BILL NUMBER: AB 1501 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 31, 2012
AMENDED IN SENATE AUGUST 24, 2012
AMENDED IN SENATE AUGUST 21, 2012
AMENDED IN ASSEMBLY MAY 25, 2012
AMENDED IN ASSEMBLY FEBRUARY 9, 2012
INTRODUCED BY Assembly Member John A. Pérez
(Coauthors: Assembly Members Alejo, Allen, Ammiano, Atkins, Beall,
Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler,
Charles Calderon, Campos, Carter, Cedillo, Chesbro, Davis, Dickinson,
Eng, Feuer, Fletcher, Fuentes, Furutani, Fong, Galgiani, Gatto,
Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman,
Lara, Bonnie Lowenthal, Ma, Mitchell, Monning, Pan, Perea, V. Manuel
Pérez, Portantino, Skinner, Solorio, Swanson, Torres, Wieckowski,
Williams, and Yamada)
(Coauthors: Senators Alquist, Corbett, De León, DeSaulnier, Evans,
Hancock, Lowenthal, Pavley, Price, and Yee)
JANUARY 10, 2012
An act to add Article 22 (commencing with Section 70020) to
Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code,
and to amend Section 19611 of, and to add Section 17060 to, the
Revenue and Taxation Code, relating to student financial aid,
making an appropriation therefor, and declaring the urgency thereof,
to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 1501, as amended, John A. Pérez. Student financial aid: Middle
Class Scholarship Program.
(1) Existing law provides for a public postsecondary education
system in this state. This system consists of the University of
California, the California State University, and the California
Community Colleges. Existing law authorizes these institutions to
require that mandatory systemwide fees, among other fees, be paid by
students at these institutions.
This bill would establish the Middle Class Scholarship Program
under the administration of the Student Aid Commission. The bill
would provide that, commencing with the 2012-13 academic
fiscal year, undergraduate students enrolled at
the University of California or the California State University would
receive a scholarship grant award credit that,
combined with other publicly funded student financial aid, as
defined, received by an eligible student, would be 60% of the amount
charged that student for mandatory systemwide fees in that
academic fiscal year if the student meets the
following conditions: annual household income does not exceed
$150,000; is a resident of this state or exempt from paying
nonresident tuition; files specified financial aid forms;
and makes timely application or applications for publicly
funded student financial aid, as defined, for which he or she is
eligible ; and meets prescribed eligibility requirements of the
Cal Grant Program, except as specified, and attains at least a 2.0
high school or community college grade point average .
The bill would provide that a student whose annual household
income exceeds $150,000, and who otherwise meets the requirements,
would receive a scholarship grant award credit that is
reduced in accordance with prescribed calculations.
The bill would require, in order for students enrolled in their
respective segments to remain eligible to receive financial aid under
the bill, the University of California and the California State
University to maintain their respective institutional need-based
grant programs at a level that, at a minimum, is equivalent to the
level maintained during the 2011-12 academic
fiscal year.
The bill would continuously appropriate from the Middle
Class Scholarship General Fund to the
Student Aid Commission as follows: first, $150,000,000 to
the Chancellor of the California Community Colleges for allocation to
community college districts based on calculations of full-time
equivalent credit, to be expended, after consultation with student
representatives as specified, for the provision of scholarship grants
to students to reduce the impact of enrollment fees or to help cover
the cost of textbooks and other educational expenses ; an
amount determined by the Student Aid Commission to be sufficient,
when combined with publicly funded student financial aid received by
eligible students from other sources, to cover the cost of 60% of the
amount of mandatory systemwide fees charged to resident students and
students who are exempt from nonresident tuition in the 2012-13
academic year and subsequent academic years, to be allocated to the
Regents of the University of California and the Trustees of the
California State University for implementation of this bill; and
$100,000,000 each to the University of California and the California
State University for maintaining access to those segments in the
2012-13 academic year . The bill would require the
Student Aid Commission to report the amount of the scholarship grant
awar d credit for each student to the Franchise Tax Board,
and to report the aggregate amount of scholarship grant award
credits to the Department of Finance.
