Assembly Speaker John Pérez (D-Los Angeles) announced legislation to the state Capitol Feb. 8 that would provide for University of California and California State University students with annual household incomes not exceeding $150,000 a grant that, combined with other financial aid, would cover 60 percent of fees.
This bill, AB 1501, hinges on the passing of AB 1500, which would eliminate a tax break for multi-state corporations approved amidst budget negotiations in December 2008 that allows them to choose whether their income taxes are calculated on a formula that considers their property, payroll and sales in California and across the nation, or the on the “single sales factor,” with which taxes would be solely based on a company’s sales in the state relative to its national sales.
The passing of AB 1500 would restrict corporations to only calculate income tax based on their sales in California relative to their sales nationwide, resulting in an annual savings of $1 billion, according to the speaker’s office.
That money would fund what Speaker Pérez calls The Middle Class Scholarship Act.
The proposal, which is divided into AB 1500 and AB 1501, requires ‘yes’ votes from two-thirds of the Assembly and the Senate to pass.
To be eligible for the plan, a student’s household income must not exceed $150,000, and they must be enrolled in a UC or CSU and pay instate costs.
Speaker Pérez estimates that the Middle Class Scholarship Act, which is designed to help struggling students who do not receive financial aid, will save eligible UC students $8,200 and CSU students $4,000 per year.
According to estimates the speaker received from the university systems, 42,000 UC and 150,000 CSU would be eligible.
AB 1501 would also provide a student whose annual household income exceeds $150,000, and who otherwise meets the requirements, a reduced grant in accordance with the prescribed calculations.
An allocation of $150 million from the General Fund will be distributed to the leaders of the California Community Colleges to aid the cost of enrollment fees, textbooks and other educational expenses.
Since the 2003-04 academic year, UC fees have increased by 145 percent, and CSU fees 191 percent, in addition to significant rises in costs at community colleges, says Speaker Pérez in a video released on middleclassscholarship.com.
The Student Aid Commission would be required to report the amount of the grant credit for each student to the Franchise Tax Board, and report the aggregate amount to the Department of Finance.
AB 1501 would also authorize the Student Aid Commission to determine if sufficient funding is available for the 2012-13 fiscal year and subsequent fiscal years, and would also allow the commission to reduce scholarships proportionately if it’s determined that sufficient funding is unavailable.
University of California President Mark Yudof made the following statement Feb. 8 after Assembly Speaker Pérez announced his Middle Class Scholarship Program: “Like Assembly Speaker Pérez, we are deeply concerned about ensuring affordability for middle-class students who don’t qualify for financial aid. That said, the University of California has made it a priority to make a high-quality education accessible to a wide range of students from families with low or moderate income. Roughly half of UC students pay no tuition because of robust financial aid reinforced by an ongoing institutional commitment. As we work with the governor and legislators on fiscal and policy issues that would affect the affordability of a UC education, we welcome constructive efforts such as the speaker’s proposal to provide middle-class tuition relief.”
UCSA President Claudia Magaña issued a statement urging students to support Pérez’s proposal, stating, “We must [educate] and activate our fellow students and Californians in order to ensure that this plan passes through the California Legislature and is signed into law. This is a huge opportunity for students, and we are up to the challenge.”
