State lawmakers fail to pass funding for Middle Class Scholarship Act

Related Posts

An Assembly bill that would provide funds to significantly cut fees for middle-income students at the state’s public universities failed to pass the California State Senate early Saturday.

Under the Middle Class Scholarship Act — which was authored by state Assembly Speaker John Perez — students at the UC and CSU with family incomes of less than $150,000 per year would see their fees slashed by 60 percent beginning in the current academic year.

AB 1500, which would fund the scholarship by revising the state’s corporate tax law, failed to secure the necessary two-thirds majority on the Senate floor Saturday morning with a  vote of 22 in favor, 15 against and 3 without recorded votes. The bill moved on to the Senate after passing the state Assembly on Aug. 13, where it barely reached the two-thirds majority necessary to pass there.

“Today was an opportunity for the State Senate to join the Assembly in approving tax fairness for California businesses and college opportunity for middle class families,” Perez said in a statement released Saturday. “It is disturbing that Senator Correa and so many Republicans would refuse to stand up for the middle class and instead continue to support a tax giveaway that favors out-of-state companies over our own.”

In a statement released Saturday, Gov. Jerry Brown said this is not the end of the Middle Class Scholarship Act.

“We’re going to work together to get it done in the next session,” he said in the statement.

The act’s failure follows years of dwindling state funding to California’s higher education system. Now, research contracts, philanthropy and tuition and fees each account for a greater portion of UC revenues than state funding, which constituted about 11 percent of the system’s operating budget in 2011-2012.

“The Middle Class Scholarship act will ensure that students, graduates and families can keep more of their hard-earned cash and stay out of debt,” said Traci Ishigo, president of UC Irvine’s student government at a UC Student Association event on Wednesday.

The scholarship would be funded by new revenue resulting from a revision in the California corporate tax code.

Currently, multistate corporations have the choice between two formulas for calculating their taxes. One formula factors in sales, property and payroll, while the other only factors in sales. The bill would have required corporations operating in California to use the formula that only factors in sales — usually the more costly option.

Large corporations, including Proctor and Gamble, Kimberly Clark and General Motors, have opposed the bill, arguing that the act would discourage companies from investing in California due to tax increases.

A 2010 report on the state’s corporate tax code by the nonpartisan Legislative Analyst’s Office found that allowing multistate corporations to use two different methods to determine tax rates puts California-based corporations at a competitive disadvantage.

For UC Berkeley students, the passage of the act could have also served to enhance the campus’s Middle Class Action Plan, which caps parent contribution toward undergraduate student education at no more than 15 percent of middle-class families’ income.

If Proposition 30, Brown’s tax initiative, fails at the polls in November, UC students would be dealt a debilitating blow — one that could also jeopardize the campus’s Middle Class Access Plan. It is estimated that UC Berkeley would incur a $50 million budget cut and that students would face a midyear tuition increase of about 20 percent.

Contact Curan Mehra and Amruta Trivedi at [email protected].