The bill would authorize the Student Aid Commission , in
the event that, in any academic year, there are funds remaining in
the Middle Class Scholarship Fund after funds have been allocated to
all eligible students of the respective universities, to hold these
funds in a reserve for fiscal uncertainties. The bill would authorize
the Student Aid Commission to determine if sufficient
funding is available for purposes of the bill in the 2012-13
academic fiscal year and subsequent
academic fiscal years, and would further
authorize the commission to reduce scholarships proportionately if it
determines that sufficient funding is not available.
(2) Existing law establishes the continuously appropriated Tax
Relief and Refund Account, and provides that payments required to be
made to taxpayers or other persons from the Personal Income Tax Fund
are to be paid from that account.
This bill, for fiscal years beginning with the 2012-13 fiscal
year, would authorize an amount equal to a qualified student's
scholarship grant award credit under the Middle Class Scholarship
Program, as determined by the Student Aid Commission pursuant to the
bill, to be refunded from the Tax Relief and Refund Account, thereby
making an appropriation.
( 3) This bill would become operative only
if AB 1500 of the 2011-12 Regular Session is chaptered and
establishes a Middle Class Scholarship Fund .
(3)
( 4) This bill would declare that it is to
take effect immediately as an urgency statute.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Article 22 (commencing with Section 70020) is added to
Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code,
to read:
Article 22. Middle Class Scholarship Program
70020. The Middle Class Scholarship Program is hereby established
under the administration of the Student Aid Commission. For purposes
of this article, "commission" means the Student Aid Commission.
70021. (a) (1) Commencing with the 2012-13 academic
fiscal year, an undergraduate student enrolled
in the California State University or the University of California
who meets the requirements of paragraph (2) is eligible for a
scholarship grant award credit as described in
paragraph (2).
(2) Each academic fiscal year, a
student shall receive a scholarship grant award credit in
an amount that, combined with other publicly funded student financial
aid received by an eligible student, is 60 percent of the amount
charged that student in that academic fiscal
year for mandatory systemwide fees, if all of the following
requirements are met:
(A) The student's annual household income does not exceed one
hundred fifty thousand dollars ($150,000), except as provided in
paragraph (3). For purposes of this article, annual household income
shall be calculated in a manner that is consistent with the
requirements applicable to the Ortiz-Pacheco-Poochigian-Vasconcellos
Cal Grant Program (Chapter 1.7 (commencing with Section 69430)) and
Section 69506.
(B) The student is either a resident of the state or is exempt
from paying nonresident tuition.
(C) The student completes and submits a Free Application for
Federal Student Aid (FAFSA) application . If the
student is not able to complete a FAFSA application
, the student submits an application determined by the university he
or she attends to be equivalent to the FAFSA application
for purposes of this article.
(D) The student makes a timely application or applications for
publicly funded student financial aid from programs for which he or
she is eligible, other than the program established by this article.
For purposes of this article, "publicly funded student financial aid"
shall be defined as the federal Pell Grant Program, the Cal Grant
Program, and institutional need-based grants.
(E) The student meets the requirements of subdivisions (a), (b),
(c), and (d) of Section 69433.9, and attains a high school or
community college grade point average of at least 2.0 on a four-point
scale, except that a student who is exempt from nonresident tuition
under Section 68130.5 shall not be required to meet the requirements
of subdivision (a) of Section 69433.9.
(3) The scholarship grant award credit under
this article of a student whose annual household income is greater
than one hundred fifty thousand dollars ($150,000), and who otherwise
meets the requirements of paragraph (2), shall be reduced by a
percentage, not to exceed 100 percent, that is equal to 10
percent multiplied by a number equal to the amount by which the
student's household annual household income exceeds one hundred fifty
thousand dollars ($150,000), divided by the product of one thousand
dollars ($1,000) multiplied by the number of students in that
household receiving a scholarship under this article during that
academic year the portion of the student's annual
household income in excess of one hundred fifty thousand dollars
($150,000) as a p ercentage of ten thousand dollars
($10,000) so that no scholarship grant award credit shall be provided
to a student with an annual household income of one
hundred sixty thousand dollars ($160,000) or more .
