BILL ANALYSIS                                                                                                                                                                                                    Ó



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

          AB 2506 (Thurmond) - Student financial aid:  Chafee grant awards
          
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          |Version: June 29, 2016          |Policy Vote: ED. 9 - 0          |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 1, 2016    |Consultant: Jillian Kissee      |
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          This bill meets the criteria for referral to the Suspense File.




          


          Bill  
          Summary:  This bill provides that an eligible current or former  
          foster youth is entitled to receive a Chafee grant award, and  
          requires postsecondary education institutions to meet  
          eligibility requirements to receive Chafee funds, similar to  
          existing provisions of the Cal Grant program.


          Fiscal  
          Impact:  

           The California Student Aid Commission (Commission) indicates  
            that this bill would cost about $980,000 in the first year and  
            would result in ongoing costs of about $8 million.  This  
            estimate assumes 1,230 new awards at an average amount of  







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            $3,234 and also takes into account funding provided in the  
            Budget Act of 2016 for this program.  Costs will ultimately  
            depend upon the actual number of eligible applicants.   
            (General Fund)
           The Commission also cites the need for two additional  
            positions and about $135,000 General Fund to address the  
            increase in applications and customer service related to the  
            Chafee grants.


          Background:  Existing law establishes requirements for postsecondary  
          education institutions to participate in the Cal Grant program,  
          including a graduation rate of above 30 percent and a three-year  
          cohort student loan default rate of less than 15.5 percent.   
          (Education Code Section 69432.7)
          Existing law establishes the federal John H. Chafee Foster Care  
          Independence Program to provide, among other benefits, education  
          and training vouchers of up to $5,000 to qualifying current and  
          former foster youth.  (United States Code, Tile 42, Section 677)  
           To qualify for a Chafee Education and Training Voucher (ETV),  
          students must: (1) be a current or former foster youth, with  
          dependency established or continued by the court between 16 to  
          18 years old, and (2) be under the age of 22.  


          The Commission administers the Chafee ETV, which is funded by  
          federal and state monies, through a Memorandum of Understanding  
          (MOU) with the California Department of Social Services.   
          Students must fill out the FAFSA, or California Dream Act  
          Application, and the California Chafee grant application.   
          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. 


          The Chafee ETV is not an entitlement, unlike the Cal Grant  
          program.  This bill makes the Chafee grant an entitlement in  
          California and requires institutions to meet the standards  
          established in statute for participation in the Cal Grant  
          program.










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          Proposed Law:  
            This bill provides that an eligible current or former foster  
          youth is entitled to receive a Chafee grant award, and requires  
          postsecondary education institutions to meet eligibility  
          requirements to receive Chafee funds, similar to existing  
          provisions of the Cal Grant program.
          Specifically, this bill:


          Chafee Entitlement


                 Deems a current or former foster youth to be entitled to  
               a Chafee grant award if the student meets the federal grant  
               requirements and submits a FAFSA and a Chafee grant  
               application between January 1 and September 2 of each  
               calendar year.


          State Standards for Institutions


                 Establishes, to the extent permitted by federal law, the  
               state standards for postsecondary educational institutions  
               to qualify for the Chafee Educational and Training Voucher  
               program authorized by federal law.  


                 Provides that an otherwise qualifying institution that  
               has a three-year cohort default rate that is 15.5 percent  
               or higher or that has a graduation rate of 30 percent or  
               less, as specified, is ineligible for the use of Chafee  
               grant awards at the institution.  


                 Provides that an institution may regain its eligibility  
               for the academic year following the year in which it  
               satisfies the three-year cohort default rate and the  
               graduation rate standard.  


                 Exempts institutions with 40 percent or less of  








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               undergraduate students borrowing federal loans from these  
               requirements.


          Commission Requirements


                 Requires the Commission to certify 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.  


                 Requires the Commission to notify initial and renewal  
               recipients if an institution that they are seeking to  
               attend, or attending, is ineligible for Chafee grant awards  
               under state standards and provide them with a list of  
               eligible, under state standards, postsecondary education  
               institutions in the state.


          Finally, this bill provides legislative intent that the MOU  
          entered into between the California Department of Social  
          Services and the Commission for the administration of the Chafee  
          ETV program be amended to reflect its provisions.




          Staff  
        Comments:  This bill makes the Chafee grant an entitlement in California  
          so that an eligible student would be awarded a grant, regardless  
          of sufficient or available funding.  Therefore enactment of this  
          bill would lessen the state's ability to control the costs of  
          this program in the future, including in the event of another  
          recession.


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