BILL NUMBER: AB 840 CHAPTERED 06/26/06 CHAPTER 43 FILED WITH SECRETARY OF STATE JUNE 26, 2006 APPROVED BY GOVERNOR JUNE 26, 2006 PASSED THE ASSEMBLY JUNE 8, 2006 PASSED THE SENATE MAY 30, 2006 AMENDED IN SENATE MAY 26, 2006 AMENDED IN SENATE MAY 3, 2006 AMENDED IN SENATE MARCH 7, 2006 AMENDED IN ASSEMBLY JANUARY 23, 2006 AMENDED IN ASSEMBLY JANUARY 13, 2006 AMENDED IN ASSEMBLY JANUARY 5, 2006 INTRODUCED BY Assembly Member Arambula (Principal coauthor: Assembly Member Liu) (Coauthors: Assembly Members Nava and Ruskin) (Coauthors: Senators Scott and Speier) FEBRUARY 18, 2005 An act to amend Sections 69433.9, 69436, and 69517.5 of the Education Code, relating to student financial aid, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 840, Arambula Student financial aid: California Community College Transfer Cal Grant Entitlement Program. (1) Existing law, known as the Ortiz-Pacheco-Poochigian-Vasconcellos Cal Grant Act, establishes, among other programs, the California Community College Transfer Cal Grant Entitlement Program and the Competitive Cal Grant A and B award program, under the administration of the Student Aid Commission, and establishes eligibility requirements for awards under these programs. Existing law requires that a participant in the California Community College Transfer Cal Grant Entitlement Program, among other things, graduate from a California high school or its equivalent during or after the 2000-01 academic year. This bill would, commencing with the 2006-07 award year, exempt from this requirement a student who graduated from a high school outside of California due solely to orders received from a branch of the United States Armed Forces by that student or by that student's parent or guardian that required that student to be outside of California at the time of high school graduation. The bill would also exempt from this requirement students for whom claims under this program were paid prior to December 1, 2005, and students for whom a valid claim under this program for the 2004-05 award year or the 2005-06 award year was or is paid on or after December 1, 2005, but no later than October 15, 2006. The bill would require the commission, commencing with the 2006-07 award year, to make preliminary awards to all applicants currently eligible for an award under the California Community College Transfer Cal Grant Entitlement Program and to require each person who receives a preliminary award to affirm, in writing, under penalty of perjury, that he or she meets specified requirements for eligibility in the program. By requiring that affirmation under penalty of perjury, the bill would expand the scope of an existing crime, thereby imposing a state-mandated local program. The bill would require the commission to notify each person who receives a preliminary award under this provision that his or her award is subject to an audit pursuant to the bill. The bill would require the commission to select, at random, a minimum of 10% of the new and renewal awards made under the California Community College Transfer Cal Grant Entitlement Program, and to require, prior to the disbursement of funds to an affected postsecondary institution under the program, that the institution verify that the student meets specified requirements for eligibility in the program. The bill would provide that an award that is audited under this provision and found to be valid is not subject to a subsequent audit. The bill would require the commission to seek repayment of any and all funds found to be improperly disbursed under the program. The bill would require the commission, on or before November 1 of each year, to submit a report to the Legislature and the Governor including, but not necessarily limited to, the number of awards made under this program in the preceding 12 months and the number of new and renewal California Community College Transfer Cal Grant Entitlement awards selected, in the preceding 12 months, for verification under the bill, as categorized by type of postsecondary institution, as specified. (2) Existing law establishes the Student Aid Commission as the primary state agency for the administration of state-authorized student financial aid programs available to students attending all segments of postsecondary education. Existing law requires the commission, with the assistance of the Attorney General's office, to seek refunds on any awards to students made under specified programs that resulted from the student or his or her parents, or both, reporting information concerning their status incorrectly, with the incorrect information leading to the establishment of the student's financial eligibility to receive an award. This bill would extend the application of this provision to awards made to students under the Ortiz-Pacheco-Poochigian-Vasconcellos Cal Grant Act. (3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. (4) This bill would declare that it is to take effect immediately as an urgency statute. