--------------|
| 1998-99 | $3,609 | -5.0% |
|--------------+--------------+--------------|
| 1999-00 | $3,429 | -5.0% |
|--------------+--------------+--------------|
| 2000-01 | $3,429 | 0.0% |
|--------------+--------------+--------------|
| 2001-02 | $3,429 | 0.0% |
|--------------+--------------+--------------|
| 2002-03 | $3,834 | 11.8% |
|--------------+--------------+--------------|
| 2003-04 | $4,984 | 30.0% |
|--------------+--------------+--------------|
| 2004-05 | $5,684 | 14.0% |
|--------------+--------------+--------------|
| 2005-06 | $6,141 | 8.0% |
|--------------+--------------+--------------|
| 2006-07 | $6,141 | 0.0% |
|--------------+--------------+--------------|
| 2007-08 | $6,636 | 8.1% |
|--------------+--------------+--------------|
| 2008-09 | $7,126 | 7.4% |
|--------------+--------------+--------------|
| 2009-10 | $8,958 | 25.7% |
|--------------+--------------+--------------|
| 2010-11 | $10,302 | 15.0% |
|--------------+--------------+--------------|
| 2011-12 | $12,192 | 18.3% |
--------------------------------------------
--------------------------------------------
| CSU |
| Mandatory Systemwide |
| Student Fees |
| Resident Undergraduates |
--------------------------------------------
|--------------+--------------+--------------|
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| | | |
| Year | Fee Amount | Percent |
| | | Change from |
| | | Prior year |
|--------------+--------------+--------------|
| 1996-97 | $1,584 | N/A |
|--------------+--------------+--------------|
| 1997-98 | $1584 | 0.0% |
|--------------+--------------+--------------|
| 1998-99 | $1,506 | -4.9% |
|--------------+--------------+--------------|
| 1999-00 | $1,428 | -5.2 % |
|--------------+--------------+--------------|
| 2000-01 | $1,428 | 0.0% |
|--------------+--------------+--------------|
| 2001-02 | $1,428 | 0.0% |
|--------------+--------------+--------------|
| 2002-03 | $1,500 | 5.0% |
|--------------+--------------+--------------|
| 2003-04 | $2,046 | 36.4% |
|--------------+--------------+--------------|
| 2004-05 | $2,334 | 14.1% |
|--------------+--------------+--------------|
| 2005-06 | $2,520 | 8.0% |
|--------------+--------------+--------------|
| 2006-07 | $2,520 | 0.0% |
|--------------+--------------+--------------|
| 2007-08 | $2,772 | 10.0% |
|--------------+--------------+--------------|
| 2008-09 | $3,048 | 10.0% |
|--------------+--------------+--------------|
| 2009-10 | $4,026 | 32.1% |
|--------------+--------------+--------------|
| 2010-11 | $4,429 | 10.0% |
|--------------+--------------+--------------|
| 2011-12 | $5,472 | 23.5% |
| | | |
--------------------------------------------
Staff notes that, even with the recent increases, fees at
UC and CSU are at or below the cost of comparable four-year
public institutions.
3) Is this the solution ? This bill proposes to "lock-in" fees
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for each entering class at the CSU and UC. The proposal
raises a number of challenges:
a) Equity. Faced with significant reductions in
General Fund support, the higher education segments
could decide to significantly increase fees for
incoming students to make up for their inability to
increase fees for current students. Each class of
entering students could be paying significantly
different amounts for the same course. Is it
reasonable that the cost for the same education be
dependent upon when a student first enrolled at the UC
or CSU?
b) Administrative challenges. What would be the
increased costs to modify systems to administer at
least four different fee levels for over 400,000
students at the CSU and over 234,000 students at the
UC?
c) After four years? Some students may take longer
to complete their studies as they balance the need to
work to support families, try to reduce the need to
borrow, attend part-time, or face family and/or
economic hardship, or if they are enrolled in
high-unit majors, such as engineering. Time-to-degree
generally exceeds four years at the UC and is closer
to six years at the CSU. Under the provisions of this
bill, the segments would have the ability to increase
fees for any student after four years. Should students
face a potential "balloon payment" at the end of their
studies in order to achieve their degree goals?
d) Transfer students. How would fees for transfer
students be determined?
e) Cal Grants. Cal Grant awards cover mandatory
systemwide fees at the UC and CSU for financially
needy students. The Governor's current budget proposal
for 2012-13 would provide for a $300 million reduction
to the Cal Grant program, primarily by limiting
eligibility and reducing the amount of the award. If
this bill leads to significant fee increases as each
new student cohort enters UC and CSU, the state could
face even greater fiscal pressures on the General Fund
to cover the increased costs of the Cal Grant program.
