Two years ago California voters passed Proposition 30, also known as the ‘millionaires’ tax.” Technically dubbed “The Schools and Local Public Safety Protection Act of 2012,” college students statewide staged protests in support of the measure—only to learn after its passage that it would actually do little to keep tuition and other out-of-pocket costs down.

In exchange for implementing tuition freezes, California colleges and universities were supposed to get a cut of the Proposition 30 tax windfall. So higher education reps came out in full force to back the tax hike.

Yet Gov. Jerry Brown and University of California President Janet Napolitano have been battling over a bigger slice of windfall pie for the UC system. Basically, since UC didn't get more of the tax money, the Regents just made good on their threat to thaw the tuition freeze and approve huge tuition hikes. [For more on Proposition 30, see my previous post at The Independent Institute Beacon Blog]. As the Los Angeles Times reports:

A 14-7 vote by the regents gave Napolitano the authority to raise tuition each year for the next five years, with the amount dependent on state funding. The annual increase could be as high as 5% — which by 2019 could add up to a cumulative 28% increase over the current tuition. …

The cost of a UC education — tuition, room and board, books and other expenses — currently can total $30,000 for state residents. Students from other states and countries pay a $23,000 premium in addition to tuition.

The California legislature is now scrambling to come up with an alternative—although it cannot force the Regents to alter its decision. Among the business-as-usual plans (out-of-state tuition hikes, enrollment caps, and more government funding) there were a few notable ideas that would actually contribute to keeping the cost of a college degree down.

The Assembly plan would move the UC system to zero-based budgeting. Under this plan, every budget line is up for review—instead of near-automatic increases for every item over-and-above the previous year’s funding level. This is a good idea for all higher education institutions because it makes it easier to identify and cut bloated bureacracy and waste.

The Senate plan would offer incentive grants for students to finish their four-year degrees in four years, instead of six.

The best plan of all, however, would be ending annual lump sum appropriations to bureaucratic institutions altogether. Instead, those funds should be directed to students directly in the form of grants. If students did not successfully complete their degree programs, those grants would converted to loans that they’d have to repay.  So structured, institutions would have to compete for students to get state funding, and they’d feel powerful pressure to keep costs down and quality high.