(b) In order for students enrolled in their respective segments to
remain eligible to receive a scholarship grant award credit
under this article and Section 17060 of the Revenue and
Taxation Code , the University of California and the California
State University shall maintain their respective institutional
need-based grant programs at a level that, at a minimum, is
equivalent to the level maintained during the 2011-12
academic fiscal year.
(c) The University of California and the California State
University shall report on the implementation of this article as part
of the report made pursuant to Section 66021.1. The California
Community Colleges shall report on the implementation of this
article, including, but not necessarily limited to, the allocation
and use of funds by community college districts, as part of the
annual report made pursuant to paragraph (2) of subdivision (b) of
Section 70901.
70022. It is the intent of the Legislature that all of the
following occur:
(a) The program created pursuant to this article shall augment,
and not replace, other state-supported financial aid and
institutional need-based grant programs and federal grants.
(b) That the scholarship grant award credit provided to
students under this article and Section 17060 of the Revenue
and Taxation Code be increased to accommodate increases in the
cost of mandatory systemwide fees charged to students of the
University of California and the California State University,
respectively, that may occur during and after the 2011-12
academic fiscal year.
(c) That the University of California and the California State
University do not raise mandatory systemwide fees that would decrease
the value of a scholarship grant award credit
under this article and Section 17060 of the Revenue and Taxation
Code .
(d) That the costs of Middle Class Scholarship Program do not
exceed the funding available in the Middle Class Scholarship Fund and
that a prudent fund balance exists to protect against fiscal
uncertainties.
70023. (a) The following amount is hereby appropriated from
the General Fund in accordance with the following :
(1) Each academic Notwithstanding Section
13340 of the Government Code, each fiscal year, from
the revenues in the Middle Class Scholarship Fund established by
Section 70025, there shall first be set aside one hundred
fifty million dollars ($150,000,000) , is
continuously appropriated, and shall be transferred to the
Chancellor of the California Community Colleges for allocation, for
that academic fiscal year, to community
college districts based on calculations of full-time equivalent
credit weighted by a measure of participants in the enrollment fee
waiver program of the Board of Governors of the California Community
Colleges established pursuant to Section 76300. Funds annually
allocated to a community college district pursuant to this paragraph
shall be expended, after the district has consulted with the
recognized campus and district student representatives in the
determination of how the funds are to be expended, for the provision
of grants to students to reduce the impact of enrollment fees, or to
help cover the cost of textbooks and other educational expenses. It
is the intent of the Legislature that the funds provided under this
paragraph meet the specific needs of students at the local district
level. The Board of Governors of the California Community Colleges
may establish minimum criteria and standards for community colleges
to award grants under this paragraph, in consultation with the
appropriate statewide student association representatives, to ensure
that the intent of the Legislature is met.
(2) Notwithstanding Section 13340 of the Government Code, each
academic year, an amount determined by the commission to be
sufficient, when combined with Cal Grants, Pell Grants, and
institutional need-based grants received by eligible students from
other sources, to cover the cost of 60 percent of the amount of
mandatory systemwide fees charged to resident students and students
who are exempt from nonresident tuition in the 2012-13 academic year
and subsequent academic years is hereby continuously appropriated
from the Middle Class Scholarship Fund established by Section 70025
to the commission for allocation to the Regents of the University of
California and the Trustees of the California State University for
implementation of this article. The University of California and the
California State University shall provide the commission with any
information that is necessary for the determination of this amount.
(3) For the 2012-13 academic year, one hundred million dollars
($100,000,000) to the University of California for the purpose of
maintaining access to the university.
(4) For the 2012-13 academic year, one hundred million dollars
($100,000,000) to the California State University for the purpose of
maintaining access to the university.
(b) In the event that, in any academic year, there are funds
remaining in the Middle Class Scholarship Fund after funds have been
allocated to all eligible students of the respective universities
pursuant to paragraphs (1) and (2) of subdivision (a), the commission
shall hold these funds in reserve for fiscal uncertainties.
(2) For the 2012-13 fiscal year, the appropriation made pursuant
to paragraph (1) shall not be allocated to the Chancellor of the
California Community Colleges until May 2013.
