BILL ANALYSIS Ó
AB 1501
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Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1501 (John A. Perez) - As Amended: February 9, 2012
Policy Committee: Higher
EducationVote:8-0
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes a scholarship program to offset a
significant portion of eligible students' tuition costs at the
University of California (UC) and the California State
University (CSU). Specifically, this bill:
1)Establishes the Middle Class Scholarship Program (MCSP) to
provide UC and CSU students a scholarship award equal to at
least two-thirds of mandatory systemwide fees, when combined
with other financial aid received by the student, for students
meeting the following conditions:
a) Annual household income does not exceed $150,000, using
income calculations consistent with those used by the Cal
Grant Program. For students with household incomes between
$150,000 and $160,000, the scholarship is reduced by 10%
for each $1,000 that income exceeds $150,000.
b) The student is either a state resident or is exempt from
paying nonresident tuition.
c) The student completes and submits a Free Application for
Federal Student Aid (FAFSA) or, if unable to complete a
FAFSA, submits an application determined by the university
he or she attends to be equivalent to the FAFSA for
purposes of this bill.
d) The student makes a timely application for publicly
funded student financial aid from programs for which he or
she is eligible, including federal, institutional, and
state student financial aid programs.
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2)Requires UC and CSU to maintain their institutional student
financial aid programs at a level that, at a minimum, is
equivalent to the level maintained during the 2011-12 academic
year.
3)States legislative intent that:
a) The MCSP shall augment and not replace other
state-supported financial aid and institutional aid
programs and federal grants.
b) The amount of the financial aid provided under this bill
be increased to accommodate increases in the cost of
mandatory UC and CSU systemwide fees that may occur during
and after the 2011-12 academic year.
c) UC and CSU do not raise mandatory systemwide fees that
would decrease the value of a scholarship awarded pursuant
to this bill.
4)Continuously appropriates from the Middle Class Scholarship
Fund the necessary monies to fund MCSP scholarships for the
2012-13 academic year and subsequent years, as determined by
the California Student Aid Commission (CSAC), to CSAC for
allocation to UC and CSU, and requires UC and CSU to provide
CSAC with information necessary to determine these amounts.
5)Authorizes CSAC to expend the balance of any MCSP funds in any
academic year for purposes of the Cal Grant Program, as
specified.
6)Appropriates $150 million to the Chancellor of the California
Community Colleges (CCC) from the Middle Class Scholarship
Fund for allocation to CCC districts based on their number of
full-time equivalent students, and specifies these funds shall
be used for grants to students to reduce the impact of
enrollment fees or to help with the cost of textbooks and
other educational expenses.
7)States that this bill becomes operative only if AB 1500 is
chaptered and establishes a Middle Class Scholarship Fund. (AB
1500 (John Perez), pending in this committee, modifies the
Single Sales Factor law and deposits the associated revenues
into the Middle Class Scholarship Fund.)
AB 1501
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FISCAL EFFECT
1)CSU . It is estimated that approximately 150,000 students will
receive the Middle Class Scholarship and save about $3,700
each per year-two-thirds of the average paid tuition of
$5,500. (Annual tuition for full-time students is currently
$5,970.) Thus, the first-year cost of the program would be
about $550 million.
2)UC . It is estimated approximately 44,000 students will save an
average of about $7,000 each per year. (Annual tuition at UC
is currently $12,192.) The first-year costs of the program
will thus be about $310 million.
3)CCC . With the $150 million provided to the community colleges
with this bill, it is estimated that an additional 150,000
students could receive a Board of Governors (BOG) fee waiver.
(In 2010-11, about 44% of CCC students (1.1 million) received
a BOG waiver.)
4)CSAC . The commission will incur ongoing costs of around
$130,000 for programmer and analyst positions to establish and
implement the program.
5)In summary , the first-year costs of this bill are about $1
billion, to be funded contingent on enactment of AB 1501,
which is projected to generate revenues of $1.2 billion in
2012-13, $950 million in 2013-14, and similar amounts annually
thereafter.
COMMENTS
1)Background . Since 2007-08, which is considered the last
"normal" budget year, state support has declined by 21% at UC,
26% at CSU and 12% at CCC, resulting in enrollment caps and
reduced course offerings and student services, among other
cost-savings measures. Over this time period, UC and CSU have
raised fees significantly-by 68% and 76%, respectively. The
Legislature has generally protected the Cal Grant Program,
which covers mandatory systemwide tuition/fees for low income
students. With the exception of modest institutional
financial aid assistance, middle income students have suffered
the brunt of these fee increases.
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2)Purpose . According to the author, middle income families that
make too much to qualify for state financial aid have been
squeezed by the increased fee levels. More and more students
have to work longer hours and increase their debt burden and,
as fees and other costs increase, the work and loan burden on
students has increased at a faster rate than grant aid.
Increased costs can hinder a student's progress toward a
degree, forcing students to cut their class load, work more
hours, leave school temporarily, or drop out of school
entirely. Middle class families that have students in the
higher education systems are forced to take on ever increasing
student loan debt loads or simply forgo the dream of higher
education.
3)Concerns . As described above, the first-year costs of AB 1501
are estimated at about $1 billion. Based on estimated
first-year revenue from AB 1500, it appears that an additional
$200 million will be available for the Cal Grant program. The
bill should be more specific regarding expenditure of any
excess funds for the Cal Grant program, since by far the
largest portion of the Cal Grant program is already a General
Fund entitlement. In addition, costs will increase as
enrollments of qualifying students and/or tuition at UC and
CSU increases. The bill should establish funding priorities in
the event that annual funding made available through AB 1500
is insufficient to cover all funding requirements in AB 1501.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081