BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 131
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          ASSEMBLY THIRD READING
          AB 131 (Cedillo)
          As Amended  May 27, 2011
          Majority vote 

           HIGHER EDUCATION    6-3         APPROPRIATIONS      11-5        
           
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          |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.









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          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 








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            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 








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            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 








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          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 


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