BILL ANALYSIS Ó AB 131 Page 1 ASSEMBLY THIRD READING AB 131 (Cedillo) As Amended May 27, 2011 Majority vote HIGHER EDUCATION 6-3 APPROPRIATIONS 11-5 ----------------------------------------------------------------- |Ayes:|Block, Brownley, Fong, |Ayes:|Fuentes, Blumenfield, | | |Galgiani, Lara, | |Bradford, Charles | | |Portantino | |Calderon, Campos, Davis, | | | | |Hall, Hill, Lara, | | | | |Mitchell, Solorio | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Donnelly, Achadjian, |Nays:|Harkey, Donnelly, | | |Miller | |Nielsen, Norby, Wagner | | | | | | ----------------------------------------------------------------- SUMMARY : Expands eligibility, effective July 1, 2012, for state-administered financial aid to nonresident students exempted from paying nonresident tuition through specified provisions of law ƯAB 540 (Firebaugh), Chapter 814, Statutes of 2001] and expands eligibility for this AB 540 exemption. Specifically, this bill : 1)Makes AB 540 (Firebaugh) students eligible to apply for and participate in: a) Any state-administered student financial aid program, including institutional aid, to the full extent permitted by federal law, and stipulates the number of financial aid awards received by California resident students may not be reduced because of this expanded eligibility; and, b) The California Community Colleges (CCC) Board of Governors (BOG) fee waiver program and declares this provision to be consistent with specified immigration law. 2)Stipulates that AB 540 students are not eligible for Competitive Cal Grant Awards unless funds remain available after all eligible non-AB 540 students have received such awards. AB 131 Page 2 3)Requests the University of California (UC) Board of Regents and requires the California State University (CSU) Board of Trustees and the CCC BOG to establish procedures and forms to enable AB 540 students to apply for and participate in all student aid programs administered by these segments, to the full extent permitted by federal law. 4)Expands eligibility for the AB 540 exemption, effective January 1, 2012, to include attendance and graduation from California technical and adult schools, provided the student attended a California high school for at least one year. (Current law requires attendance for at least three years at a California high school.) EXISTING LAW exempts specified California nonresidents from paying nonresident tuition at UC, CSU, and CCC, also known as the AB 540 nonresident tuition waiver, if they meet all of the following: 1)Attended a California high school for three or more years; 2)Graduated from a California high school or attained an equivalent degree; 3)Registered or attended an accredited California higher education institution beginning after fall of the 2001-02 academic year; and, 4)If an alien without lawful immigration status, has filed an affidavit stating that the student has filed an application to legalize his or her immigration status or will file such an application as soon as he or she is eligible to so do. FISCAL EFFECT : All costs would begin in 2012-13. 1)Cal-Grants . The California Student Aid Commission (CSAC), estimates additional annual General Fund costs of about $13 million for Cal Grants Entitlement Awards beginning in 2013-14, based on current estimated enrollment of AB 540 students at the UC, CSU, and the CCC and assuming similar application and award rates. Applications for the Competitive Grants far exceed the number of grants available, thus no AB 540 students are likely to AB 131 Page 3 receive grant awards in this program. In addition to grant costs, CSAC, in order to accommodate this new, unique cohort of students, will incur: a) first-year General Fund (GF) costs of about $700,000 for IT programming and other implementation activities; and, b) ongoing GF costs of about $250,000 for IT and program support. 2)Institutional aid . For UC and CSU, making AB 540 students eligible for institutional aid will not increase overall spending, but may change the mix of recipients and/or the amounts they received. UC estimates, based on current numbers of AB 540 students, their demographic profile, and average aid awards, that about 390 to 488 students would be eligible for $3.8 million to $4.6 million in UC institutional aid. CSU indicates enrollment of about 3,600 AB 540 students. Assuming up to one-half of these students received institutional aid, with an average award of $4,200, the amount of such aid going to AB 540 students would total about $7.6 million. 3)CCC fee waivers . The revenue loss from CCC BOG fee waivers is offset by increased Proposition 98 funding, and is thus a direct state cost. According to the Chancellor's Office of the CCC, there were 36,000 AB 540 students in the system in 2009-10. Assuming these students averaged six credits per semester, total fee revenue would be $15.6 million. If 45% of those students received fee waivers (the statewide average), the revenue loss (and Proposition 98 cost) would be $7 million. 4)Expanding eligibility for the AB 540 exemption, thus allowing more students to pay in-state tuition, would result in revenue loss to the UC, the CSU, and the CCC from these students, who would otherwise pay nonresident tuition. For example, if the cohort of AB 540 students at the CCC increased by just 2.5% (900 students) and these students take an average of six units per semester, the total revenue loss would be about $1.7 million. A similar impact at CSU would result in a revenue loss of about $400,000. One could argue, however, that many in this cohort are not even attending the CCC or CSU due to AB 131 Page 4 the high cost of nonresident tuition/fees, thus the above revenue losses are likely overstated. On the other hand, making available an AB 540 exemption to those who have attended technical or adult schools would create additional enrollment pressures, to varying degrees, at the segments, and thus the associated state per-student subsidy costs. 5)The availability of state financial aid to AB 540 students would likely, over time, increase their participation in public postsecondary education, and thus increase all of the above costs. Conversely, to the extent the availability of this aid increases the success rate of these students and reduces the time required for them to attain their educational goals, the segments will benefit from these increased efficiencies. COMMENTS : Pursuant to AB 540 (Firebaugh), two groups of students who have attended and graduated from California high schools receive non-resident tuition status: those who do not have legal immigration status and thus cannot establish state residency, and those who are U.S. citizens but are residents of another state. In 2005, Martinez v. Regents of the University of California et al. was filed against UC, CSU, and CCC, challenging the legality of AB 540. In October 2006, a California Superior Court ruled in favor of AB 540, stating its provisions were in accordance with federal law. In September 2008, a California Court of Appeal overturned the Superior Court's ruling in Martinez v. Regents and held that California state law authorizing in-state tuition to "illegal aliens" is preempted by federal immigration law and, thus, void. The decision was appealed, and in November 2010, the California Supreme Court, in a unanimous decision, reversed the Court of Appeal and thus ruled in favor of AB 540. Students who receive a waiver of non-resident tuition at UC, CSU and the CCC still face significant costs, including resident fees, books, supplies, food, rent, transportation, and other miscellaneous items. CSAC estimates the nine-month cost of education in 2010-11 for California students living off-campus to be $16,497, in addition to systemwide and campus fees. Moreover, federal law prohibits undocumented students from receiving any aid from the federal government, such as Pell Grants and federal student loans. Supporters of AB 131 (Cedillo) argue that, in light of recent reports highlighting AB 131 Page 5 the state's need for one million more workers with college degrees, California cannot afford to exclude people or prevent students from attending college, thus providing state and institutional financial assistance to all qualified students is essential. Since AB 540 considers only high school attendance in order to qualify for the nonresident tuition waiver, high school students who combine high school attendance with attendance at an adult or technical school may jeopardize their eligibility for the nonresident tuition exemption if their attendance at the high school is for less than three years. This bill therefore allows two of the three years of required attendance to be at an adult or technical school, provided the student attends a California high school for one year. Analysis Prepared by : Sandra Fried / HIGHER ED. / (916) 319-3960 FN: 0000903