BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 25 (Gipson) - Financial aid: Cal Grant program: renewal.
          
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          |Version: April 8, 2015          |Policy Vote: ED. 9 - 0          |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: July 6, 2015      |Consultant: Jillian Kissee      |
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          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  This bill requires the California Student Aid  
          Commission (CSAC) to establish an appeal process for  
          institutions failing to meet Cal Grant program participation  
          requirements and authorizes the CSAC to grant an appeal to an  
          institution with a small cohort of 20 individuals or less, as  
          specified.


          Fiscal  
          Impact:  
           Unknown costs potentially in the low hundreds of thousands  
            General Fund dependent upon the number of ineligible  
            institutions and approved appeals.  Costs would likely vary  
            from year to year.
           Likely minor costs to the CSAC to create and administer the  
            appeals process.


        Background:1)  Existing law authorizes the Cal Grant program, administered by  







          AB 25 (Gipson)                                         Page 1 of  
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          the CSAC, to provide grants to financially needy students to  
          attend a college or university. The Cal Grant programs include  
          both the entitlement and the competitive Cal Grant awards.  The  
          program consists of the Cal Grant A, Cal B, and Cal Grant C  
          programs, and eligibility is based upon financial need, grade  
          point average, California residency and other criteria.  
          (Education Code 69430-69433.9) 

          The 2012 and 2013 Budget Acts established new requirements for  
          institutional participation in the Cal Grant program (SB 70,  
          Chapter 7, Statutes of 2011, and SB 1016, Chapter 38, Statutes  
          of 2012) by providing that colleges must maintain three year  
          cohort default rates below 15.5 percent and a graduation rate  
          above 30 percent in order to be eligible for initial and renewal  
          Cal Grant awards at the institution.  There is an exception to  
          these requirements for an institution with a three- year cohort  
          default rate of below 15.5 percent and a graduation rate above  
          20 percent through the 2016-17 academic year.  Existing law also  
          provides that the cohort default rate and graduation  
          requirements do not apply to institutions with 40 percent or  
          less of their students borrowing federal student loans. (EC §  
          69432.7)


          Proposed Law:  
            This bill: (1) requires the Commission to establish an appeal  
          process for an institution that fails to satisfy the three-year  
          cohort default rate and graduation rate requirements pursuant to  
          existing law, and (2) authorizes the Commission to grant an  
          appeal for an academic year only if it determines the  
          institution has a cohort size of 20 or less and the cohort is  
          not representative of the overall institutional performance.


          Related  
          Legislation:  AB 640 (Hall, 2014) similar to this bill, would  
          have required CSAC to implement an appeal process for schools  
          that fail to meet the CDR and graduation rate requirements and  
          authorized CSAC to consider cohort size.  AB 640 was held in  
          this committee. 

          SB 1149 (Galgiani, 2014) was substantially similar to AB 640.   
          SB 1149 was held in this committee. 









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          Staff  
          Comments:  This bill requires the CSAC to establish an appeals  
          process and authorize an appeal for an academic year only if it  
          determines (1) the institution has a cohort size of 20 or less  
          and (2) the cohort is not representative of the overall  
          institutional performance.
          The CSAC will likely incur costs to establish and administer the  
          required appeals process, including establishing the criteria by  
          which it is determined the cohort is not representative of the  
          overall institutional performance.  However, more significant  
          costs could be incurred to the extent this bill results in the  
          reinstatement of disqualified institutions.  The costs will  
          likely vary from year to year dependent upon a number of factors  
          such as: the number of ineligible institutions, how many seek an  
          appeal, whether students that receive Cal Grant awards transfer  
          to eligible institutions (as awards follow the student), and  
          whether it is determined that cohorts are not representative of  
          overall institutional performance.  


          As a point of reference, according CSAC's most recent data, four  
          institutions that fall under the cohort size required by this  
          bill were recently determined to be ineligible for Cal Grants  
          and received about $200,000.  If these institutions appealed  
          this determination and through the CSAC's appeals process their  
          awards were reinstated, state costs could rise by up to that  
          amount.  It is unknown whether the cohorts of these institutions  
          were representative of the overall institutional performance and  
          thereby would have not received an approved appeal, as that is  
          not defined by this bill.




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