BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 1460 (Cedillo) Hearing Date: 05/03/2010 Amended: 04/21/2010 Consultant: Dan Troy Policy Vote: ED 6-2 _________________________________________________________________ ____ BILL SUMMARY: SB 1460 would establish the California Dream Act for the purposes of expanding eligibility for state-administered financial aid to students exempted from paying nonresident tuition through specified provisions in law. The bill would also extend the nonresident tuition exemption to graduates of adult education and technical schools, provided that the individuals spent at least one year in a California high school. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Cal Grants $38,000 $38,000 General CCC fee waivers $2,350 $4,700 $4,700 General* UC aid $900 $1,800 $1,800 General** CSU aid $1,300 $2,600 $2,600 General** *Counts toward meeting the Proposition 98 minimum funding guarantee **Combination of General Fund support and fee revenue _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense File. AB 540 (Firebaugh) of 2001 exempted individuals from paying nonresident tuition at public California postsecondary institutions if they attended a California high school for at least 3 years, graduated from a California high school or obtained an equivalent degree, registered or attended an accredited California postsecondary institution not before the 2001-02 year, and, for an alien without unlawful immigration status, filed an affidavit stating that the student has applied to legalize their immigration status or will do so as soon as eligible. Effectively, AB 540 provided in-state tuition on the basis of secondary school attendance rather than on legal residency. This bill would extend eligibility for any state-administered postsecondary institutional financial aid programs to AB 540 pupils, including Cal Grant awards, institutional aid, and fee waivers provided by the Board of Governors of the California Community Colleges. The bill would also expand the exemption of nonresident tuition to graduates of adult education and technical schools (current law only specifies high schools), as long as the pupil has completed at least one year in a California high school. Page 2 SB 1460 (Cedillo) According to estimates calculated by the California Student Aid Commission (CSAC), this bill would result in over $38 million in new annual expenditures from the Cal Grant program. The University of California (UC) estimates that 605 AB 540 students would be eligible for approximately $1.8 million in institutional aid if this bill were in effect. Assuming 65 percent more AB 540 FTEs attend the California State University (CSU) than UC (CSU has approximately 65 percent more FTEs than UC), the cost would be approximately $2.6 million, assuming an average award of $2,661. While it is unclear what response UC and CSU would take toward allocating these institutional awards - they may choose to shift more institutional resources toward aid to meet increased eligibility or they may allocate lower average grant awards to keep system-wide costs neutral - it is clear that increasing the pool of eligibility creates pressure to increase the amount of institutional resources that go toward financial aid. According to the Chancellor's Office of the California Community Colleges (CCCs), there were 34,000 AB 540 students enrolled in the CCCs in 2008-09. Assuming each student took 6 credits per semester for two semesters, annual fee revenue would be $10.4 million. Further assuming that 45 percent of those fees were waived (similar to the overall percentage of students receiving waivers), the lost revenue would be $4.7 million. As community college fee waivers are offset by Proposition 98 general fund appropriations, this provision would have a direct state cost. The bill's provision to extend the nonresident tuition exemption to those graduating from any secondary school would also likely increase state costs, though this cost is unknown at this time. There have been several legislative efforts to expand postsecondary financial aid to AB 540 students. SB 160 (Cedillo), which would have made AB 540 students eligible for UC and CSU institutional aid, was held on this committee's suspense file in 2009. Other similar measures, SB 160 (Cedillo, 2005) and SB 1 (Cedillo, 2007) and SB 1301 (2008) were vetoed by the Governor. The Governor's veto message of SB 1301 cited the state's precarious fiscal condition.