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.