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california legislation > SB 1525

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Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair


SB 1525 (Padilla) - Postsecondary Student Athlete Bill of Rights

Amended: April 26, 2012 Policy Vote: Education 6-1
Urgency: No Mandate: No
Hearing Date: May 14, 2012 Consultant: Jacqueline
Wong-Hernandez

This bill meets the criteria for referral to the Suspense File.


Bill Summary: SB 1525 enacts the Student Athlete Bill of Rights
(SABR), which would apply to intercollegiate athletic programs
at universities in the state that receive an average of $10
million or more in revenue derived from media rights for
intercollegiate athletics. The SABR would require that
qualifying universities that do not renew the athletic
scholarship of a student who has suffered an injury resulting
from his or her participation provide an equivalent scholarship,
as specified. It requires that each qualifying athletic program
conduct a financial and life skills workshop for first and
third-year athletes, as specified. The SABR further requires
that the university continue to pay specified medical expenses
for a student athlete who was injured. This bill provides that
the institutions to which this bill applies shall rely
exclusively on income derived from media rights for
intercollegiate athletics to defray the costs of this bill.

Fiscal Impact:
University of California (UC): Potentially significant cost
pressure on the UCLA and UC Berkeley campus budgets to
backfill any reduction of support for activities that
currently receive financial support from media rights
revenues. Potentially significant administrative costs to
work with the State Controller's Office (SCO) to determine
which programs and campuses fall under these provisions, and
whether the UC is in compliance.
California State University (CSU): Potentially significant
administrative costs to work with the SCO to determine
applicability of this bill to CSU. The CSU does not believe
that any of its campuses currently meet the threshold for
the SABR to apply, but projects that San Diego State
University (SDSU) will in the near future. The CSU estimates








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that it will incur annual increased costs of $500,000 when
the bill applies SDSU.
Financial aid programs: Potential state savings, to the
extent that former student-athletes are extended
scholarships paid for by media rights funds, instead of
being entitled to, or competing for, state and institutional
aid upon losing an athletic scholarship.

Background: California does not currently regulate coverage of
athletically-related medical expenses for college
student-athletes, nor require the extension of athletic
scholarships to student-athletes who have been injured and no
longer participate in the activity for which their scholarships
were given.

Beginning January 1, 2012, California postsecondary educational
institutions that offer athletic scholarships are required to
provide specific information on their websites, such as the
National Collegiate Athletic Association (NCAA) policy on
scholarship duration, the most recent cost of attendance, and
the policy on athletically- related medical expenses.
(Education Code 67365)

The NCAA recently adopted several new rules that have not yet
been implemented, including granting the authority for Division
I schools to offer multi-year athletic scholarships and a $2,000
stipend, and increased academic standards.

The 2011-12 Guide for the College-Bound Student-Athlete, and
other links on the NCAA website, provides information about
athletically-related financial aid and recruiting regulations.
Specifically: 1) Athletic scholarships in Divisions I and II are
initially awarded for up to one academic year, and may be
renewed annually for up to five years (D-I) or up to a total of
10 semesters/15 quarters (D-II); 2) athletic scholarships can be
renewed, altered, or canceled from year to year for almost any
reason; 3) athletic scholarships are awarded in a variety of
amounts; and, 4) the total amount of financial aid a
student-athlete can receive may be limited, and may affect
whether a student-athlete may accept additional financial aid.

Proposed Law: This bill enacts a number of protections for
student-athletes, geared toward ensuring a student-athlete is
able to complete his or her education if he or she loses an








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athletic scholarship due to injury, and to be paid for from
"media rights" revenue. Most significantly, it requires that:
If an athletic program does not renew an athletic
scholarship of a student athlete who has suffered an injury
resulting from his or her participation in the athletic
program, either because of the injury or for any other
nondisciplinary reason (if the athletic program does not
reach a certain average graduation rate), the institution
of higher education shall provide an equivalent scholarship
for up to 6 years, as specified.
An athletic program shall be responsible for paying
the medical insurance premiums of each of its
student-athletes whose household income would qualify them
for Cal Grant A, and covering claims resulting from their
participation in the athletic program.
An athletic program shall be responsible for paying
the insurance deductible amount applicable to the claim of
any student athlete who suffers an injury resulting from
his or her participation in the athletic program and makes
a claim relating to that injury, for up to 5 years after
the claim is made.
An athletic program adopt and implement guidelines to
prevent, assess, and treat sports-related concussions and
dehydration. It also requires a program to adopt and
implement exercise and supervision guidelines for any
student athlete identified with potentially
life-threatening health conditions.

