BILL ANALYSIS Ó AB 2506 Page 1 ASSEMBLY THIRD READING AB 2506 (Thurmond) As Amended May 27, 2016 Majority vote ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Higher |13-0 |Medina, Baker, Bloom, | | |Education | |Chávez, Irwin, | | | | |Jones-Sawyer, Levine, | | | | |Linder, Low, Olsen, | | | | |Santiago, Weber, | | | | |Williams | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |20-0 |Gonzalez, Bigelow, | | | | |Bloom, Bonilla, | | | | |Bonta, Calderon, | | | | |Chang, Daly, Eggman, | | | | |Gallagher, Eduardo | | | | |Garcia, Roger | | | | |Hernández, Holden, | | | | |Jones, Obernolte, | | | | |Quirk, Santiago, | | | | |Wagner, Weber, Wood | | | | | | | | | | | | AB 2506 Page 2 ------------------------------------------------------------------ SUMMARY: Requires the California Student Aid Commission (CSAC) to provide a Chafee Educational and Training Voucher (Chafee) to qualified students attending qualifying institutions. Specifically, this bill: 1)Establishes, to the extent permitted by federal law, standards for postsecondary educational institutions to be classified as Chafee qualifying institutions. 2)Requires CSAC to certify by October 1 of each year a postsecondary educational institution's latest three-year cohort default rate and graduation rate as most recently reported by the United States Department of Education. 3)Requires a federal Chafee participating institution to meet the following, consistent with Cal Grant institutional participation requirements: a) A three-year cohort default rate that is equal to or less than 15.5%, as certified by the commission on October 1, 2017, and on October 1 of any year thereafter. b) For purposes of the 2017-18 academic year, and every academic year thereafter, a graduation rate of 30% or greater for students taking 150% or less of the expected time to complete degree requirements. c) Provides that the aforementioned requirements do not apply to institutions with 40% or less of undergraduate students borrowing federal student loans. AB 2506 Page 3 d) Provides that the aforementioned requirements do not apply to institutions where an eligible Chafee grant recipient is attending an institution outside of California. 4)Requires CSAC to notify Chafee grant recipients regarding institutional ineligibility and to provide students with a list of eligible institutions. 5)Provides that, commencing with the 2017-18 academic year, current and former foster youth are entitled to a Chafee grant award, and that CSAC shall allocate that award to foster youth that meet all of the following criteria: a) He or she meets the Chafee grant requirements as set forth in the federal John H. Chafee Foster Care Independence Program. b) He or she submits 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. 6)Provides that the amount of any individual Chafee grant award shall depend on the cost of attendance at the qualifying institution at which the student is enrolled. For each applicant, the award amount shall not exceed the amount of the calculated financial need. EXISTING LAW: Establishes CSAC to administer California's student financial aid programs. CSAC administers the Chafee AB 2506 Page 4 program funded by federal and state monies provided through the California Department of Social Services. Federal law establishes the John H. Chafee Foster Care Independence Program to provide, among other benefits, education and training vouchers to qualifying current and former foster youth. FISCAL EFFECT: According to the Assembly Appropriations Committee: 1)Estimated additional General Fund costs of $4 million in the first year for entitlement program awards, based on 1,230 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 from due to lack of a single piece of required information. CSAC expects that new administrative procedures soon to be implemented to assist such applicants will increase eligibility, which would lead to an entitlement award. Annual costs would increase to around $11 million in the third year and thereafter. 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: 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 AB 2506 Page 5 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 to $5,000 in grants to foster youth. The budget for the program is about $11.5 million, which is evenly split between federal funds ($5.6 million) and the state General Fund. State funding for the program is accounted for in the Department of Social Services budget, the funding is distributed to CSAC through a Memorandum of Understanding (MOU) that outlines program operations; CSAC then directs money to students pursuant to the requirements of the MOU. Current or former foster youth qualify for the Chafee if they are 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; the average awarded grant in 2014-15 was $3,251. The program serves about 2,228 students. Purpose of this bill. According to the author, this bill seeks to address the low rates of college persistence and completion among foster youth in California. There are two deficiencies in current law that AB 2506 seeks to remedy: 1)Insufficient funding. The funding available to the Chafee is inadequate to meet the current demand, which has increased considerably with the expansion of foster care in 2012. In the 2014-15 school year, 4,609 students applied for the Chafee ETV and were determined to be eligible in 2014-15. However, due to insufficient funds, 1,115 eligible applicants did not receive a grant. Currently, there is no application deadline or guarantee of funds and applications are processed on a rolling basis until all funds are expended. This often results in students not learning whether they received a grant until well into the school term. AB 2506 Page 6 2)Poor-quality institutions. Current law does not require Chafee grants to be used at postsecondary institutions that meet baseline performance measures. The Cal Grant Program requires participating institutions to meet minimum rates of graduation and loan repayment. 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: Laura Metune / HIGHER ED. / (916) 319-3960 FN: 0003149