BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                         AB 25|
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                                   THIRD READING 


          Bill No:  AB 25
          Author:   Gipson (D)
          Amended:  4/8/15 in Assembly
          Vote:     21  

           SENATE EDUCATION COMMITTEE:  9-0, 6/24/15
           AYES:  Liu, Runner, Block, Hancock, Leyva, Mendoza, Monning,  
            Pan, Vidak

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 8/27/15
           AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

            ASSEMBLY FLOOR:  79-0, 6/2/15 - See last page for vote

           SUBJECT:   Financial aid:  Cal Grant program:  renewal


          SOURCE:    Author


          DIGEST:  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 for one  
          academic year to an institution with a small cohort of 20  
          individuals or less, as specified.  


           ANALYSIS:


          Existing law:









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          1)Authorizes the Cal Grant program, administered by 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:

             a)   For the 2011-12 academic year, an otherwise qualifying  
               institution for the Cal Grant program must maintain a  
               three-year cohort default rate equal to or below 24.6  
               percent to be eligible for Cal Grant awards at the  
               institution. 

             b)   For 2012-13, and every academic year thereafter,  
               colleges must maintain three year cohort default rates  
               below 15.5 percent in order to be eligible for initial and  
               renewal Cal Grant awards at the institution.  

             c)   For 2012-13 and every academic year thereafter, an  
               institution must maintain a graduation rate above 30  
               percent to be eligible for Cal Grant awards at the  
               institution.

             d)   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. (EC § 69432.7) 

          2)Provides that the cohort default rate and graduation  
            requirements do not apply to institutions with 40 percent or  
            less of its students borrowing federal student loans. (EC §  
            69432.7)

          This bill:

       1)Requires the CSAC to establish an appeal process for an otherwise  
            qualifying institution that fails to satisfy existing  







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            three-year CDR and graduation rate requirements.

       2)Specifically authorizes the CSAC to grant an appeal for one  
            academic year if the commission determines the cohort of  
            students at the institution is 20 or less and that cohort is  
            not representative of the institution's overall performance.

          Comments 
          
       1)Need for the bill: As a condition of participating in the Cal  
            Grant program, institutions are required to meet specified  
            criteria including a 3-year cohort default rate below 15.5  
            percent and maintain a 20% graduation rate for the 2015-2016  
            academic year. According to the author, program participation  
            requirements have exposed the vulnerability of smaller  
            specialized Universities, where first time full time freshman  
            (FTFTF) students typically have lower enrollment rates and  
            therefore, present volatility to campus Cal Grant eligibility.  
            The author asserts that the risk of losing Cal Grant  
            eligibility to the instability of a small sample size could  
            lead institutions to stop enrolling FTFTF students who would  
            otherwise be eligible to enroll, or to eliminate programs that  
            may attract these students.  
               
            This bill seeks to provide an otherwise qualifying  
            institution, with a very small cohort size that becomes  
            ineligible due to CDR and graduation rate requirements the  
            opportunity to regain Cal Grant eligibility following one  
            academic year for which it satisfied the specified thresholds.

       2)Appeal process? Although some institutions deemed ineligible to  
            participate in the Cal Grant program have appealed to CSAC,  
            there is no statutory or regulatory guidance provided  
            regarding such a process. Current law allows an institution to  
            regain eligibility if the United State Department of Education  
            corrects or revises an institution's three-year CDR or  
            graduation rate that results in the institution satisfying  
            rate requirements. Most recently the CSAC heard from Marymount  
            California University, National Hispanic University, and  
            Charles R. Drew University of their institutional eligibility  
            to participate in the Cal Grant Program in 2014-15. Those  
            institutions whose CDR or graduation rate where miscalculated  
            successfully regained their eligibility.  
               







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       3)Effect on schools.  For the 2015-2016 academic year a total of 33  
            schools were found to be Cal Grant ineligible. Schools on the  
            ineligible list failed to meet one or both of the required  
            thresholds for the 2015-16 academic year. As mentioned schools  
            must keep their federal student loan CDR below 15.5 percent  
            and maintain their graduation rate above 20 percent. Included  
            among the list of ineligible schools is Charles R. Drew  
            University of Medicine and Science (CDU). CDU contends that  
            its unsatisfactory status is attribute to having a small  
            cohort of FTFTF undergraduate students, nine in 2005 and four  
            in 2006 (cohorts from whom the recent graduation rate derived)  
            are not representative of its ability to recruit and retain  
            undergraduate students with Cal Grant eligibility. Although  
            CDU tried to appeal its status to CSAC, current law constrains  
            the CSAC's ability to remedy the situation. The bill provides  
            CSAC with the statutory authority to establish an appeal  
            process and grant an appeal to institutions whose small cohort  
            size is not representative of the institutions overall  
            performance, as specified. It is unclear how many schools  
            would fall under the 20 individuals or less threshold  
            specified in the bill. 

       4)Effect on Students. Initial and renewal Cal Grant recipients are  
            not able to use their Cal Grant awards at institutions that  
            fail to meet institutional CDR requirements; however, Cal  
            Grant awards are mobile, meaning if a student chooses to  
            transfer from one institution to another the award would  
            follow the student to the new school provided that the  
            institution is Cal Grant eligible. 

          Prior 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 the Senate  
          Appropriations Committee. 

          SB 1149 (Galgiani) was substantially similar to AB 640. SB 1149  
          was heard and passed by the Senate Education Committee by a vote  
          of 9-0 but was subsequently held in the Senate Appropriations  
          Committee.









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          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          

          According to the Senate Appropriations Committee, this bill  
          would have the following 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.


          SUPPORT:   (Verified 8/27/15)


          American Federation of State, County and Municipal Employees 
          Association of Independent California Colleges and Universities 
          Charles Drew University of Medicine and Science 
          Our Lady of Victory Catholic Church
          San Jose Evergreen Community College District
          St. Aloysius Gonzaga Catholic Church
          St. Lawrence of Brindisi Church
          Watts Century Latino Organization



          OPPOSITION:   (Verified8/27/15)


          None received

          ASSEMBLY FLOOR:  79-0, 6/2/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,  
            Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,  
            Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,  
            Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  
            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  







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            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,  
            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Atkins
          NO VOTE RECORDED:  Chávez

          Prepared by:Olgalilia Ramirez / ED. / (916) 651-4105
          8/31/15 10:14:39


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