Staff Comments: The cost of adopting the SABR will depend on a
variety of factors, including: a) which institutions its rules
will apply to; b) the extent to which those institutions already
comply with its provisions; c) the ways in which athletics media
rights revenue is spent currently by the affected institutions;
and, d) the level of involvement the SCO will need to have with
affected or soon-to-be-affected athletics programs.

SABR applicability to a particular institution of higher
education hinges on whether or not the institution receives an
average of $10 million in annual "revenue derived from media
rights for intercollegiate athletics, as determined by the
Controller". This bill defines several terms in the SABR's
"General Provisions" section, but it does not define "media
rights". Additionally, the bill specifies that the SCO will
determine how much annual revenue an institution received from








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media rights, without delineating what income streams should be
considered. It appears that the SCO will be left to determine
which revenues to consider and to evaluate each institution's
athletics revenues to determine whether they meet the $10
million threshold, above which this bill's requirements apply.
In order to comply with this bill's requirements, the SCO will
likely have to develop a definition of "media rights" and a
process for evaluating income sources to athletic programs. The
SCO would also have to annually audit a number of athletic
programs that may not ultimately have to comply with SABR, to
make a firm determination of whether or not they derive $10
million in annual income specifically from media rights. This
requirements is likely to drive significant new annual workload
for the SCO and the institutions being evaluated.

For the portion of the bill that requires an injured
student-athlete to be extended the same financial support level
in the event that he or she loses an athletic scholarship, there
will be institutional costs and cost pressures, depending on how
many students this applies to, and the level of their
scholarship support. The bill specifies that a replacement
scholarship will be derived from media rights funds within the
athletics program, but it assumes that there are sufficient
unencumbered funds to cover those costs. Funds spent on student
aid for students who do not have renewed athletics scholarships
put pressure on funds for additional athletics scholarships, as
well as any other activities funded by the athletics program;
typically, high-revenue sports fund the existence of teams in
less popular sports, as well as athletics infrastructure,
coaches' salaries, athletic trainers used across teams, etc. To
the extent that money is diverted for SABR purposes, there will
likely be cost pressure on the institutions' other funds (such
as student fees) to support programs, facilities, and salaries
currently funded by the athletics programs.

The same cost pressure would exist to the extent that students'
medical insurance expenses, as specified, will be paid by
athletic funds. The UC is self-insured, and currently covers
athletic injuries at 100% for at least a year and, in the case
of UC Berkeley, up to two years of treatments even if the
student leaves the campus; this costs the UC more than $100,000
annually. This bill extends the timetable to five years, which
will add significantly to costs for an athlete's injuries.









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The SABR scholarship provisions also apply to student-athletes
whose scholarships are not renewed for reasons not related to
injuries. This bill uses, but does not define, the term
"nondisciplinary," as it applies to the reasons for which a
student-athlete's scholarship is not renewed. This ambiguity is
significant, because it is tied to the financial
responsibilities the institution would have to a student who is
denied a scholarship renewal for non-injury. Presumably,
"nondisciplinary" would include failure to meet minimum grade
requirements, but it is unclear what else might be covered,
since there is broad flexibility to not renew scholarships. This
bill provides an exception for "an athletic program with a
graduation rate that is above 60 percent, disaggregated by
sport". In the sentence, "graduation rate" modifies "athletic
program" rather than "sport"; so, it is unclear whether the
author intends to treat differently two student-athletes within
the same athletics program, who play different sports based upon
their particular sports team's graduation rate.

Whatever the parameters, there will be some number of students
that an affected institution would have to continue to provide
scholarships for, from athletic funds, despite the student's
original athletic scholarship not being renewed. One consequence
of this would be that it creates additional cost pressure on the
areas previously identified, which are currently supported by
athletics funds. Another could, however, result in state savings
to UC system and state savings, to the extent that these
student-athletes would otherwise be placed in the general
financial aid pool along with all other UC students seeking
CalGrants, institutional aid, etc.; mandating that media rights
revenue continue to provide scholarship support to these
students relieves other financial aid sources, to the extent
that these students would have qualified for other sources.

This bill also requires athletics programs to adopt and
implement guidelines to prevent, assess, and treat
sports-related concussions and dehydration; to implement
exercise and supervision guidelines for any student athlete
identified with potentially life-threatening health conditions;
and, to hold specified workshops for student-athletes. The UC
reports that it is already in compliance with these
requirements, and would not incur additional costs.










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