Middle class tuition break at UC, CSU

Four Republican legislators crossed party lines in the Assembly on Wednesday, providing the two-thirds vote needed to approve a bill that would create a middle class scholarship program for the state’s public college and university students.

AB 1501 is part of a two-bill package called the Middle Class Scholarship Act introduced by Assembly speaker John A. Pérez, a Los Angeles Democrat, that would reduce tuition by two-thirds for students attending the University of California and California State University whose families earn less than $150,000 a year.

In urging a yes vote, Pérez cited the enormous fee hikes at the state’s public colleges and universities, noting that in the past decade tuition has increased by 191 percent at Cal State, by 145 percent at the University of California, and by 300 percent at community colleges. Meanwhile, state support for UC and CSU has dropped by 21 percent and 26 percent respectively since 2005.

10 year history of changes in CSU tuition. (Source: California State University). Click to enlarge.
Ten-year history of changes in CSU tuition. (Source: California State University.) Click to enlarge.

“This means that for thousands of California families, higher education entails increasingly difficult tradeoffs,” said Pérez; tradeoffs that would either compel parents to make huge sacrifices, or force students to take on massive loan debt. “For many Californians those tradeoffs are too great, and they make the reluctant decision to forego a higher education altogether.”

Student loan debt now exceeds $1 trillion nationally, more than all U.S. credit card debt. Statewide, according to the California Student Aid Commission, there’s been a double-digit increase every year for the past three years in the number of students who qualify for loans and for the state’s Cal Grant awards.

Under AB 1501, eligible Cal State students would save $4,000 per year, or $16,000 over four years, while UC students would save about $8,200 per year, or nearly $33,000 over a four-year period. Students from families earning between $150,000 and $160,000 a year would be entitled to assistance at a lower level; their scholarships would be reduced by 10 percent for each $1,000 in family income over $150,000. California community colleges would receive $150 million to help students defray the cost of textbooks and offset other educational expenses.

Lack of investment “criminal”

Modesto Assemblymember Kristin Olsen, vice chair of the Higher Education Committee and one of the Republicans who broke ranks and supported the measure, defended her position during the floor debate as a vote for the state’s economic prosperity.

“We have slashed state investment in higher education, and that’s criminal,” Olsen said. “One of the only ways we’re going to grow a strong economy over the long term is by investing in our public universities to make sure that we are graduating educated employees who are prepared to compete in a global workforce.”

She noted that wealthy families can afford to pay tuition, and low-income families have various options for state and federal aid, but middle-income families are being hit hard by escalating tuition and the faltering economy.

But her colleague in the GOP caucus, Assemblymember Tim Donnelly from Twin Peaks, wasn’t moved, except to sarcasm. “I see these programs and they sound so nice – middle class scholarship fund – woo-hoo, hallelujah, Praise the Lord! I love it, sounds wonderful, why don’t we give one to everybody?” he quipped. “Oh yeah, there’s a slight little problem: we don’t have the money.”

Donnelly blamed union wage demands and injudicious spending decisions by UC and CSU for their financial problems, especially giving huge pay raises to new campus presidents while increasing student fees. Then he offered this sage advice: “I remember when I went to school. I went to the University of California at Irvine; I got three jobs to pay my way through. My idea of a middle class scholarship is a job.”

Half a loaf

While there is some disagreement among Republicans on AB 1501, they are united in their opposition to its companion bill, AB 1500. This is the half that pays for the Middle Class Scholarship Act.

Pérez wants to fund it by closing a loophole in the 2009 Corporation Tax Law that gave companies operating in both California and another state the option of computing their taxes using either the Single Sales Factor (SSF), which is based on their California sales, or another formula that gives the companies more flexibility on how much taxes they’ll pay. The policy was adopted in one of those never-well-thought-through budget deals reached in the middle of the night.

Requiring those companies to move to the SSF would increase the state’s general fund by about $1 billion in 2013-14, according to the Legislative Analyst’s Office. In fact, the LAO recommended that the state take that action two years ago.

Gov. Brown tried to change the law last year, by getting bipartisan support for AB 40X. The bill would have mandated the SSF and returned the revenue to businesses in the form of job credits as an incentive for hiring Californians. Although it passed the Assembly, the bill did not garner any GOP support in the Senate and died.

One of the sponsors of AB 40X was Assembly Republican Cameron Smyth of Santa Clarita. He’s also one of the four Republicans who voted yesterday for AB 1501. But in a phone call Wednesday afternoon, Smyth said he will not be supporting AB 1500.

“It would be another funding obligation from the state,” said Smyth. “I still think the Single Sales Factor needs to be reexamined, but I do have concerns, because unlike last year, this bill is a tax increase and it creates a new entitlement.”

Kristin Olsen and the other two Republicans who voted for AB 1501 – Katcho Achadjian from San Luis Obispo and Jeff Gorell of Camarillo – have also said they will not support the companion bill, but are willing to work with Speaker Pérez on finding a different funding source, such as savings from the governor’s pension reform proposal.

Assemblymember Olsen said adequate funding for public higher education ought to be a top priority in the general fund if California is committed to maintaining a premier public university system. But she’s not optimistic. “The direction that California is headed today, quite honestly, makes me fearful,” said Olsen, “and makes me question whether I will be able to send my three kids to college.”