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DeSaulnier bill would lower student loan rates

Student loan borrowers would be able to refinance their interest rates at the rate offered to banks by the Federal Reserve, under a bill announced Monday by Rep. Mark DeSaulnier.

DeSaulnier, D-Concord, held an event at the University of California, Berkeley to roll out H.R. 3675, the Student Borrower Fairness Act, which would offset its costs by increasing corporate tax rates on companies that pay their CEOs or highest paid employees more than 100 times the median compensation of all employees.

Mark DeSaulnier“It is patently unfair that the same big banks that toppled our economy borrow from the federal government at extremely low interest rates while student borrowers are struggling to pay back their loans,” DeSaulnier said in a news release. “Meanwhile, people of all ages are buried in student loan debt which holds them back from being able to buy a car, purchase a home, save for retirement, or start a family. This bill is a first step toward making sure our students can emerge from under their piles of crippling debt and enter tomorrow’s highly-trained workforce.”

Congress acted on student loan rates in 2013, but the changes only applied to new borrowers.

UC-Berkeley Chancellor Nicholas Dirks applauded the bill. “College students and their families depend on student loans to access higher education,” Dirks said in the congressman’s release. “At Berkeley, we are proud that 61 percent of our undergraduates graduate without debt and the average debt of students who do borrow is only $17,584, much lower than the national average. This legislation would benefit all borrowers because it will help them manage their debt and repayment.”

James Donahue, president of St. Mary’s College of California in Moraga, said his college “is built on the idea that education has the power to transform lives. The Student Borrower Fairness Act will provide opportunities for all students to pursue their dreams of a higher education, and ultimately highly successful lives. Student loan debt is a national issue and reducing it must be a national priority.”

DeSaulnier’s office said outstanding student loans now total more than $1.3 trillion, surpassing total credit card debt. More than 37 million Americans have outstanding student loan debt, with an average outstanding balance of $29,400 for those who borrowed to get a bachelor’s degree. From 2004 to 2012, student loan debt rose an average of 14 percent per year.

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Reich visits Capitol on CEO pay, oil extraction tax

It’s Robert Reich day at California’s State Capitol.

No, there hasn’t been an official proclamation. But the former U.S. Secretary of Labor, now a UC-Berkeley public policy professor, will be under the dome Thursday to speak on behalf of two bills introduced by Bay Area lawmakers.

Reich is doing a news conference with state Sen. Mark DeSaulnier, D-Concord; state Sen. Loni Hancock, D-Berkeley; and California Labor Federation Executive Secretary-Treasurer Art Pulaski in support of DeSaulnier’s SB 1372, which would create a new corporate tax table that increases taxes on businesses with big disparities between the salaries of their workers and their CEOs. The bill is being heard Thursday morning by the State Governance and Finance Committee.

“For example, if the CEO makes 100 times the median worker in the company, the company’s tax rate drops from the current 8.8 percent down to 8 percent. If the CEO makes 25 times the pay of the typical worker, the tax rate goes down to 7 percent,” Reich wrote on his blog Monday. “On the other hand, corporations with big disparities face higher taxes. If the CEO makes 200 times the typical employee, the tax rate goes to 9.5 percent; 400 times, to 13 percent.”

“Pushing companies to put less money into the hands of their CEOs and more into the hands of average employees creates more buying power among people who will buy, and therefore more jobs,” he wrote. “For the last thirty years, almost all the incentives operating on companies have been to lower the pay of their workers while increasing the pay of their CEOs and other top executives. It’s about time some incentives were applied in the other direction.”

And, Reich will testify to the Senate Public Education Committee in favor of SB 1017 by state Sen. Noreen Evans, D-Santa Rosa, which would create an oil extraction tax to fund higher education, health and human services, state parks and more.

Reich endorsed a similar student-organized ballot measure effort last year, saying that using oil severance tax revenue for education “should be a no-brainer. It will only improve our schools. The real question is why California hasn’t done this long before now.”

The California Chamber of Commerce this month put both bills on its list of “job killers,” arguing they create barriers to economic development.

“The economic recovery is still the number one issue for Californians,” Chamber President and CEO Allan Zaremberg said when announcing the list. “These bills pose a serious threat to our economy and, if enacted, would dampen job growth in the state.”

Of Evans’ bill, Zaremberg said “an oil extraction tax will drive up consumer prices, push jobs away and upset a fragile economy that is showing strong signs of life.”

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Neel Kashkari rolls out his education plan

State funding would be routed directly to schools so principals, teachers and parents can spend it as they see fit while much of California’s Education Code would be eliminated under a plan unveiled Tuesday by Republican gubernatorial candidate Neel Kashkari.

NEEL KASHKARIThe education reform legislation that Gov. Jerry Brown signed into law last summer was called the Local Control Funding Formula (LCFF), so perhaps Californians can think of Kashkari’s plan as EMLCFF: Even More Local Control Funding Formula.

