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 SB 174 Page 2 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 SB 174 Page 3 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 FN: 0004791