BILL ANALYSIS Ó AB 2506 Page 1 Date of Hearing: May 4, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2506 (Thurmond) - As Amended March 30, 2016 ----------------------------------------------------------------- |Policy |Higher Education |Vote:|13 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill makes the Chafee Educational and Training Voucher (Chaffee grant) an entitlement for qualified current and former foster youth attending qualified postsecondary educational institutions. Specifically, this bill: AB 2506 Page 2 1)Stipulates that, in order to be qualified for accepting Chaffee grants, an institution must meet the same qualifications - in terms of the maximum allowable cohort default rate (for federal student loans) - and the minimum allowable graduation rate as for Cal Grant institutional participation. 2)Requires the California Student Aid Commission (CSAC) to provide Chafee grant recipients with a list of the institutions deemed eligible. 3)Provides that, commencing with the 2017-18 academic year, current and former foster youth are entitled to a Chafee grant award, and that CSAC must allocate an award to foster youth that: a) Meet Chafee grant requirements as set forth in the federal John H. Chafee Foster Care Independence Program. b) Submit a Free Application for Federal Student Aid (FAFSA) and a Chafee grant application between January 1 and September 2 of each calendar year for the academic year beginning in the fall of that calendar year. 4)Provides that the amount a Chafee grant award depends on the cost of attendance at the institution where the student is enrolled, and may not exceed the amount of the calculated financial need. FISCAL EFFECT: AB 2506 Page 3 1)Estimated additional General Fund costs of $6.4 million annually for entitlement program awards, based on 1,960 additional awards and an average award of $3,234. There were 1,115 eligible applicants that, under the current Chaffee program, did not receive an award in 2014-15 due to insufficient resources. In addition, CSAC indicates that another 845 applicants were deemed ineligible due to lack of a single piece of required information. CSAC expects that new administrative procedures to assist such applicants will be implemented soon and will increase eligibility, which would lead to an entitlement award. 2)CSAC administrative costs (General Fund) will be about $60,000 one-time and $270,000 ongoing for four positions to implement the entitlement program. The commission indicates that the Chafee program is relatively labor intensive due to the population it serves and the need to coordinate among various agencies. COMMENTS: 1)Background. The federal John H. Chafee Foster Care Independence Program (CFCIP) was created in 1999 to offer assistance to current and former foster care youths in achieving self-sufficiency. Federal grants are offered to States who submit a plan to assist youth in a wide variety of areas designed to support a successful transition to adulthood. The Educational and Training Vouchers Program (ETV) for Youths Aging out of Foster Care was added to the CFCIP in 2002. ETV provides resources specifically to meet the education and training needs of youth aging out of foster care. In California, the Chafee Grant for Foster Youth provides up AB 2506 Page 4 to $5,000 in grants to foster youth. The program budget is about $11.5 million, evenly split between federal funds and the state General Fund. CSAC administers the program pursuant to an MOU with the state Department of Social Services. To qualify, current or former foster youth must be under age 22 and were in foster care in out-of-home placement at any time between the ages of 16 and 18. The maximum grant is $5,000 per academic year; and the average awarded grant in 2014-15 was $3,250. The program serves about 2,200 students. 2)Purpose. According to the author, this bill seeks to help address the low rates of college persistence and completion among foster youth in California by addressing two deficiencies in the program: insufficient funding and poor-quality institutions. Funding is inadequate to meet the current demand, which has increased considerably with the expansion of foster care in 2012. In the 2014-15, about 4,600 students were determined to be eligible for the Chafee ETV, but due to a lack of funding, almost 25% of these eligible applicants did not receive a grant. In addition, unlike the Cal Grant Program, current law does not require Chafee grants to be used at postsecondary institutions that meet baseline performance measures. The author notes reports of for-profit colleges marketing specifically to vulnerable student populations, including veterans and foster youth, in order to access financial aid. Analysis Prepared by:Chuck Nicol / APPR. / (916) 319-2081 AB 2506 Page 5