BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 2506 (Thurmond) - Student financial aid: Chafee grant awards ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: June 29, 2016 |Policy Vote: ED. 9 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 1, 2016 |Consultant: Jillian Kissee | | | | ----------------------------------------------------------------- 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 AB 2506 (Thurmond) Page 1 of ? $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. AB 2506 (Thurmond) Page 2 of ? 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 AB 2506 (Thurmond) Page 3 of ? 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. -- END -- AB 2506 (Thurmond) Page 4 of ?