BILL ANALYSIS Ó
AB 1501
Page 1
ASSEMBLY THIRD READING
AB 1501 (John A. Pérez)
As Amended May 25, 2012
2/3 vote. Urgency
HIGHER EDUCATION 8-0 APPROPRIATIONS 12-5
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|Ayes:|Block, Olsen, Achadjian, |Ayes:|Fuentes, Blumenfield, |
| |Huber, Fong, Galgiani, | |Bradford, Charles |
| |Lara, Portantino | |Calderon, Campos, Davis, |
| | | |Gatto, Ammiano, Hill, |
| | | |Lara, Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Establishes the Middle Class Scholarship Program
(MCSP), which would provide a grant, as specified, for students
at the University of California (UC) and the California State
University (CSU) with family incomes below $160,000.
Specifically, this bill :
1)Provides UC and CSU students a scholarship award equal to at
least two-thirds of the amount that is charged for mandatory
systemwide fees when combined with other financial aid
received by the student, beginning with the 2012-13 academic
year, for students who meet the following conditions:
a) The student's annual household income does not exceed
$150,000, using income calculations consistent with those
used for the Cal Grant Program, as defined. For students
with incomes between $150,000 and $160,000, the scholarship
shall be reduced by 10% for each $1,000 that the student's
annual income exceeds $150,000;
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) or, if unable to complete a
FAFSA, submits an application determined by the university
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he or she attends to be equivalent to the FAFSA for
purposes of this bill; and,
d) The student makes a timely application for publicly
funded student financial aid from programs for which he or
she is eligible, other than the program established by this
bill, including federal, institutional, and state student
financial aid programs.
2)Requires UC and CSU to maintain their respective 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) MCSP shall augment and not replace other state-supported
financial aid and institutional aid programs and federal
grants;
b) The amount of the student financial aid provided to
students under this bill be increased to accommodate
increases in the cost of mandatory systemwide fees charged
to UC and CSU students that may occur during and after the
2011-12 academic year; and,
c) UC and CSU do not raise mandatory systemwide fees that
would decrease the value of a scholarship award under this
article.
4)States that this act shall become operative only if AB 1500
(John A. Pérez) of the 2011-12 Regular Session is chaptered
and establishes a Middle Class Scholarship Fund.
5)Appropriates from the Middle Class Scholarship Fund the
necessary monies to fund MCSP scholarships, as determined by
the California Student Aid Commission (CSAC), to CSAC for
allocation to UC and CSU for implementation of MCSP and
requires UC and CSU to provide CSAC with any information
necessary for determination of this amount.
6)Authorizes CSAC to expend any remaining MCSP funds in any
academic year for purposes of the Cal Grant Program, as
specified.
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7)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 calculations of
full-time equivalent students and specifies these funds shall
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.
8)Requires UC, CSU and CCC to report on the implementation of
MCSP funds as part of existing reporting requirements, as
specified.
9)Contains an urgency clause.
EXISTING LAW establishes the Cal Grant Entitlement Programs to
provide grant assistance for tuition/fee payment at the UC, CSU
and private institutions in California, to the extent that
students are financially and academically eligible for such
support. (Education Code Section 69530)
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
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
from 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
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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 1500,
which is projected to generate revenues of $1.2 billion in
2012-13, $950 million in 2013-14, and similar amounts annually
thereafter.
COMMENTS : This bill is a companion measure to AB 1500 (John A.
Pérez), pending in the Assembly, which would modify the Single
Sales Factor law and is estimated to provide $1 billion for the
Middle Class Scholarship Fund.
Background. Since 2007-08, which is considered the last
"normal" budget year, state budget challenges have decreased
funding to higher education 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. In
addition, UC and CSU have raised fees-68% at UC and 76% at CSU.
The Legislature has, for the most part, protected the Cal Grant
Program, which covers mandatory systemwide tuition/fees for low
income students. However, with the exception of modest
institutional aid assistance, middle income students have borne
the brunt of these fee increases.
Need for the bill. 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.
How will this work? CSU and UC students will fill out the
standard financial aid forms. All students with family incomes
less than $150,000 who do not already have mandatory systemwide
tuition/fees covered by existing financial aid programs will
receive a Middle Class Scholarship that covers two-thirds of
tuition/fees. Families with incomes between $150,000-160,000
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would receive a reduced scholarship benefit. This will cost
approximately $850 million per year.
Analysis Prepared by : Sandra Fried / HIGHER ED. / (916)
319-3960
FN: 0003911