BILL ANALYSIS                                                                                                                                                                                                    






                         SENATE COMMITTEE ON EDUCATION
                                Carol Liu, Chair
                           2013-2014 Regular Session
                                        

          BILL NO:       AB 606
          AUTHOR:        Williams
          AMENDED:       April 11, 2013
          FISCAL COMM:   Yes            HEARING DATE:  June 19, 2013
          URGENCY:       No             CONSULTANT:Kathleen Chavira

           SUBJECT  :  Community colleges financial aid pilot program.
          
           SUMMARY  

          This bill 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.

           BACKGROUND  

          Current law provides for a variety of student financial aid  
          programs including the Cal Grant programs and the Community  
          College Board of Governors (BOG) Fee Waiver program.   
          Current law requires that eligibility for a Cal Grant and  
          the determination of financial need be accomplished using  
          the federal financial need methodology and application (the  
          Federal Application for Student Assistance, or 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  69432.9,  
           69433)

          Current law requires the BOG to charge each student a $46  
          per unit per semester fee effective with the summer term of  
          2012. Current law exempts certain students from this fee  
          requirement, as specified, including students who meet  




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          specified income requirements. (EC  76300)

          Current law 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  
          California Community Colleges.  

          Current law also requires the California Community College  
          Chancellor's Office (CCCCO) to develop a statement to  
          individual students receiving the Community College Board  
          of Governors (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 and to request colleges  
          to provide this statement to all students who meet this  
          description.
          (EC  76071)

           ANALYSIS
           
           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 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  




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                         application for either a BOG fee waiver or a  
                         FAFSA.

                           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 by  
                    actions that include, but are not limited to:

                           i)                  Identifying strategies  
                         and best practices for increasing the number  
                         of students who submit the Free Application  
                         for Federal Student Aid (FAFSA).

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

                           iii)    Identify the extent to which  
                         students claim the federal American  
                         Opportunity Tax Credit and strategies for  
                         increasing the number of students who do so.

          2)   Encourages the CCCCO to pursue both private and  
               federal funding to support implementation and  
               operation of the pilot program.
          3)   Requires the California Community College Chancellor's  
               Office (CCCCO) to provide information on the  
               strategies and techniques employed by participating  
               campuses and data on student participation in state  
               and federal financial aid programs to the Legislative  
               Analyst's Office (LAO) by January 10, 2016.

          4)   Requires the LAO, based upon the information received,  
               to:
           
                    a)             Report to the Legislature on the  
                    results of the pilot program.

                    b)             Make recommendations for statewide  
                    expansion of the pilot.

                    c)             Include in its report a  




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                    statistical analysis of financial aid  
                    applications and awards before and after the  
                    pilot and a summary of the major strategies and  
                    techniques employed by participating campuses.

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

           STAFF COMMENTS  

           1)   Need for the bill  .   According to the author, this  
               measure is necessary to gather information on the  
               reasons and strategies specific to California's  
               students and community colleges to determine why  
               California Community College (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.  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  
               2009 research brief issued by MPR Associates, Inc.  
               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.  

           2)   Related budget activity  .  The Governor's proposed  
               budget for 2013-14 would have required all students  
               seeking financial aid to fill out a Free Application  
               for Federal Student Aid (FAFSA) form.  In the May  
               Revision, this proposal was modified to allow students  
               one academic term to provide financial need  
               documentation and delay implementation of the new  
               policies to the 2014-15 academic year.  A pilot  
               program would allow for closer examination of the  
               unique student population served by the California  
               Community Colleges in order to identify best practices  




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               for ensuring the colleges' commitment to access while  
               maximizing the potential for California students to  
               benefit from federal financial aid programs.
                
            3)   Further clarification  .  This bill proposes a pilot  
               program to examine, among other things, strategies and  
               best practices for increasing the use of the FAFSA,  
               and the extent of the use of the American Opportunity  
               Tax Credit and strategies for increasing the number of  
               community college students who claim this credit. To  
               further clarify:

               a)        Free Application for Federal Student Aid  
                    (FAFSA). 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 UC  
                    and the CSU, work-study awards, scholarships, and  
                    federal student loans.  

               b)        American Opportunity Tax Credit. Is a  
                    federal 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, which means a student can  
                    receive the credit even if no taxes are owed.   
                    According to the author, it is unclear as to how  
                    many CCC students know about this tax credit and  
                    take advantage of the tax credit. 

           4)   Board of Governors (BOG) fee waiver  .  The BOG Fee  
               Waiver program provides for an exemption 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.  
                

               According to the CCC Chancellor's Office,  
               approximately 80% of BOG fee waiver recipients filed a  
               FAFSA in 2010 - 2011.  The Chancellor's Office also  
               found that the BOG fee waiver program has grown  




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               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.

               In a recent report, The Impact of Budget Cuts on the  
               California Community Colleges, Public Policy Institute  
               of California (PPIC) suggested that, absent an  
               increase in state or local funding, bridging the gap  
               between demand and supply would likely require  
               additional money from students and families.   
               Alternatively, PPIC suggests 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.  The PPIC  
               opines that reducing eligibility thresholds may not  
               necessarily discourage access, given that lower income  
               students are likely to be eligible for federal grants  
               and 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, the report 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.

           5)   Prior legislation  .  This bill is substantively similar  
               to legislation previously considered by this  
               committee.  These include:

               AB 91 (Portantino, 2011) passed by this committee in  
               June 2011, by a vote of 8-2, and was subsequently  
               vetoed by Governor Brown, whose veto message read:

                    This bill orders the Chancellor of the Community  
                    Colleges to set up a pilot program at local  
                    campuses to figure out how to motivate their  
                    students to apply for financial aid.  This is a  
                    matter that each community college can handle on  
                    its own.
               
               AB 1997 (Portantino, 2010) passed by this committee in  




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               June 2010, by a vote of 7-3, and was subsequently  
               vetoed by Governor Schwarzenegger, whose veto message  
               read:

                    Nothing under current law prohibits the  
                    California Community College Chancellor's Office  
                    from working with local community colleges to  
                    meet the objectives of this bill. Furthermore,  
                    the annual budget act was augmented several years  
                    ago to provide the community colleges an  
                    additional $34.2 million for financial aid  
                    outreach efforts that were expected to assist  
                    students with maximizing federal and state  
                    financial aid.
          
           SUPPORT 

          Campaign for College Opportunity


           OPPOSITION

           None received.