BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2506| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2506 Author: Thurmond (D), et al. Amended: 8/16/16 in Senate Vote: 21 SENATE EDUCATION COMMITTEE: 9-0, 6/22/16 AYES: Liu, Block, Hancock, Huff, Leyva, Mendoza, Monning, Pan, Vidak SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/11/16 AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen ASSEMBLY FLOOR: 78-1, 6/1/16 - See last page for vote SUBJECT: Student financial aid: Chafee grant awards SOURCE: Author DIGEST: This bill requires postsecondary education institutions to meet eligibility requirements to receive Chafee funds, similar to existing provisions of the Cal Grant program. ANALYSIS: Existing law: 1)Establishes the California Student Aid Commission (CSAC) for the purpose of administering specified student financial programs. (Education Code § 69510, et seq.) AB 2506 Page 2 2)Establishes requirements for postsecondary education institutions to participate in the Cal Grant program, and requires, for the 2012-13 and subsequent academic years, an institution to maintain a graduation rate above 30% and a three-year cohort student loan default rate of less than 15.5%. (EC § 69432.7) 3)Establishes the federal John H. Chafee Foster Care Independence Program to provide, among other benefits, education and training vouchers to qualifying current and former foster youth. (United States Code, Title 42, § 677) This bill: 1)Establishes the standards for postsecondary educational institutions to be classified as qualifying institutions for the purposes of the Chafee Educational and Training Voucher (ETV) program, to the extent permitted by federal law. 2)Requires the following standards to apply, beginning with the 2017-18 academic year, in determining an institution's eligibility for the use of initial and renewal Chafee grant awards by its students: a) Provides that an otherwise qualifying institution with a three-year cohort default rate that is 15.5% or higher, as certified by the CSAC, is ineligible for the use of Chafee grant awards. b) Authorizes an otherwise qualifying institution that becomes ineligible to regain eligibility for the subsequent academic year after satisfying a) - d). This bill provides that an institution is to immediately regain its eligibility if the United States Department of Education corrects or revises the institution's three-year cohort default rate or graduation rate such that the requirements AB 2506 Page 3 in a) - d) are met. c) Provides that an otherwise qualifying institution for which no three-year cohort default rate or graduation rate has been reported is provisionally eligible for Chafee grant awards until a three-year cohort default rate or graduation rate has been reported for the institution by the United States Department of Education. d) An otherwise qualifying institution with a graduation rate of 30% or less for students taking 150% of less of the expected time to complete degree requirements, as reported by the United States Department of Education and certified by the CSAC, is ineligible for the use of Chafee grant awards. 3)Exempts from these standards institutions with 40% or less of undergraduate students borrowing federal student loans, using information reported to the United States Department of Education for the prior two academic years. 4)Entitles an individual who has received a Chafee grant for the 2016-17 academic year and who is enrolled at a postsecondary educational institution to use a Chafee grant award for as long as he or she is enrolled at that institution and is making reasonable progress toward graduation or otherwise completing the course of study. 5)Requires the CSAC to notify initial or renewal recipients seeking to attend, or attending, an institution that is ineligible for Chafee grant funds that the institution is ineligible for the use of Chafee grant awards. 6)States legislative intent that the memorandum of understanding between the Department of Social Services and the CSAC for the administration of the Chafee grant be amended to reflect the provisions of this bill. AB 2506 Page 4 7)States legislative findings and declarations relative to the importance of quality education and the poor educational outcomes for foster youth. Comments Chafee eligibility requirements. To qualify for a Chafee ETV, students must: 1)Be a current or former foster youth, with dependency established or continued by the court between ages 16-18. 2)Be under the age of 22 years as of July 1 of the award year. Students must fill out the Free Application for Federal Student Aid, or California Dream Act Application, and the California Chafee grant application. The Chafee ETV is not an entitlement, unlike the Cal Grant program. Qualifying institutions. The Chafee ETV may be used at any eligible California college as well as colleges in other states. In California, students may use the Chafee grant at career and technical schools, California Community Colleges, the California State University, the University of California, independent colleges, and private colleges. Existing law requires postsecondary education institutions to maintain, in order for students to use Cal Grants to attend those institutions, a graduation rate above 30% and a three-year cohort student loan default rate of less than 15.5%. This bill requires institutions to meet the standards established in statute for participation in the Cal Grant program. Funding. In California, the Chafee ETV provides up to $5,000 in grants to current and former foster youth. The budget for the AB 2506 Page 5 program is approximately $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 2016 Budget Act includes an additional $3 million for the Chafee ETV. The maximum Chafee grant is $5,000 per academic year; the average awarded grant in 2014-15 was $3,251. The program serves about 2,228 California students. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee, the CSAC indicates that verifying institutions' eligibility for the use of Chafee grant awards by its students would impose minor and absorbable costs to the CSAC. SUPPORT: (Verified8/15/16) None received OPPOSITION: (Verified8/15/16) None received ASSEMBLY FLOOR: 78-1, 6/1/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, AB 2506 Page 6 Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon NOES: Harper NO VOTE RECORDED: Beth Gaines Prepared by:Lynn Lorber / ED. / (916) 651-4105 8/16/16 18:02:10 **** END ****