Handing over the purse-strings to local educators and families would let them adopt new priorities and methods – perhaps including increased vocational training and lengthening the school day and academic year – even as they’re held to strict accountability standards, Kashkari says. He also wants charter schools to have the same level of funding and facilities as traditional schools, and would eliminate the cap that limits California to 100 new charter schools per year.

For higher education, Kashkari wants to tie state funding to campuses’ success rates – as measured by credits accumulated, students retained, courses completed and degrees awarded – while putting more UC and CSU courses online and offering free tuition to science, technology, engineering and math students in exchange for a cut of their future earnings.

Kashkari’s education plan, which he’s rolling out Tuesday morning at Central City Value High School in Los Angeles, is a cornerstone of a campaign he launched in January with the slogan, “Jobs and Education. That’s It.” The former Treasury Department official and asset manager from Laguna Beach says California’s schools rank 46th in the nation in reading and math, with a huge achievement gap leaving low-income kids wanting for an adequate education.

“California used to boast one of the best education systems in the nation, and we do know how to fix our schools,” Kashkari said. “States around the country have implemented bold reforms that can help improve educational outcomes for our students, both in our K-12 schools and in our institutions of higher education.”

Yet Gov. Jerry Brown “continues to pursue superficial measures that treat only symptoms instead of undertaking bold education reforms that will help lift student achievement and rebuild the middle class,” Kashkari accused.

Brown last year signed the LCFF legislation that changes the state funding formula for K-12 schools in a way that he hopes will help boost disadvantaged students’ academic achievement. It will send $2.1 billion more to school districts with high numbers of students who are from lower-income families, who have limited English proficiency, or who are foster children.

More, after the jump…
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Proposal for oil severance tax rises anew

From the Legislature, to an unsuccessful effort toward a ballot measure, and to the Legislature again: The oil-severance tax is back.

State Sen. Noreen Evans, D-Santa Rosa, rolled out her SB 1017 on Wednesday with a rally at California State University, Sacramento. Flanked by student leaders and California Tax Reform Association executive director Lenny Goldberg, Evans said the tax is estimated to raise about $2 billion per year.

“California is realizing an economic recovery but as both the State Auditor and California Budget Project have concluded, without new revenues the state remains on unstable financial footing,” Evans said. “California remains the only oil-producing state in the nation that does not impose an oil extraction tax. Meanwhile, our debts grow, our population increases, and our services are strained while new revenues from our own natural resources earn $331 million a day for big oil companies. Not taxing oil extraction is simply fiscally unsound.”

SB 1017 would impose a 9.5 percent severance tax on the extraction of oil from ground or water within California’s jurisdiction. Half the revenue would be distributed into an endowment and split three ways among the University of California, California State University and California Community College systems, while health and human services would get 25 percent and state parks would get 25 percent.

The idea has been kicking around here for many years, and this isn’t even Evans’ first bite at the apple: She carried SB 241 just last year, but it never made it out of the Senate Appropriations Committee.

A UC-Berkeley-based student group called Californians for Responsible Economic Development began circulating petitions for an oil-extraction-tax ballot measure last April; when they missed their signature-gathering deadline in September, they started anew with a revised measure. But in November, the group changed its name to Students’ Voice Now and announced it would partner with lawmakers to push for a bill instead.

“Tuition levels are vulnerable to a fluctuating economy,” said Harrison “Jack” Tibbetts, a UC Berkeley senior and author of the California Modernization and Economic Development Act. “The endowment avoids this reality by growing during a booming economy and protecting students and their families during the bust. Many other states who tax oil extraction use this same model and have a flourishing education system.”

But Gov. Jerry Brown has pledged not to raise or create any taxes without voter approval, and so isn’t likely to break his promise and embrace this bill, especially as he seeks re-election this year. Anti-tax groups quickly noted this amid their own opposition.

“Governor Brown has been very clear: now is the time for fiscal restraint and government efficiency,” said Beth Miller, spokeswoman for Californians Against Higher Taxes. “But Senator Evans clearly isn’t listening. Instead she is focused on raising taxes on hard-working Californians and creating a huge new, unaccountable government bureaucracy.

SB 1017 promotes a tax Brown already said he doesn’t support, and for which voters have no appetite, Miller said. “Just two years ago, voters approved more than $6 billion in higher taxes and earlier this year the governor announced the state had a $4 billion budget surplus. Voters want Sacramento politicians to hold the line on taxes and work to make government work better and smarter – not create more government and taxes.”

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Oil severance tax measure to start circulating

A proposed ballot measure to enact an oil severance tax, with most of the revenue spent on education, has received its official title and summary and is about to start circulating for petition signatures.

California oil wellsConceived by UC-Berkeley students, the California Modernization and Economic Development Act places a 9.5 percent tax on oil and gas extracted from California; supporters say it would bring about $2 billion of new revenue per year. Of that, about $1.2 billion would be allocated in four equal parts towards K-12 education, California Community Colleges, California State University and the University of California.

