BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                    AB 2787

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          Date of Hearing:  April 19, 2016


                                 Jose Medina, Chair

          AB 2787  
          (Chávez) - As Amended April 12, 2016

          SUBJECT:  Student financial aid: Middle Class Scholarship  
          Program: private nonprofit postsecondary educational  

          SUMMARY:  Expands the Middle Class Scholarship Program (MCS) to  
          include students attending private nonprofit postsecondary  
          educational institutions that participate in the Cal Grant  
          Program, and provides that the maximum award amount will be 40%  
          of the maximum award that the student would have received under  
          the Cal Grant Program.  

          EXISTING LAW:  

          1)Establishes the MCS to provide, commencing with the 2014-15  
            academic year, and subject to available and sufficient  
            appropriations, an undergraduate student enrolled in the  
            California State University (CSU) or the University of  
            California (UC), who meets eligibility requirements, an award.

          2)Provides that the MCS award amount shall, when combined with  
            other federal, state, or institutionally administered student  
            grants or fee waivers, is up to 40% of the amount charged to  


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            that student in that academic year for mandatory systemwide  
            tuition and fees.

          3)Eligibility requirements provide that:

             a)   The student's annual household income does not exceed  
               $150,000.  For awards distributed for the 2016-17 academic  
               year and subsequent academic years, CSAC is required to  
               shall annually adjust the maximum income level in  
               accordance with changes in the cost of living;

             b)   The student's household asset level shall not exceed  
               $150,000. For awards distributed in the 2016-17 academic  
               year and subsequent academic years, CSAC is required to  
               annually adjust the maximum household asset level  
               consistent with changes in cost of living;

             c)   The student satisfies other eligibility requirements for  
               a Cal Grant award, as specified;

             d)   The student is exempt from paying nonresident tuition;

             e)   The student completes and submits a Free Application for  
               Federal Student Aid (FAFSA) application by no later than  
               March 2;

             f)   The student makes a timely application or applications  
               for all other federal, state, or institutionally  
               administered grants or fee waivers for which the student is  


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             g)   The student maintains satisfactory academic progress;

             h)   The student is pursuing his or her first undergraduate  
               baccalaureate degree or has completed a baccalaureate  
               degree and has been admitted to, and is enrolled in, a  
               program of professional teacher preparation at an  
               institution approved by the California Commission on  
               Teacher Credentialing; and, 

             i)   The student is enrolled at least part time.

          4)Provides that the percentage of the award shall be reduced by  
            0.6 percent per $1,000 of household annual income in excess of  

          5)Provides that the minimum annual scholarship amount for  
            full-time enrollment is $90.

          6)Provides that, for 2014-15, 2015-16, and 2016-17 academic  
            years, the maximum amount of a student's scholarship award  
            shall be 35 percent, 50 percent, and 75 percent, respectively,  
            of the total scholarship award amount that the student would  
            otherwise be eligible to receive.

          7)Prohibits UC and CSU from supplanting their respective  
            institutional need-based grants with the funds provided for  
            scholarships under the MCS, and requires institutions to  
            maintain funding amounts at levels that, at minimum, are equal  
            to the level maintained for undergraduate students in 2013-14.

          8)Requires UC and CSU to report on MCS implementation.


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          FISCAL EFFECT:  Unknown.

          COMMENTS:  Purpose of this bill.  The author provided the  
          following background information in regards to this bill:

          1)What problem is this bill seeking to address?  Please present  
            all relevant (and specific) facts that demonstrate the need  
            for this bill.  According to the author's background materials  
            "the Middle Class Scholarship program provides undergraduate  
            students with family incomes up to $150,000 and a maximum  
            household amount of $150,000, a scholarship to attend UC or  
            CSU campuses. Given that tuition rates, not just in public  
            institutions but also in private non-profit institutions, have  
            steadily increased year after year, college has become  
            increasingly less affordable.  This scholarship ultimately  
            helps to alleviate some of the increasing costs of attending  
            college; however, it only applies to public institutions. It  
            does not currently address the cost burdens incurred by  
            students attending private non-profit institutions."

          2)What is the deficiency in current law that this bill seeks to  
            remedy?  Why is legislation necessary to resolve this problem?  
             According to the author, "this bill will extend the MCS to  
            students attending private non-profit institutions and thus  
            help all students, regardless of what institution they are  
            attending, alleviate some of the cost burdens associated with  
            rising tuition costs while they are attending."

          3)How will the enactment of this bill address this problem?   
            According to the author, "this bill will extend the MCS to  
            apply to both public and private non-profit institutions."

          Issues to consider.  The author and Committee may wish to  
          consider the following:


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          1)Funding.  This bill does not appropriate funding to support  
            costs associated with extending MCS to cover students enrolled  
            in nonprofit postsecondary educational institutions.  Does the  
            author intend for MCS to not be applicable to students at  
            independent institutions until it is subsequently funded? Is  
            this expansion intended to be an entitlement or a competitive  
            grant program?  In the absence of additional funds what would  
            the impact of this bill be on existing MCS recipients? 

          2)Supplanting campus aid.  Public institutions are required to  
            report to the Legislature regarding campus need-based aid  
            programs.  This reporting ensures that the institutions comply  
            with the requirements that MCS funds are not used to supplant  
            existing campus aid programs.  There is no provision of this  
            bill that would ensure against MCS funds supplanting private,  
            nonprofit institutional campus based aid.  Is it prudent to  
            expend state resources in a way that potentially supplants  
            campus based aid?

          3)Other financial aid priorities.  As discussed in more detail  
            in the analysis of other bills before this Committee, the Cal  
            Grant program is still missing hundreds of thousands of  
            low-income students.  While the Budget Act of 2015-16  
            increased the number of annual competitive Cal Grants to  
            25,750, this number still falls far short of meeting demand.   
            In 2014, for example, over 300,000 students had income and  
            asset levels to qualify for a Cal Grant.  Should expanding the  
            MCS to middle-class students attending nonprofit, private  
            colleges be prioritized over other financial aid program  



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          California Chamber of Commerce


          None on File

          Analysis Prepared by:Laura Metune / HIGHER ED. / (916) 319-3960