By Wyatt Buchanan

SACRAMENTO — California students from middle-income families would receive massive breaks on tuition and fees at the state’s colleges and universities under legislation Assembly Speaker John Pérez planned to introduce Wednesday at the state Capitol.

Under the plan, undergraduate students from families with household income of less than $150,000 would have their tuition and fees cut by two-thirds, bringing the cost below what it was nearly a decade ago.

It would amount to a $4,000 annual savings for California State University students and just over $8,100 for students attending the University of California and would take effect as soon as this fall. Both new students and current students would be eligible.

“Over the past couple of years we’ve been able to protect the poorest students by maintaining the Cal Grant system, but as fees have increased we’ve gotten to a point where middle-class families are being squeezed, where they make too much money to qualify for the current system of aid, but too little to afford to put their students through the UC or CSU,” said Pérez, D-Los Angeles.

Pérez is calling his plan the “Middle Class Scholarship” and it would be administered through the state’s current student aid system at minimal cost, he said. It would be an ongoing program.

University of California President Mark Yudof said Wednesday he welcomes “constructive efforts” such as Pérez’s to provide middle-class tuition relief.

He added that UC “has made it a priority to make a high-quality education accessible to a wide range of students from families with low or moderate incomes. Roughly half of UC students pay no tuition because of robust financial aid reinforced by an ongoing institutional commitment.”

Funding the plan

The speaker’s office estimates the program would cost the state about $1 billion per year, which would be raised by eliminating a corporate tax break that was approved in 2009 as part of budget negotiations between Democrats and Republicans. That tax break allows corporations to choose the cheaper of two formulas for calculating the taxes they owe.

The Pérez plan would save a family with two students in UC more than $65,000 over four years, based on current tuition and fees, while a family with two CSU students would save $32,000 over four years.

In the CSU system, about 150,000 students would be eligible, while 42,000 UC students would be eligible, based on estimates the speaker received from UC and CSU.

The break would go to UC and CSU students from families whose household income is too high to qualify for other financial aid programs but whose income is less than $150,000 a year.

Community colleges also would receive $150 million, and leaders in that system would get to decide how to best use the money to reduce costs to students.

The proposal comes as several lawmakers are pushing measures to give some relief to college and university students in California. Senate President Pro Tem Darrell Steinberg, D-Sacramento, has a bill that aims to lower the cost of college textbooks. Others are pushing measures to create more transparency in student fees.

Pérez’s proposal would mandate that corporations calculate what they owe based solely on the portion of their national sales that take place in California, or the so-called “single sales factor.”

Many large states, including New York, Texas and Illinois, use only that formula to calculate corporate taxes. The alternate method of calculating corporate taxes involves a formula that includes sales, property and payroll in the state.

In the past few years, lawmakers and the governor have sought to change the formula and use the money for other purposes. Last year, Gov. Jerry Brown proposed making the same change and using the money to provide tax breaks to corporations.

Hinges on GOP backing 

Any change in the tax requires a two-thirds vote of the Legislature, which means at least two Republicans in each house must agree. Brown’s plan passed the Assembly, but failed to win Republican support in the Senate.

A ballot initiative proposed for the November election also targets the increased revenue from changing the tax policy, and would dedicate the money for clean-energy research and technology.

Pérez said that despite past Republican opposition to changing the tax, he believes GOP members of the Legislature could be persuaded to support this plan and noted that two Republicans in the Assembly voted for the governor’s proposal last year.

“We think it is such a good, straightforward approach that it should receive popular support in the Senate as well,” he said.

But Senate Republicans, who have not been briefed on the speaker’s measure, said they could not foresee approving any change, as the tax was a concession to them in negotiations.

“Why would we Republicans want to unwind deals that we helped negotiate when we were the minority party? The majority party is always unwinding deals with us, so we’re not anxious to go down that road, just on principle, forget the policy, whether it has merit or not,” said Senate Republican leader Bob Huff of Diamond Bar.

He noted that a change would be considered a tax increase by some, “so it’s a nonstarter on a couple of points now,” Huff said.

— Reach Wyatt Buchanan at [email protected] 

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