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. (a) The Legislature finds and declares all of the following: (1) It has been, and it remains, the intent of the Legislature that the California Community College Transfer Cal Grant Entitlement Program established by Article 4 (commencing with Section 69436) of Chapter 1.7 of Part 42 of the Education Code provide future opportunities for California high school pupils who choose to begin their four-year baccalaureate education at a campus of the California Community Colleges. (2) Reflecting this intent, the Legislature enacted provisions in the Statutes of 2000 to restrict eligibility for the California Community College Transfer Cal Grant Entitlement Program to students who were residents of California at the time of high school graduation or its equivalent. (3) Subsequent to the enactment of that statute, the Student Aid Commission failed to implement these provisions and granted California Community College Transfer Entitlement awards to approximately 1,000 students who were not residents of California at the time of high school graduation or its equivalent. (4) These students are qualified for a Cal Grant award in all other aspects, including current California residency, minimum community college grade point average, financial need, and continuing satisfactory academic progress. (5) These students were not notified of the residency requirement related to their status at the time of high school graduation or its equivalent. (6) These students have accepted these awards and have relied upon, or will rely upon, this assistance to make choices regarding higher education and to enroll in, and pursue, a four-year baccalaureate degree in California. (7) These students, by virtue of receiving a California Community College Transfer Cal Grant Entitlement Award, were not considered for the Cal Grant competitive awards, for which some of these students might have qualified if given the opportunity to be considered, because these programs do not have a restriction on residency at the time of high school graduation or its equivalent. (b) It is the intent of the Legislature to make a narrow retroactive change in the eligibility criteria of the California Community College Transfer Cal Grant Entitlement Program to make it unnecessary to attempt to collect funds that have already been received by students and to allow certain students who received their awards in error to complete their education with the support promised to them by the State of California, but to further ensure that the original eligibility criteria are strictly enforced for awards now being made for the 2006-07 academic year and beyond. SEC. 2. Section 69433.9 of the Education Code is amended to read: 69433.9. To be eligible to receive a Cal Grant award under this chapter, a student shall be all of the following: (a) A citizen of the United States, or an eligible noncitizen, as defined for purposes of financial aid programs under Title IV of the federal Higher Education Act of 1965 (20 U.S.C. Secs. 1070 et seq., as from time to time amended). (b) In compliance with all applicable Selective Service registration requirements. (c) Not incarcerated. (d) Not in default on any student loan within the meaning of Section 69507.5. (e) For purposes of Article 2 (commencing with Section 69434), Article 3 (commencing with Section 69435), and Article 4 (commencing with Section 69436), except as provided in subdivision (d) of Section 69436, at the time of high school graduation or its equivalent, be a resident of California. SEC. 3. Section 69436 of the Education Code is amended to read: 69436. (a) Commencing with the 2001-02 academic year, and each academic year thereafter, a student who was not awarded a Cal Grant A or B award pursuant to Article 2 (commencing with Section 69434) or Article 3 (commencing with Section 69435) at the time of his or her high school graduation but, at the time of transfer from a California community college to a qualifying baccalaureate program, meets all of the criteria set forth in subdivision (b), shall be entitled to a Cal Grant A or B award. (b) Any California resident transferring from a California community college to a qualifying institution that offers a baccalaureate degree is entitled to receive, and the commission shall award, a Cal Grant A or B award depending on the eligibility determined pursuant to subdivision (c), if all of the following criteria are met: (1) A complete official financial aid application has been submitted or postmarked pursuant to Section 69432.9, no later than the March 2 of the year immediately preceding the award year. (2) The student demonstrates financial need pursuant to Section 69433. (3) The student has earned a community college grade point average of at least 2.4 on a 4.0 scale and is eligible to transfer to a qualifying institution that offers a baccalaureate degree. (4) The student's household has an income and asset level not exceeding the limits set forth in Section 69432.7. (5) The student is pursuing a baccalaureate degree that is offered by a qualifying institution. (6) He or she is enrolled at least part time. (7) The student meets the general Cal Grant eligibility requirements set forth in Article 1 (commencing with Section 69430). (8) The