BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1466
                                                                  Page  1


          SENATE THIRD READING
          SB 1466 (De León)
          As Amended  August 20, 2012
          Majority vote 

           SENATE VOTE  :32-6  
           
           HIGHER EDUCATION    8-1         APPROPRIATIONS      12-5        
           
           ----------------------------------------------------------------- 
          |Ayes:|Block, Olsen, Achadjian,  |Ayes:|Gatto, Blumenfield,       |
          |     |Brownley, Fong, Galgiani, |     |Bradford, Charles         |
          |     |Lara, Portantino          |     |Calderon, Campos, Davis,  |
          |     |                          |     |Fuentes, Hall, Hill,      |
          |     |                          |     |Cedillo, Mitchell,        |
          |     |                          |     |Solorio                   |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Miller                    |Nays:|Harkey, Donnelly,         |
          |     |                          |     |Nielsen, Norby, Wagner    |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :   Establishes priorities for allocation within the Cal 
          Grant program of funds derived from the Higher Education 
          Investment Tax Credit (HEITC) program.  Specifically,  this bill  :

          1)Requires the California Student Aid Commission (CSAC), 
            commencing with the 2014-15 academic year, to apply the 
            following three priorities when allocating funds from the 
            HEITC program:

             a)   First priority to students otherwise ineligible for an 
               Entitlement Cal Grant A or B award or a Cal Grant Transfer 
               Entitlement award but who meet eligibility requirements in 
               place for the 2011-12 academic year;

             b)   Second priority to students otherwise ineligible for a 
               Competitive Cal Grant A or B award but who meet eligibility 
               requirements in place for the 2011-12 academic year, up to 
               the maximum number of awards authorized for this program in 
               the annual budget act; and,

             c)   Third priority to all other students who meet 
               eligibility requirements in place for 2011-12 for a Cal 








                                                                  SB 1466
                                                                  Page  2


               Grant award, except that these students may have a 
               household income of an amount determined by CSAC, as 
               specified.

          2)States intent that monies in the HEITC program are intended to 
            supplement other monies provided for the Cal Grant program and 
            are intended for students who would otherwise not be eligible 
            except for the expanded eligibility provided above.

          3)Requires CSAC do the following:

             a)   Certify the HEITC funds available for distribution, 
               beginning April 1, 2014, and each April 1 thereafter, for 
               the following award year, and,

             b)   Determine the highest maximum household income level 
               that is capable of being supported by the fund (specified 
               not to exceed 80% of the fund balance) and requires CSAC to 
               thereafter adopt this amount as the maximum household 
               income level for the following award year, and,

             c)   Notify students that the award is for one academic year 
               only and is not an entitlement.

          4)Specifies that awards are payable only to the extent that 
            funds are available for distribution from the HEITC special 
            fund and any remaining funds be available for allocation in 
            future years.

          5)Sunsets all of the above on December 1, 2018, or until are 
            HEITC monies are expended, whichever comes last.

          6)Makes all of the above operative upon verification by the 
            Franchise Tax Board to CSAC that legislation has been enacted 
            that provides for an investment tax credit for the purposes of 
            funding this act.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee, costs would only be incurred if future legislation 
          enacts a higher education investment tax credit.

          1)With respect to the first priority, allocations from the HEITC 
            Fund would depend on the extent that students are ineligible 
            for Cal Grants in 2014-15 and thereafter, but would have been 








                                                                  SB 1466
                                                                  Page  3


            eligible under the criteria in place for 2011-12.  This would 
            depend on future actions of the Legislature with respect to 
            Cal Grant eligibility.  For 2013-14, there are no changes to 
            Cal Grant eligibility for students.

          2)With respect to the second priority, the Competitive Cal Grant 
            program is currently over-subscribed by about 8:1, with tens 
            of thousands of currently eligible students not receiving 
            assistance, so it is highly unlikely that any additional 
            students would a receive assistance under the provisions of 
            this bill.

          3)With respect to the third priority, the current income ceiling 
            for Cal Grant A eligibility (for a family of six or more) is 
            $92,600, with declining amounts for smaller family sizes.  If 
            the income ceiling under the HEITC was set at $100,000, CSAC 
            estimates (based on current Cal Grant award amounts) that 
            allocations from the HEITC Fund would be about $200 million 
            from 2014-15 through 2017-18, with the last year assisting 
            about 9,200 students.  An increase in the HEITC income ceiling 
            beyond $100,000 would allow for additional allocations to 
            qualifying students, assuming monies are remaining in the 
            HEITC Fund.

           COMMENTS  :   The author believes that creative measures are 
          needed to assist students following years of budget cuts to 
          higher education.  The state's contribution to higher education 
          has steadily declined, and the author's office calculates that 
          the share of expenditures borne by students, in the form of 
          tuition and fees, has tripled from 13% in 2000 to 40% in 2011.  


           Analysis Prepared by  :    Sandra Fried / HIGHER ED. / (916) 
          319-3960 


                                                                FN: 0004995