BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 174
                                                                  Page  1

          Date of Hearing:   June 10, 2014

                       ASSEMBLY COMMITTEE ON HIGHER EDUCATION
                                 Das Williams, Chair
                   SB 174 (De León) - As Amended:  January 6, 2014

           SENATE VOTE  :   34-0
           
          SUBJECT  :   Student Financial Aid: Cal Grant Program

           SUMMARY  :   Provides for the use of funds from the College Access  
          Tax Credit Fund (Fund) to increase Cal Grant B access awards,  
          administered by the California Student Aid Commission (CSAC) up  
          to a maximum of $5,000 per award per academic year, contingent  
          upon enactment of SB 798 (De León).   Specifically,  this bill  :    


          1)Finds and declares that California's fiscal crisis resulted in  
            deep cuts to public postsecondary education resulting in  
            increased costs and time-to-degree for students; educational  
            attainment levels predict the overall economic performance of  
            states, California's educational attainment now ranks among  
            the bottom 10 states; estimates show that the Fund will allow  
            CSAC to fund larger access grants to California's neediest  
            students; and, all Californians deserve access to affordable  
            postsecondary education.  

          2)Provides that monies appropriated from the Fund are in  
            addition to other monies appropriated for the Cal Grant  
            Program, and that during the existence of the Fund the amount  
            of the Cal Grant B access award may not be adjusted below the  
            amount in the 2012 Budget Act.

          3)Requires the Treasurer, on April 1, 2015, and each April 1  
            thereafter, to certify the amount of monies available for  
            distribution from the Fund for the following academic year and  
            provides that the amount available for distribution may not  
            exceed 85% of the Fund balance.

          4)Requires CSAC to determine the amount of the supplemental  
            awards to be granted and to include that amount in the annual  
            budget change proposals previously submitted to the Department  
            of Finance by the Commission.  Upon appropriation by the  
            Legislature to the CSAC in the annual Budget Act, the monies  
            become available for making awards to students.








                                                                  SB 174
                                                                  Page  2


          5)Provides that any monies available in the fund after making  
            supplemental awards shall remain in the fund for allocation in  
            future fiscal years.

          6)Provides that disbursements from the Fund shall be made for  
            the following purposes:

             a)   To supplement awards made for "access costs" as defined  
               under the provisions of the Cal Grant Program. Limits the  
               amount of the supplemental award, when added to the annual  
               access award amount established by the Budget Act, to  
               $5,000.  

             b)   To defray the administrative costs incurred by the  
               Commission in connection with these responsibilities.

          7)Provides that awards are only payable to the extent monies are  
            available from the Fund.  Requires the Commission 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 monies in the Fund.

          8)Becomes operative only if SB 798 (De León) is enacted and  
            becomes operative on or before January 1, 2015.

          9)Declares this act an urgency to take effect immediately in  
            order for this program to be funded by donations to the  
            College Access Tax Credit Fund made during 2014, to provide  
            adequate funding for Cal Grant B access awards beginning in  
            the 2015-16 academic year so that students receiving these  
            awards can stay enrolled.

           EXISTING LAW  authorizes the Cal Grant Program, administered by  
          CSAC, to provide grants to financially needy students to attend  
          college.  

           FISCAL EFFECT  :   According to the Senate Appropriations  
          Committee, $140,000 in staffing costs to CSAC to administer the  
          program expansion, reimbursed by the Fund.  This bill prohibits  
          the Cal Grant B Access Award amounts funded in the annual Budget  
          Act from being reduced below 2012 Budget Act levels, for the  
          duration of the existence of Fund. 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  








                                                                  SB 174
                                                                  Page  3

          Grant Access Awards provide additional funding to students in  
          California's public postsecondary institutions, that funding may  
          supplant some institutional aid from the segments.

           COMMENTS  :    Background  .  In the first award year, Cal Grant B  
          students are awarded a grant to cover access costs, defined as  
          living expenses and expenses for transportation, supplies, and  
          books.  After the freshman year, the Cal Grant B award may also  
          include tuition and fee coverage in the same amount as the Cal  
          Grant A award.  Current law limits the access award to $1,551,  
          but allows the amount to be adjusted in the annual Budget Act.   
          The 2012 Budget Act reduced the award to $1,473; that amount was  
          maintained in the 2013 Budget Act.  According to the Commission,  
          in 2012-13, the average income for new Cal Grant B recipients  
          was $16,511. There were a total of 128,426 new recipients of Cal  
          Grant B.  The largest number and percentage of Cal Grant B  
          recipients were at the California Community Colleges (48%).
           
          Purpose of this bill  .  According to the author, this legislation  
          will increase the underfunded Cal Grant B access award amount  
          for California's lowest income students to improve graduation  
          rates.  The Author notes that, adjusted for inflation, the Cal  
          Grant B access award today should be $5,900; instead it has lost  
          most of its purchasing power over time and is currently set at  
          only $1,473.  According to the author, there is significant  
          research that shows that students who work more hours take  
          longer to graduate; Grant aid is the proven equalizer that  
          allows low-income students to persist and complete degrees at  
          rates that equal those of their higher-income peers. This bill,  
          in coordination with SB 798, is intended to enable CSAC to  
          double the Cal Grant B access award during tough economic times.  
             

           Contingent enactment  .  The implementation of this bill is  
          contingent upon the funding source established in SB 798 (De  
          León), which would, for taxable years 2014 through 2016, allow  
          taxpayers, upon receipt of California Educational Facilities  
          Authority certification, to receive a tax credit for a specified  
          percentage of cash contributions made to the Fund.  SB 798 is  
          pending hearing in the Revenue and Taxation Committee.
           
          Related legislation  .  AB 1364 (Ting), which was approved by this  
          Committee by a vote of 9-3 on April 9, 2013,  proposes to,  
          beginning in the 2014-15 academic year, increase the maximum  
          amount of the Cal Grant B access award to $1,710, and provide  








                                                                  SB 174
                                                                  Page  4

          for annual adjustment upward based upon the California Consumer  
          Price Index beginning January 15, 2014.  AB 1364 is currently  
          pending in the Senate Appropriations Committee.   

          Prior legislation  .  SB 284 (De León, 2013) which was identical  
          to this bill, was approved by the Legislature and subsequently  
          vetoed by Governor Brown due to a technical error contained in  
          the companion measure, SB 285 (De León, 2013) that negatively  
          impacted Proposition 98 funding guarantee.  The companion  
          measure to this bill, SB 798 (De León) corrects this technical  
          error.

          SB 1466 (De León, 2012), as heard in this committee, expanded  
          eligibility for a Cal Grant to include a student with a  
          household income up to $100,000, subject to specified funding  
          prioritization, and contingent upon legislation that created a  
          fund for this purpose (SB 1356, De León, 2012).  SB 1466 passed  
          this committee in July 2012 by a vote of 8-1, but was  
          subsequently amended to address a different subject. 

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          California Catholic Conference
          California Community College Chancellor's Office
            California Competes
          Californians for Shared Prosperity Coalition
          California State Student Association
            Community College League of California
          EARN
          Los Angeles Area Chamber of Commerce
          Southern California College Access Network
          Student Senate for California Community Colleges
          Students First
          The Campaign for College Opportunity
          The Education Trust-West
          The Institute for College Access and Success
          University of California Student Association 
          Young Invincibles

           Opposition 
           
          None on file.









                                                                  SB 174
                                                                  Page  5

           Analysis Prepared by  :    Laura Metune / HIGHER ED. / (916)  
          319-3960