BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 174
                                                                  Page  1


          SENATE THIRD READING
          SB 174 (De León)
          As Amended  January 6, 2014
          Majority vote 

           SENATE VOTE  :34-0  
           
           HIGHER EDUCATION    11-0        APPROPRIATIONS      17-0        
           
           ----------------------------------------------------------------- 
          |Ayes:|Williams, Fong, Fox,      |Ayes:|Gatto, Bigelow,           |
          |     |Jones-Sawyer, Levine,     |     |Bocanegra, Bradford, Ian  |
          |     |Linder, Medina, Olsen,    |     |Calderon, Campos,         |
          |     |Quirk-Silva, Weber, Wilk  |     |Donnelly, Eggman, Gomez,  |
          |     |                          |     |Holden, Jones, Linder,    |
          |     |                          |     |Pan, Quirk,               |
          |     |                          |     |Ridley-Thomas, Wagner,    |
          |     |                          |     |Weber                     |
          |-----+--------------------------+-----+--------------------------|
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           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) of the current legislative  
          session.  Specifically,  this bill  :   

          1)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.

          2)Requires the State 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.

          3)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 CSAC.  Upon appropriation by the Legislature to  








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            the CSAC in the annual Budget Act, the monies become available  
            for making awards to students.

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

          5)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 CSAC in  
               connection with these responsibilities.

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

          7)Becomes operative only if SB 798 is enacted and becomes  
            operative on or before January 1, 2015.

          8)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.

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, the amount of funds allocated for supplemental Cal  
          Grant B Access Awards will depend on the amounts contributed by  
          taxpayers, per the provisions of SB 798, to the College Access  
          Tax Credit Fund net of the total tax credits claimed by these  
          taxpayers and state administrative costs.  This amount is  
          unknown but could be up to several hundred million dollars  
          annually for three years.  CSAC will incur annual costs of  
          around $140,000 for three years for 1.5 positions for  








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          administrative functions related to the supplemental grant. 

           COMMENTS  :  According to the author, this bill 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.    

          The implementation of this bill is contingent upon the funding  
          source established in SB 798, 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 284 (De León) of 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) of 2013, that negatively impacted  
          Proposition 98 of 1988 funding guarantee.  The companion measure  
          to this bill, SB 798 corrects this technical error.


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


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