student does not meet the federal definition of an independent student, as set forth in subsection (d) of Section 1087vv of Title 20 of the United States Code, with the exception of: (A) A student who is an orphan or a ward of the court and who will not be 24 years old or older by December 31 of the award year. (B) A student who is a veteran of the United States Armed Forces and who will not be 24 years old or older by December 31 of the award year. (C) A student who is a married person and who will not be 24 years old or older by December 31 of the award year. (D) A student who will not be 24 years old or older by December 31 of the award year and who has dependents other than a spouse. (E) A student who will not be 24 years old or older by December 31 of the award year and for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances. (9) The student graduated from a California high school or its equivalent during or after the 2000-01 academic year. (c) The amount and type of the award pursuant to this article shall be determined as follows: (1) For applicants with income and assets at or under the Cal Grant A limits, the award amount shall be the amount established pursuant to Article 2 (commencing with Section 69434). (2) For applicants with income and assets at or under the Cal Grant B limits, the award amount shall be the amount established pursuant to Article 3 (commencing with Section 69435). (d) (1) Commencing with the 2006-07 award year, a student meeting the requirements of paragraph (9) of subdivision (b) by means of high school graduation, rather than its equivalent, shall be required to have graduated from a California high school, unless that California resident graduated from a high school outside of California due solely to orders received from a branch of the United States Armed Forces by that student or by that student's parent or guardian that required that student to be outside of California at the time of high school graduation. (2) For the purposes of this article, both of the following are exempt from the requirements of subdivision (e) of Section 69433.9 and paragraph (9) of subdivision (b) of this section: (A) A student for whom a claim under this article was paid prior to December 1, 2005. (B) A student for whom a claim under this article for the 2004-05 award year or the 2005-06 award year was or is paid on or after December 1, 2005, but no later than October 15, 2006. (3) (A) Commencing with the 2006-07 award year, the commission shall make preliminary awards to all applicants currently eligible for an award under this article. At the time an applicant receives a preliminary award, the commission shall require that applicant to affirm, in writing, under penalty of perjury, that he or she meets the requirements set forth in subdivision (e) of Section 69433.9, paragraph (9) of subdivision (b) of this section, and paragraph (1) of this subdivision. The commission shall notify each person who receives a preliminary award under this paragraph that his or her award is subject to an audit pursuant to subparagraph (B). (B) The commission shall select, at random, a minimum of 10 percent of the new and renewal awards made under subparagraph (A), and shall require, prior to the disbursement of Cal Grant funds to the affected postsecondary institution, that the institution verify that the recipient meets the requirements of subdivision (e) of Section 69433.9, paragraph (9) of subdivision (b) of this section, and paragraph (1) of this subdivision. An award that is audited under this paragraph and found to be valid shall not be subject to a subsequent audit. (C) Pursuant to Section 69517.5, the commission shall seek repayment of any and all funds found to be improperly disbursed under this article. (D) On or before November 1 of each year, the commission shall submit a report to the Legislature and the Governor including, but not necessarily limited to, both of the following: (1) The number of awards made under this article in the preceding 12 months. (2) The number of new and renewal awards selected, in the preceding 12 months, for verification under subparagraph (B), and the results of that verification with respect to students at the University of California, at the California State University, at independent nonprofit institutions, and at independent for-profit institutions. SEC. 4. Section 69517.5 of the Education Code is amended to read: 69517.5. The Student Aid Commission shall, with the assistance of the Attorney General's office, seek refunds on any awards to students made under this part that resulted from the student or his or her parents, or both, reporting information concerning their status incorrectly, with the incorrect information leading to the establishment of the student's financial eligibility to receive an award. SEC. 5. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution. SEC. 6. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to ensure that students erroneously granted awards under the Ortiz-Pacheco-Poochigian-Vasconcellos Cal Grant Act may continue their education, it is necessary that this act take effect immediately.