(3) For purposes of making the computations required by Section 8
of Article XVI of the California Constitution, including computation
of the state's minimum funding obligation to school districts and
community college districts in subsequent fiscal years, the
appropriation made pursuant to paragraph (1) shall be deemed to be
"General Fund revenues appropriated for community college districts,"
as defined in subdivision (d) of Section 41202, and included within
the "total allocations to school districts and community college
districts from General Fund proceeds of taxes appropriated pursuant
to Article XIII B," as defined in subdivision (e) of Section 41202,
for that fiscal year.
(4) Each fiscal year, the commission shall report to the Franchise
Tax Board the amount of the scholarship grant award credit for each
student, as provided in subdivision (d) of Section 17060 of the
Revenue and Taxation Code. The commission shall also report the
aggregate amount of scholarship grant award credits to the Department
of Finance. The University of California and the California State
University shall provide the commission with any information that is
necessary for the administration of the Middle Class Scholarship
Program.
(c)
(b) (1) For the 2012-13 academic
fiscal year, the commission shall determine if five
hundred sixty million dollars ($560,000,000) is sufficient to cover
the costs of the scholarships scholarship
grant award credits as defined
described in paragraph (2) (4) of
subdivision (a) of this section and Section 70021 . If
five hundred sixty million dollars ($560,000,000) is not sufficient
for this purpose, then the scholarships shall be reduced
proportionately by an equal percentage for all recipients of
scholarships scholarship grant award credits
under this article and Section 17060 of the Revenue and Taxation
Code .
(2) (A) Beginning with the Governor's Budget proposal for the
2013-14 fiscal year, and in the Governor's Budget for each fiscal
year thereafter, the Department of Finance shall include a
fund condition statement for the Middle Class Scholarship Fund
display of revenues and scholarship grant award
credits provided under this article and Section 17060 of the Revenue
and Taxation Code for the past, current, and proposed fiscal
years prepared in accordance with existing law.
(B) The For the 2014-15 fiscal year and
each fiscal year thereafter, the commission shall determine,
from the information provided pursuant to this subdivision, if
sufficient funds will be available to cover the costs of the
allocation to the California Community Colleges and the scholarships
pursuant to paragraphs (1) and (2), respectively, of
subdivision (a) of this section, and Section 70021,
for the upcoming fiscal year. If the funds are not sufficient,
then the scholarships shall be reduced proportionately by an equal
percentage for all recipients of scholarships under this article
and Section 17060 of the Revenue and Taxation Code .
(C) The purpose of this subdivision is to ensure that the Middle
Class Scholarship Program costs do not exceed funding available
in the Middle Class Scholarship Fund .
SEC. 2. Section 17060 is added to the
Revenue and Taxation Code , to read:
17060. (a) (1) For fiscal years beginning with the 2012-13 fiscal
year, there shall be allowed to a qualified student a credit against
the "net tax," as defined in Section 17039, in an amount equal to
the qualified student's scholarship grant award credit determined by
the Student Aid Commission pursuant to Section 70021 of the Education
Code and other applicable provisions of Article 22 (commencing with
Section 70020) of Chapter 2 of Part 42 of Division 5 of Title 3 of
the Education Code.
(2) The amount of the scholarship grant award credit determined by
the Student Aid Commission under paragraph (1) shall be provided to
the qualified student in writing, and that amount shall be paid
pursuant to subdivision (c) in lieu of the qualified student claiming
the scholarship grant award credit on any return that may be filed
under Part 10.2 (commencing with Section 18401) with respect to the
income of the qualified student for any taxable year.
(b) For purposes of this section, "qualified student" means a
student that meets all of the requirements of Section 70021 of the
Education Code to be eligible for a credit under this section.
(c) The credit allowed under this section shall be payable to the
California State University or the University of California, as the
case may be, for the benefit of the qualified student, and shall be
applied by the California State University or the University of
California, as the case may be, to reduce the qualified student's
mandatory systemwide fees, within the meaning of Section 70021 of the
Education Code, for a fiscal year.
(d) The Student Aid Commission shall provide the Franchise Tax
Board with information for each qualified student regarding the
amount of the credit allowed under this section, the student
identification information for the qualified student benefitting from
the credit, and whether the credit is payable to the Regents of the
University of California or the Trustees of the California State
University. Based on this information, the Franchise Tax Board shall
make payments from the Tax Relief and Refund Account on behalf of the
qualified student to either the Regents of the University of
California or the Trustees of the California State University, as the
case may be.
