BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Alan Lowenthal, Chair
2011-2012 Regular Session
BILL NO: AB 1501
AUTHOR: Perez
AMENDED: May 25, 2012
FISCAL COMM: Yes HEARING DATE: June 27, 2012
URGENCY: Yes CONSULTANT: Kathleen
Chavira
SUBJECT : Middle Class Scholarship Program.
SUMMARY
This bill, an urgency measure, establishes the Middle
Class Scholarship Program, to be administered by the
California Student Aid Commission, beginning with the
2012-13 academic year, and provides for an appropriation
for purposes of funding the program, contingent upon the
enactment of AB 1500 (Perez).
BACKGROUND
Current law establishes the California Student Aid
Commission and outlines its responsibilities which include,
among other things, the administration of the Cal Grant
program. (Education Code § 69510)
Current law establishes the Cal Grant Program, to provide
grants to financially needy students to attend college.
The Cal Grant programs include both the entitlement and the
competitive Cal Grant awards. Eligibility for the program
is based upon financial need, grade point average,
California residency, and other eligibility criteria. (EC
§ 69430)
Current law requires the University of California (UC) and
the California State University (CSU) to annually report on
their respective institutional financial aid programs (EC §
66021.1)
Current law requires the Board of Governors of the
California Community Colleges (CCC) to annually evaluate
and issue reports on the fiscal and educational
AB 1501
Page 2
effectiveness of community college districts according to
outcome measures cooperatively developed with those
districts and to provide assistance when districts
encounter severe management difficulties. (EC § 70901)
ANALYSIS
This bill , an urgency measure, establishes the Middle Class
Scholarship Program under the administration of the
California Student Aid Commission (CSAC). More specifically
it:
1) Establishes a program which provides scholarships for
mandatory systemwide fees at the UC and CSU and funds
for grants to cover fees, books, and other educational
costs at the CCC.
2) Declares that, beginning with the 2012-13 academic
year, an undergraduate student enrolled at the UC or
CSU is eligible for a scholarship in an amount that,
when combined with other financial aid received by the
student, is at least 2/3 of the amount charged that
student in the academic year for mandatory systemwide
fees if the student:
a) Has a household income that does
not exceed $150,000, except that, students with
an annual income above $150,000 but below
$160,000 may receive an award reduced by 10
percent for every thousand dollars in excess of
$150,000 if the student otherwise meets
eligibility requirements.
b) Is exempt from paying nonresident
tuition.
c) Submits a Free Application for
Federal Student Aid (FAFSA), or, if unable to
submit a FAFSA, submits an equivalent
application.
d) Makes timely application(s) for
other publicly funded student financial aid
programs (defined as federal, institutional, and
state student financial aid programs) for which
he/she is eligible.
AB 1501
Page 3
3) Requires the UC, CSU and CCC to report on the
implementation of the bill's provisions, as specified,
as part of existing annual reporting requirements
under specified state law.
4) Declares the Legislature's intent that:
a) The program augment, and not
replace, other state-supported financial and
institutional aid programs or federal grants.
b) The amount of the award keeps pace
with future increases in mandatory systemwide
fees at the UC and CSU.
c) The UC and CSU not raise mandatory
systemwide fees that would decrease the value of
the scholarship.
5) Authorizes the appropriation of an amount to be
determined by the California Student Aid Commission
(CSAC), when combined with other financial aid
sources, that covers at least 2/3 of the amount of
mandatory systemwide fees.
6) Continuously appropriates the amount determined
necessary by the CSAC from the Middle Class
Scholarship Fund, proposed to be established by AB
1500 (Perez), to the CSAC for allocation to the UC and
CSU for purposes of the scholarship program
established by the bill.
7) Provides for the appropriation of $150 million from
the Middle Class Scholarship fund to the Chancellor of
the California Community Colleges to allocate to
districts, on a full-time equivalent (FTE) student
basis, to provide grants to students to reduce the
impact of enrollment fees, cover the cost of textbooks
and other educational expenses.
