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