BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 606
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          Date of Hearing:   April 9, 2013

                                 Das Williams, Chair
                    AB 606 (Williams) - As Amended:  April 1, 2013
          SUBJECT  :   Student financial aid: community colleges.

           SUMMARY  :   Requires the California Community College  
          Chancellor's Office (CCCCO) to establish a voluntary pilot  
          program to increase student participation in state and federal  
          financial aid programs, outlines the parameters of the pilot,  
          and requires the Legislative Analyst's Office (LAO) to report to  
          the Legislature on the results of the pilot program and to make  
          recommendations for its statewide expansion.  Specifically,  this  
          bill  :  

          1)Requires the CCCCO to establish a voluntary pilot program to  
            increase student participation in state and federal financial  
            aid programs.  More specifically it:

             a)   Requires the CCC Chancellor to select no more than 10  
               campuses from those that volunteer to participate;

             b)   Requires, to the extent possible, that the geographic,  
               economic and demographic diversity of participating  
               campuses be ensured;

             c)   Establishes the following two target populations of  
               potentially eligible students to be identified for  
               participation in the pilot program:

               i)     Those who complete an application for either a CCC  
                 Board of Governors (BOG) fee waiver but not a Free  
                 Application for Federal Student Aid (FAFSA), and,

               ii)    Those who do not receive any campus, state, or  
                 federal aid.

             d)   Establishes the goal of the pilot program to increase  
               student participation in both state and federal financial  
               aid programs and take advantage of the federal American  
               Opportunity Tax Credit by actions that include, but are not  
               limited to:


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               i)     Identifying strategies and best practices for  
                 increasing the number of students who submit the FAFSA,

               ii)    Examining and developing strategies for increasing  
                 student participation in financial aid programs beyond  
                 the BOG Fee Waiver program, and,

               iii)   Identifying, to the extent possible, the extent to  
                 which students claim the federal American Opportunity Tax  
                 Credit and developing strategies for increasing the  
                 number of students who claim the credit.

          2)Encourages the CCCCO to pursue both private and federal  
            funding to support implementation and operation of the pilot  

          3)Requires the Legislative Analyst's Office (LAO) to report to  
            the Legislature by January 10, 2016, as specified, based on  
            information provided by the CCCCO on the strategies and  
            techniques employed by participating campuses and data on  
            student participation in state and federal financial aid  

          4)Repeals these provisions as of January 1, 2017.

           EXISTING LAW  :  

          1)Provides for a variety of student financial aid programs  
            including the Cal Grant programs and the CCC (BOG) fee waiver  
            program.  Current law requires that eligibility for a Cal  
            Grant and the determination of financial need be accomplished  
            using FAFSA, and that this application be used for all  
            programs funded by the state or a public institution of  
            post-secondary education as well as all federal programs  
            administered by a postsecondary educational institution.   
            Current law makes an exception to this requirement for the BOG  
            fee waiver program which is authorized to use a simplified  
            application designed for that sole purpose (Education Code  
            [EC]  69432.9 and  69433).

          2)Requires the CCCCO to develop a statement that individual  
            students will be asked to sign, which acknowledges that  
            federal and state funds are available to assist with the costs  
            of college and that information regarding these programs, and  
            assistance in applying for those funds can be obtained at the  


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            financial aid office.  The Chancellor is required to request  
            the colleges to require students to sign this acknowledgment  
            in the application for enrollment at all campuses of the CCC.   
            Additionally, current law requires the CCCCO to develop a  
            statement to individual students receiving the BOG fee waiver,  
            who did not apply for federal student aid, informing them  
            about the benefits of the federal programs, the application  
            process, and the availability of assistance to apply for these  
            programs;  the CCCCO is required to request colleges to  
            provide this statement to all students who meet this  
            description (EC  76071). 
           FISCAL EFFECT  :   In an analysis of a virtually identical bill in  
          2011, the Senate Appropriations Committee determined that  
          greater participation in aid programs will result in more  
          federal aid for CCC students but will also lead to increased  
          state costs through increased access to Cal Grant B awards.   
          Assuming a 10% increase in student participation in aid for 10  
          representative CCC campuses, this bill would drive new General  
          Fund costs of approximately $440,000.  Further, the activities  
          for administering the pilot would likely result in costs of  
          approximately $60,000 to $80,000.  There would also be  
          undetermined costs for implementation at the campus level,  
          though the local districts would undertake the activities at  
          their own discretions.  The CCCCO is hopeful of receiving  
          federal grants or private donations to assist with costs.  

           COMMENTS  :   Background  :  The FAFSA is the core document used to  
          determine eligibility for all major federal and state financial  
          aid programs, including Cal Grant, Pell Grant, institutional aid  
          at the University of California and the California State  
          University, work-study awards, scholarships, and federal student  
          loans.  The BOG Fee Waiver program provides relief from CCC fees  
          for financially needy students.  A CCC student may apply for a  
          BOG fee waiver by submitting a FAFSA or by submitting a Short  
          Form, which requires less information and is simpler to complete  
          than the FAFSA.

          The federal American Opportunity Tax Credit is a credit that can  
          be claimed for expenses paid for tuition, certain fees, and  
          course materials for higher education.  The tax credit refunds  
          up to $2,500 in educational costs for students with modified  
          adjusted gross incomes of $80,000 or less ($160,000 or less for  
          joint filers).  Additionally, 40% of the credit (up to $1,000)  
          is refundable; this means a student can receive the credit even  


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          if he/she owes no tax.  Currently, it is unclear as to how many  
          CCC students know about this tax credit and take advantage of  
          the tax credit.

