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.
AB 25 (Gipson) Page 2 of
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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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