8) Provides that, in any academic year, any funds
remaining in the Middle Class Scholarship Fund may be
expended for purposes of the Cal Grant Program after
funds are allocated to all eligible students.
9) Provides that the provisions of this bill are
AB 1501
Page 4
contingent upon the enactment of AB 1500 (Perez).
STAFF COMMENTS
1) 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.
2) Mandatory systemwide fees . Fee revenue works
interchangeably with General Fund support to fund the
core instructional mission of the public segments.
The state's portion essentially subsidizes the amount
paid by students in the form of fees. Since 2007-08,
state support for the UC and CSU has declined
significantly. The charts below illustrate the
resulting fluctuation in fees at the UC and the CSU
over the last several years.
--------------------------------------------
| UC |
| Mandatory Systemwide |
| Student Fees |
| Resident Undergraduates |
--------------------------------------------
|--------------+--------------+--------------|
| | | |
| Year | Fee Amount | Percent |
| | | Change from |
| | | Prior year |
|--------------+--------------+--------------|
| 1996-97 | $3,799 | N/A |
|--------------+--------------+--------------|
| 1997-98 | $3,799 | 0.0% |
AB 1501
Page 5
|--------------+--------------+--------------|
| 1998-99 | $3,609 | -5.0% |
|--------------+--------------+--------------|
| 1999-00 | $3,429 | -5.0% |
|--------------+--------------+--------------|
| 2000-01 | $3,429 | 0.0% |
|--------------+--------------+--------------|
| 2001-02 | $3,429 | 0.0% |
|--------------+--------------+--------------|
| 2002-03 | $3,834 | 11.8% |
|--------------+--------------+--------------|
| 2003-04 | $4,984 | 30.0% |
|--------------+--------------+--------------|
| 2004-05 | $5,684 | 14.0% |
|--------------+--------------+--------------|
| 2005-06 | $6,141 | 8.0% |
|--------------+--------------+--------------|
| 2006-07 | $6,141 | 0.0% |
|--------------+--------------+--------------|
| 2007-08 | $6,636 | 8.1% |
|--------------+--------------+--------------|
| 2008-09 | $7,126 | 7.4% |
|--------------+--------------+--------------|
| 2009-10 | $8,958 | 25.7% |
|--------------+--------------+--------------|
| 2010-11 | $10,302 | 15.0% |
|--------------+--------------+--------------|
| 2011-12 | $12,192 | 18.3% |
--------------------------------------------
--------------------------------------------
| CSU |
| Mandatory Systemwide |
| Student Fees |
| Resident Undergraduates |
--------------------------------------------
|--------------+--------------+--------------|
| | | |
| Year | Fee Amount | Percent |
| | | Change from |
| | | Prior year |
|--------------+--------------+--------------|
| 1996-97 | $1,584 | N/A |
AB 1501
Page 6
|--------------+--------------+--------------|
| 1997-98 | $1584 | 0.0% |
|--------------+--------------+--------------|
| 1998-99 | $1,506 | -4.9% |
|--------------+--------------+--------------|
| 1999-00 | $1,428 | -5.2 % |
|--------------+--------------+--------------|
| 2000-01 | $1,428 | 0.0% |
|--------------+--------------+--------------|
| 2001-02 | $1,428 | 0.0% |
|--------------+--------------+--------------|
| 2002-03 | $1,500 | 5.0% |
|--------------+--------------+--------------|
| 2003-04 | $2,046 | 36.4% |
|--------------+--------------+--------------|
| 2004-05 | $2,334 | 14.1% |
|--------------+--------------+--------------|
| 2005-06 | $2,520 | 8.0% |
|--------------+--------------+--------------|
| 2006-07 | $2,520 | 0.0% |
|--------------+--------------+--------------|
| 2007-08 | $2,772 | 10.0% |
|--------------+--------------+--------------|
| 2008-09 | $3,048 | 10.0% |
|--------------+--------------+--------------|
| 2009-10 | $4,026 | 32.1% |
|--------------+--------------+--------------|
| 2010-11 | $4,429 | 10.0% |
|--------------+--------------+--------------|
| 2011-12 | $5,472 | 23.5% |
| | | |
--------------------------------------------
3) Contingency language . The provisions of the bill are
contingent upon the enactment of AB 1500 (Perez), an
urgency measure, which provides for the funding of the
Middle Class Scholarship Program by making the single
sales factor (SSF) apportionment formula mandatory,
revising the rules for assignment of sales, and
requiring that revenue derived from those changes be
deposited in the newly established Middle Class
Scholarship Fund. AB 1500 is currently awaiting
action on the Assembly floor.