(e) (1) The credit allowed under this section shall be
administered by the Student Aid Commission as described in Article 22
(commencing with Section 70020) of Chapter 2 of Part 42 of Division
5 of Title 3 of the Education Code, in the manner determined under
regulations issued by the Student Aid Commission. The University of
California and the California State University shall provide the
commission with any information that is necessary for the
administration of the Middle Class Scholarship Program.
(2) The Student Aid Commission may prescribe rules and regulations
necessary to carry out the purposes of this section, including any
rules and regulations necessary to establish priorities, procedures,
processes, requirements, and rules identified in, or required to
implement, this section, including rules relating to the priority of
applications received and the allocation of credits in whatever
priority is contained in those regulations.
(3) The allocation methodology and the amount of scholarship grant
award credits determined by the Student Aid Commission may not be
reviewed, revised, or adjusted in any administrative or judicial
proceeding.
(4) The Student Aid Commission may adopt regulations under
paragraph (2) as emergency regulations in accordance with Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2
of the Government Code. For purposes of the Administrative Procedure
Act, including Section 11349.6 of the Government Code, the adoption
of those regulations shall be deemed to be an emergency and necessary
for the immediate preservation of the public peace, health and
safety, or general welfare, notwithstanding subdivision (e) of
Section 11346.1 of the Government Code. Notwithstanding subdivision
(e) of Section 11346.1 of the Government Code, any regulation adopted
pursuant to this section shall not remain in effect more than 180
days unless the Student Aid Commission complies with all provisions
of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division
3 of Title 2 of the Government Code, as required by subdivision (e)
of Section 11346.1 of the Government Code.
(f) Except as provided for in subdivision (c), the credit under
this section shall not be available to offset, reduce, or otherwise
diminish any debt, liability, or financial obligation owed to the
state.
SEC. 3. Section 19611 of the Revenue
and Taxation Code is amended to read:
19611. (a) The Tax Relief and Refund Account is hereby created in
the General Fund. Notwithstanding Section 13340 of the Government
Code, all moneys in the Tax Relief and Refund Account are hereby
continuously appropriated, without regard to fiscal year, to the
Franchise Tax Board for purposes of making all payments as provided
in this section.
(b) Notwithstanding any other provision of law,
all payments required to be made to taxpayers or other persons from
the Personal Income Tax Fund shall be paid from the Tax Relief and
Refund Account.
(c) The Controller shall transfer, as needed, to the Tax Relief
and Refund Account:
(1) From the unexpended balance of the annual Budget Act
appropriation for Item 9100-101-001, Schedule 80-Renter's Tax Relief,
an amount determined by the Franchise Tax Board to be equivalent to
the total amount of renters' assistance credits and refunds allowed
under Section 17053.5.
(A) If there is no unexpended balance of the appropriation, as
provided for in paragraph (1), the Controller shall transfer
sufficient moneys from the Personal Income Tax Fund to make the
renters' assistance credits and refunds until there is an unexpended
balance.
(B) Subsequent to there being no unexpended balance of the
appropriation, as provided for in paragraph (1), and there being a
transfer of moneys from the Personal Income Tax Fund to make the
renters' assistance credits and refunds, reimbursement shall be made
from the unexpended balance of the appropriation as provided for in
paragraph (1) to the Personal Income Tax Fund. However, if no such
appropriation is subsequently made, reimbursement shall be made from
the General Fund.
(2) From the disability fund, the amount transferable to the
General Fund pursuant to subdivision (a) of Section 1176.5 of the
Unemployment Insurance Code.
(3) From the Personal Income Tax Fund, such additional amounts as
determined by the Franchise Tax Board to be necessary to make the
payments required under this section and Section 17060 .
SEC. 2. SEC. 4. This act shall
become operative only if Assembly Bill 1500 of the 2011-12 Regular
Session is chaptered and establishes a Middle Class
Scholarship Fund .
SEC. 3. SEC. 5. This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to provide urgently needed financial aid to California
public postsecondary students in time for the beginning of the
2012-13 academic fiscal year, it is
necessary that this act take effect immediately.