Would the State be further pressured to limit Cal
Grant eligibility or reduce award amounts?
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4) The state's role ? Funding for UC and CSU generally comes
from a combination of state general funds, student fee
revenue, and to small extent state Lottery. Fee revenue
works interchangeably with General Fund support to fund the
core instructional mission of the public segments. If the
state wants to provide for a lower share of cost for
students (fees), it necessarily implies higher costs for
the state (General Fund). The state's portion subsidizes
the amount paid by all students, whereas a fee increase has
the effect of increasing non-needy students' share of their
college costs, thereby reducing the state's share and
freeing up state resources to meet various state needs
including financial aid and higher education programs,
public safety, and health and human service programs. The
state's current fiscal condition has resulted in
significant reductions to various state programs, including
support for UC and CSU. The result has been the increased
fees as highlighted in staff comment #2.
5) Net effect ? Limiting student fees increases, no matter how
well-intentioned, reduces the options available to the
higher education segments for offsetting general fund
reductions. In times of severe budget reductions,
institutions would likely reduce enrollment, limit course
offerings, or reduce programs and services. While the
provisions of this bill might make tuition predictable for
individual families once enrolled, it would not ensure that
tuition would be affordable, and access and quality would
likely be compromised.
6) Is a fee policy necessary ? Yes. While the specific policy
proposed in this bill faces a number of challenges, there
is a need for a fee policy that provides for moderate,
gradual and predictable increases, that is linked to the
economic health of Californians, and that recognizes the
role and responsibility of the state for funding
postsecondary education. Staff recommends the bill be
amended to require the CSU and request the UC to limit
annual increases for resident undergraduate students to two
percent above the percentage change in the state per capita
personal income for the prior fiscal year, to provide that
if the change is negative, the percentage change in income
shall be zero, and to apply these requirements only in an
academic year in which the annual Budget Act provides funds
for enrollment growth and cost-of-living adjustments.
7) Prior legislation . The Legislature has considered several
bills that proposed a number of variations on a fee policy.
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Most recently, these have included:
a) SB 969 (Liu, 2010) placed an upper limit on
mandatory systemwide student fees, not to exceed a
fixed percentage of the cost of education as defined,
and prohibited annual mandatory systemwide fee
increases from increasing by more than the implicit
price deflator for state and local government for
goods and services. This version of SB 969 combined
elements of SB 969 (Florez) and SB 1199 (Liu). The
bill was passed by this committee by a vote of 8-0,
but was subsequently held on suspense in the Assembly
Appropriations Committee.
b) SB 969 (Florez, 2010) placed an upper limit on
mandatory systemwide student fees, not to exceed a
fixed percentage of the cost of education, as defined,
prohibited student fees from ever increasing beyond
the amount a student paid at the time of enrollment,
and prohibited annual mandatory systemwide fee
increases for each new cohort of undergraduate
students at the UC, CSU, and California Community
Colleges from exceeding five percent of the preceding
academic year.
c) SB 1199 (Liu, 2010) required the governing boards
of the UC and CSU to develop student fee increase
methodologies consistent with specified direction, and
included many of the same concepts found in SB 969.
The bill's provisions were combined with those of SB
969 and the hearing was canceled at the request of the
author.
d) SCA 26 (Denham, 2010) amended the State
Constitution and imposed upon the UC a waiting period
of 180 days before mandatory student fees could take
effect, and limited annual fee increases to no more
than a cumulative 10 percent over the preceding
academic year. SCA failed passage in this committee by
a vote of 2-2.
e) SB 917 (Denham, 2010) was similar to SCA 26,
however the application of the provisions in the
measure would have affected the CSU. The bill failed
passage in this committee by a vote of 2-2.
AB 69 (Duvall, 2009) was almost identical to this bill.
That bill was never heard and was subsequently amended
to address a different issue.
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SUPPORT
None received.
OPPOSITION
California State University