           Need for the bill  .  Several reports have highlighted the fact  
          that CCC students have significant financial need but are the  
          least likely to take advantage of the federal financial aid  
          support that is available to them.  A research brief issued by  
          MPR Associates, Inc. in October 2009 (and based upon 2006 - 2007  
          enrollment data - the most recent comprehensive data on this  
          issue) noted that fewer than 230,000 (about 10%) of degree  
          seeking students at the CCC received federal Pell Grants.  The  
          most common form of financial aid was a BOG fee waiver, given to  
          540,000 students (26% of enrolled students).  About 305,000 of  
          these students received only a fee waiver and of those, 110,000  
          applied for federal aid but did not receive it with the most  
          common reasons for not qualifying being 1) they were part-time,  
          2) their income or expected family contribution was too high, or  
          3) they did not meet citizenship, academic, or other  
          requirements for federal financial aid.  

          Additionally, the Institute for College Success & Access (TICAS)  
          issued a report (March 2010) finding that only 33% of CCC  
          students apply for federal financial aid compared to 46% of  
          community college students in other states.  TICAS argued that  
          CCC students are less likely than those in other states to  
          complete the FAFSA.  It is possible that CCC students are  
          therefore not accessing an estimated $500 million in federal aid  
          that would otherwise be available to them.  Despite not having  
          more recent comprehensive data available, according to the CCC  
          Chancellor's Office, approximately 80% of BOG fee waiver  
          recipients filed a FAFSA in 2010 - 2011.  The Chancellor's  
          Office found that the BOG fee waiver program has grown  
          substantially over the past eight years.  For example, in 2002-  
          2003, 597,000 CCC students received $102.7 million in BOG fee  
          waivers compared to 2010 - 2011, those figures grew more than  
          89% over the comparison year, with over 1,130,000 students  
          receiving more than $410 million in BOG fee waivers.

          According to the author, this measure attempts to gather  
          specific information on the reasons and strategies specific to  
          California's students and community colleges to determine why  
          CCC students do not submit the FAFSA in greater numbers and to  
          identify intervention strategies to increase their participation  
          in state and federal financial aid programs.


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           Public Policy Institute of California (PPIC) report  .   Last  
          month, PPIC issued a report that found it may be worth  
          re-evaluating the need-based criterion of the BOG fee-waiver  
          system. According to PPIC, BOG waivers currently limit the CCC's  
          ability to generate revenue from about one-third of their  
          students.   Income thresholds are relatively high, suggesting  
          that marginal BOG-qualifying students may be able to pay CCC  
          fees at the current level.  The LAO's 2011-12 budget analysis  
          cites the example of an independent student living alone  
          qualifying for a BOG waiver with an income of up to $45,000, or  
          $80,000 with one child.  Reducing such thresholds may not  
          necessarily discourage access, given that lower income students  
          are likely to be eligible for federal grants.   PPIC finds that  
          it is possible that BOG waivers crowd out funding that might  
          come from the federal government.   

          PPIC suggests one option for addressing this situation would be  
          to require students to apply for federal financial aid in order  
          to receive a BOG waiver.  Additionally, PPIC recommends high  
          schools, colleges, and the state should strive to ensure that  
          students are made aware of the availability of federal aid, and  
          should make every effort to help students complete the necessary  

           Increased Pell Grant awards  :  Funding for Pell Grants has  
          doubled since 2008-the award is $5,550 for the 2010-2011 award  
          year, and starting with the 2013-2014 academic year, the maximum  
          grant will automatically increase by the Consumer Price Index  
          rate.  These increased Pell Grant awards will provide additional  
          direct aid to low-income students and families in future years.

           Student success  :  The Institute for Higher Education Leadership  
          & Policy (IHELP) in its report, Rules of the Game: Barriers to  
          Completion (February 2007), found that enrollment patterns are  
          related to student success.  In particular, completion was more  
          likely among those who: attended full time in a majority of  
          terms enrolled; enrolled continuously without taking time off;  
          completed an orientation course; dropped few of their courses;  
          or registered on time for most of their courses.  Only about 33%  
          of students enrolled full time (12+ units) in a majority of the  
          terms they attended, yet these students were four times more  
          likely to complete than the two-thirds who enrolled part-time in  
          most terms.  


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           Previous legislation  :  AB 91 (Portantino , 2011)  contained  
          virtually identical provisions to this measure, was vetoed by  
          Governor Brown as unnecessary since the CCCCO can work with CCC  
          districts to meet the objectives of this bill.  AB 1997  
          (Portantino, 2010), which contained virtually identical  
          provisions to this bill and AB 91, was vetoed by Governor  
          Schwarzenegger for the same reasons AB 91 was vetoed.   AB 668  
          (Portantino), Chapter 607, Statutes of 2007, required the CCCCO  
          to develop statements for students regarding the availability of  
          federal financial aid.  As introduced, this bill would have  
          provided a financial incentive to CCC campuses for every student  
          who received a Pell Grant.


          California Communities United Institute
          Kern Community College District
          Los Angeles Community College District
          Los Rios Community College District
          Service Employees International Union (SEIU)
          West Kern Community College District
          Yosemite Community College District

          None on file.

          Analysis Prepared by  :    Jeanice Warden / HIGHER ED. / (916)