Another $400 million or so would be used to provide businesses with subsidies for switching to cleaner, cheaper forms of energy, and about $300 million would go to county governments for infrastructure repair, public works projects, and funding public services.

Californians for Responsible Economic Development, the group behind the measure, has 150 days to collect 505,000 signatures in order to qualify it for the 2014 ballot. The group says it’ll do both grassroots organizing and fundraising for paid signature gathering.

California over recent decades has seen many legislative bills and ballot measures – either proposed, or unsuccessful with voters – to impose such a tax. More than 30 states have oil and gas severance taxes, but opponents say such a tax could reduce California’s oil production, costing jobs.

Former U.S. Labor Secretary Robert Reich, now a Cal professor, endorsed the effort in February, saying using oil severance tax revenue for education “should be a no-brainer. It will only improve our schools. The real question is why California hasn’t done this long before now.”

The measure last week won support from state Senator Noreen Evans, D-Santa Rosa, whose SB 241 would impose an oil severance tax to fund education and parks in California. She said she supports any effort to let “California to collect on these vast and irreplaceable natural resource revenues that should fund one of the most important core services of government – education. It’s past time California ends the oil industry’s free ride and finally sets a solid revenue stream towards funding government’s education obligations.”

CMED campaign manager Jack Tibbets, a junior at Cal, said his staff will be working closely with Evans’ office. “Should the Senate fail to vote and pass SB 241, our campaign will work with public officials, donors, interest groups and students to produce an extraction tax for the 2014 ballot.”

Here’s the official title and summary issued today by the state Attorney General’s office:

TAX ON OIL AND NATURAL GAS. REVENUES TO EDUCATION, CLEAN ENERGY, COUNTY INFRASTRUCTURE AND SERVICES, AND STATE PARKS. INITIATIVE STATUTE.
Imposes 9.5% tax on value of oil and natural gas extracted in California. During first ten years, allocates revenues: 60% to education for classroom instruction (split equally between UC, CSU, community colleges, and K-12 schools); 22% to clean energy projects and research; 15% to counties for infrastructure and public health and safety services; 3% to state parks. Thereafter, allocates 80% to education, 15% to counties, and 5% to state parks. Prohibits passing tax on to consumers through higher fuel prices.
Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Increased state revenues from a new oil and gas severance tax of $1.5 billion to $2 billion per year initially (which could either grow or decline over time), to be spent on public schools, colleges, and universities; clean energy research and development; local infrastructure projects; and state parks. (13-0002.)

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California parents value college but aren’t saving

California parents value a college education more than a good-paying job for their kids, but most have not started saving to help pay for that education, according to a new survey conducted for ScholarShare, the state’s “529” college savings plan.

“The good news is parents realize the importance of a college degree to their kids’ future and economic prosperity,” State Treasurer Bill Lockyer, who chairs the ScholarShare Investment Board, said in a news release. “The bad news is higher education costs continue to rise, and most parents have not been able to start making preparations to help ensure their family can afford those costs. A ScholarShare account can help fill that critical financial need.”

Named for the section of the IRS code under which they were created, 529 plans let earnings on investments grow tax-deferred, and disbursements, when used for tuition and other qualified higher education expenses, are federal and state tax-free. ScholarShare accounts can be opened with as little as $25, or $15 when combined with regular, automatic monthly contributions of at least $15. The program has no annual account maintenance fee, no income limit and offers a high maximum contribution cap of $350,000. ScholarShare now holds more than $4.4 billion in assets in about 250,000 accounts.

The survey conducted by Hart Research Associates found 84 percent of parents considered it “very important” that their children attend college. That’s a higher percentage than those who prioritized having a good-paying job (75 percent) or owning a home (69 percent). Latino (93 percent), black (88 percent) and Asian (90 percent) parents said attending college was “very important” at significantly higher rates than white parents (72 percent). And 78 percent of parents overall said a college education was more important now than it was 10 years ago.

The survey also that when asked what they would be willing to do to improve their current financial situation, 65 percent of parents would be willing to delay their retirement and 46 percent would be willing to save less for their retirement. But only 45 percent said they would delay saving for their kids’ college education and 40 percent said they would save less for their kids’ education.

Yet most parents worry about being able to afford their kids’ tuition: 53 percent said they’re “very concerned” about their ability to pay.

Only 43 percent of parents have a college savings account. Parents who have been saving more than 10 years have set aside an average of $25,193, compared to $14,733 for those saving 6-10 years and $4,663 for those saving five years or less.

Fifty-nine percent of parents surveyed said it’s certain or very likely their children will attend a University of California or California State University school; 51 percent said it was certain or very likely their children would go to a community college; and only 26 percent said it was certain or very likely their children would attend a private university. (That adds up to more than 100 percent because the “very likelies” have some either-or.)

And 44 percent of parents said they expected scholarships or grants to cover at least half of their children’s higher education costs; 35 percent said cost coverage would come from their own savings and income, and 28 percent said it would come from student loans. (That adds up to more than 100 percent because parents expect to use more than one funding source.)