BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 174 (de León) - Cal Grant Program
Amended: January 6, 2014 Policy Vote: Education
Urgency: Yes Mandate: No
Hearing Date: January 21, 2014
Consultant: Jacqueline Wong-Hernandez
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 174 provides for the use of funds from the
College Access Tax Credit Fund (CATC) to increase the amount of
the Cal Grant B Access Award up to a maximum of $5,000 per award
per academic year. This bill is contingent upon the enactment of
legislation creating the CATC, and is an urgency measure.
Fiscal Impact:
$140,000 in staffing costs to the California Student Aid
Commission (CSAC) to administer the program expansion,
reimbursed by the CATC.
Cost pressure: This bill prohibits the Cal Grant B Access
Award amounts funded in the annual Budget Act (by the
non-CATC General Fund) from being reduced below 2012 Budget
Act levels, for the duration of the existence of CATC
funding. If budget reductions became necessary, the Cal
Grant B Access Award would be protected at the expense of
other programs.
To the extent that expanded Cal Grant Access Awards provide
additional funding to students in California's public
postsecondary institutions, that funding may supplant some
institutional aid from the segments.
Background: Existing law authorizes the Cal Grant Program,
administered by the CSAC, to provide grants to financially needy
students to attend college. The Cal Grant programs include both
the entitlement and the competitive Cal Grant awards, and
eligibility is based upon financial need, grade point average
(GPA), California residency, and other eligibility criteria, as
specified in Education Code § 69433.9. These programs currently
operate as follows:
Cal Grant A - High School Entitlement Program provides tuition
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fee funding for the equivalent of four full-time years at
qualifying postsecondary institutions to eligible lower and
middle income high school graduates who have at least a 3.0
GPA, and apply within one year of graduation.
Cal Grant B - High School Entitlement Program provides funds
to eligible low-income high school graduates who have at least
a 2.0 GPA, and apply within one year of graduation. The award
provides up to $1,551 for books and living expenses for the
first year and each year following for up to four years (or
equivalent of four full-time years). After the first year, the
award also provides tuition fee funding at qualifying
postsecondary institutions.
Cal Grant Community College Transfer Program provides a Cal
Grant A or B to eligible high school graduates who have a
community college GPA of at least 2.4, and transfer to a
qualifying baccalaureate degree granting college or
university.
Cal Grant Competitive Award Program provides 22,500 Cal Grant
A and B awards to applicants who meet financial, academic, and
general program eligibility requirements. Half of these awards
are reserved for students enrolled at a community college and
who meet the September 2 application deadline.
Cal Grant C Program provides funding for financially eligible
lower income students preparing for occupational or technical
training. The authorized number of new awards is 7,761. For
new and renewal recipients, the current tuition and fee award
is up to $2,592 and the allowance for training-related costs
is $576.
Existing law requires that the maximum household income and
asset levels for the Cal Grant program be adopted and defined in
regulations by the CSAC, and that these eligibility ceilings be
annually adjusted based upon changes in the cost of living. Cal
Grant funding is annually appropriated in the Budget Act, and
reductions to the program translate to award reductions.
Proposed Law: SB 174 provides for the use of funds from the CATC
Fund for purposes of increasing the Cal Grant B Access Award.
Specifically it:
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1) Declares the intent that CATC Funds supplement other funds
appropriated for the Cal Grant Program and, once the CATC
Fund is established, prohibits the adjustment of the Cal
Grant B Access Award below the level set in the Budget Act
of 2012 ($1,473).
2) Requires the Treasurer to certify the amount of moneys
available for distribution from the CATC fund beginning
April 1, 2015, and annually thereafter by April 1.
3) Prohibits the amount available for distribution in any year
from exceeding 85% of the certified fund balance.
4) Requires the CSAC to thereafter determine the amount of the
supplemental awards to be granted, and requires CSAC to
include both that amount and an estimate of its
administrative costs in its budget change proposals
submitted to the Legislature, to be reimbursed by the CATC.
5) Requires that any funds remaining after all supplemental
awards are made be retained in the CATC for allocation in
future fiscal years.
6) Requires that supplemental awards be made for "access
costs" as defined under the provisions of the Cal Grant
Program.
7) Caps the amount of the supplemental award, when combined
with the annual award amount established in the annual
Budget Act, at $5,000.
8) Provides that these awards are only payable to the extent
moneys are available from the CATC Fund.
9) Requires CSAC to inform award recipients that the award is
for one academic year only, is not an entitlement, and that
future supplemental awards are subject to the availability
of moneys in the CATC.
Related Legislation: The provisions of this bill are contingent
upon the enactment of SB 798 (de León) which establishes the
CATC Fund, and requires that all revenue in this fund be
allocated to the CSAC for purposes of increasing Cal Grant B
Access Awards pursuant to the provisions of this bill. SB 798
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will also be heard in this Committee on January 21, 2014.
Staff Comments: The grant expansion created by this bill is
contingent upon the enactment of SB 798 (de León) which provides
funding to increase specified Cal Grant awards. SB 798 specifies
that the funding in CATC can only be used for the purposes
outlined in this companion bill. This bill provides that revenue
generated pursuant to SB 798 (up to 85% of the balance of the
CATC Fund) will be allocated to CSAC to implement these
provisions.
The bill's language clearly states that these awards are only
payable to the extent moneys are available from the CATC Fund,
and even specifically requires CSAC to inform award recipients
that the award is for one academic year only, is not an
entitlement, and that future supplemental awards are subject to
the availability of moneys in the CATC.
This bill also indicates that state operations costs to
implement the program will be paid from the CATC, and requires
the CSAC to submit those expenses as a part of its annual budget
change proposals. The CSAC estimates that it will require
approximately $140,000 annually, for staffing costs related to
this program. Specifically, the CSAC reports it will require 1
Staff Services Analyst to field additional calls generated from
the additional notifications, regularly revise the website,
publications, and award notifications, and to provide training
to high school counselors and college financial aid
administrators. The CSAC will also need a .5 Research Analyst II
to develop a methodology to project the supplemental access
award amount to fully utilize the funds available, analyze the
actual access award expenditures, monitor supplemental payments
expended, and to prepare a final reconciliation of the access
award supplemental payments.
This bill does, however, create cost pressure on the General
Fund by locking in a minimum funding level for Cal Grant B
Access Awards. This bill specifies that during the existence of
the CATC, the "amount of the Cal Grant B access award as
established in the annual Budget Act," which is the General Fund
portion prior to any CATC supplement, "shall not be adjusted
below the amount set forth in the Budget Act of 2012." In other
words, regardless of any competing state fiscal interest, a Cal
Grant B Access Award cannot be adjusted below $1,473 (the 2012
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funding level) in General Fund support for the next three years.