BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 606
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          ASSEMBLY THIRD READING
          AB 606 (Williams and Quirk-Silva)
          As Amended  April 11, 2013
          Majority vote 

           HIGHER EDUCATION    12-0        APPROPRIATIONS      17-0        
           
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          |Ayes:|Williams, Chávez, Bloom,  |Ayes:|Gatto, Harkey, Bigelow,   |
          |     |Fong, Jones-Sawyer,       |     |Bocanegra, Bradford, Ian  |
          |     |Levine, Waldron, Medina,  |     |Calderon, Campos,         |
          |     |Olsen, Quirk-Silva,       |     |Donnelly, Eggman, Gomez,  |
          |     |Weber, Wilk               |     |Hall, Ammiano, Linder,    |
          |     |                          |     |Pan, Quirk, Wagner, Weber |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           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,









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               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:

               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, 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  
            program.

          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  
            programs.

          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.   








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            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  
            Sections 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  
            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  
            Section 76071). 
           
           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, the bill has the following associated costs:

          1)Assuming 10 participating campuses are representative of the  
            entire system, and assuming increases, by the third year of  
            the pilot program, in new financial aid awards to students at  
            these campuses of 10% for the High School Entitlement Cal  
            Grant B and 5% for the Transfer Entitlement Cal Grant A and B,  
            General Fund costs would be about $200,000 in 2014-15 and  
            about $600,000 in 2015-16.

          2)The CCCCO will incur annual costs of around $75,000 to  
            administer the pilot program.

          It should be noted that to the extent the pilot program leads to  
          increases in federal financial aid awards to students at the  
          participating colleges, and further implementation leads to  
          increased state and federal financial aid awards to students  
          throughout the community college system, this could result in  
          overall gains in student success and reductions in the average  
          time for students to complete their educational goals, with  
          resulting efficiency benefits to CCC.








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           COMMENTS  :  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  
          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.
           
           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  








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          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.  

          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.

          Public Policy Institute of California (PPIC) report.   In March  
          2013, 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  
          forms. 

          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  








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          & 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.  

          Previous legislation:  AB 91 (Portantino) of 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) of 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.

           
          Analysis Prepared by  :    Jeanice Warden / HIGHER ED. / (916)  
          319-3960 


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