4) Similar legislation . SB 1466 (De Leon) expands
AB 1501
Page 7
eligibility for a Cal Grant, beginning in the 2014-15
academic year to a student whose household income is
$150,000, subject to specified funding prioritization,
and contingent upon SB 1356 (De Leon), that creates
the Higher Education Income Tax Credit. SB 1466 is
awaiting action in the Assembly Higher Education
Committee and SB 1356 is awaiting action in the
Assembly Revenue and Taxation Committee.
SUPPORT
Alhambra Unified School District
American Federation of State, County and Municipal
Employees (AFSCME), AFL-CIO
American Federation of Teachers Guild
Associated Students Sacramento State
Associated Students University of California Davis
Berkeley City Council, City Clerk Department
Bill Rosendahl, Los Angeles City Council
California Community Colleges Chancellor's Office
California Faculty Association
California Hospital Association
California Labor Federation
California Medical Association
California Professional Firefighters
California Public Defenders Association
California School Employees Association, AFL-CIO
California State Association of Electrical Workers
California State Council of Laborers
California State Pipe Trades Council
California State Student Association
California State University
California Student Aid Commission
California Youthbuild Coalition
Centinela Valley Union High School District
City Controller of Los Angeles
City of Los Angeles City Council
City of Sacramento City Council
Coalition of California Utility Employees
Community College League of California
Congress of California Seniors
Dennis P. Zine, Los Angeles City Council
Equality California
Eric Garcettii, Los Angeles City Council
Faculty Association of California Community Colleges
Faculty Association of Rancho Santiago Community College
AB 1501
Page 8
District
Graduate Student Association, UC Riverside
Hacienda La Puente Unified School District
Herb J. Wesson, Jr., Los Angeles City Council
Inglewood Unified School District
International Longshore & Warehouse Union Southern
California District Council
International Union of Elevator Constructors
Joe Buscaino, Los Angeles City Council
Jose Huizar, Los Angeles City Council
Laborers' Locals 777 & 792
Los Angeles County Democratic Party
Los Angeles County Federation of Labor, AFL-CIO
Los Angeles County Sheriff's Department
Los Angeles Unified School District
Los Rios Community College District
Montebello Unified School District
National Association of Social Workers-California Chapter
National Police Clergy Council
Nury Martinez, Los Angeles City Council
Office of Mayor Antonio R. Villaraigosa
Paul Koretz, Los Angeles City Council
Paul Krekorian, Los Angeles City Council
Richard Alarcon, Los Angeles City Council
Sacramento County Board of Supervisors
San Diego County Court Employees Association
Santa Monica-Malibu Unified School District
Santiago Canyon College Associated Student Government
Shasta College Student Senate
Student Senate for California Community College, Might
Region VI
Student Senate for California Community Colleges
Tony Cardenas, Los Angeles City Council
Tri-Counties Central Labor Council
UAW Local 2865-The UC Student Workers Union
University of California
University of California Student Association
Western Association for College Admission Counseling
Western States Council of Sheet Metal Workers
OPPOSITION
None received.
AB 1501
Page 9