BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1466 (DeLeon) - Cal Grant Program Eligibility Expansion.
Amended: May 2, 2012 Policy Vote: Education 8-1
Urgency: No Mandate: No
Hearing Date: May 21, 2012 Consultant: Jacqueline
Wong-Hernandez
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: SB 1466 expands eligibility for a Cal Grant,
beginning in the 2014-15 academic year and until either all
funds in the Higher Education Investment Tax Credit (HEITC)
program are expended or December 1, 2018. This bill allows a
student who household income is $150,000 or less to be eligible
for a Cal Grant, subject to specified funding prioritization,
and contingent upon legislation that creates the HEITC.
Fiscal Impact:
Minor and absorbable workload increase to the California
Student Aid Commission (CSAC) to administer increased Cal
Grants.
Potentially substantial General Fund savings, to the extent
that HEITC funding supplants General Fund support for Cal
Grants.
To the extent that expanded Cal Grant eligibility and
funding covers additional students, it may supplant
institutional aid from the segments.
Background: Existing law authorizes the Cal Grant Program,
administered by the CSAC, to provide grants to financially needy
students to attend college. The Cal Grant programs include both
the entitlement and the competitive Cal Grant awards, and
eligibility is based upon financial need, grade point average
(GPA), California residency, and other eligibility criteria, as
specified in Education Code § 69433.9. These programs currently
operate as follows:
Cal Grant A - High School Entitlement Program provides
tuition fee funding for the equivalent of four full-time years
at qualifying postsecondary institutions to eligible lower and
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middle income high school graduates who have at least a 3.0
GPA, and apply within one year of graduation.
Cal Grant B - High School Entitlement Program provides funds
to eligible low-income high school graduates who have at least
a 2.0 GPA, and apply within one year of graduation. The award
provides up to $1,551 for books and living expenses for the
first year and each year following for up to four years (or
equivalent of four full-time years). After the first year, the
award also provides tuition fee funding at qualifying
postsecondary institutions.
Cal Grant Community College Transfer Program provides a Cal
Grant A or B to eligible high school graduates who have a
community college GPA of at least 2.4, and transfer to a
qualifying baccalaureate degree granting college or
university.
Cal Grant Competitive Award Program provides 22,500 Cal Grant
A and B awards available to applicants who meet financial,
academic, and general program eligibility requirements. Half
of these awards are reserved for students enrolled at a
community college and who met the September 2 application
deadline.
Cal Grant C Program provides funding for financially eligible
lower income students preparing for occupational or technical
training. The authorized number of new awards is 7,761. For
new and renewal recipients, the current tuition and fee award
is up to $2,592 and the allowance for training-related costs
is $576.
Current law requires that the maximum household income and asset
levels for the Cal Grant program be adopted and defined in
regulations by the California Student Aid Commission and that
these ceilings be annually adjusted based upon changes in the
cost of living. Cal Grant funding is annually appropriated in
the Budget Act, and reductions to the program translate to award
reductions.
Proposed Law: This bill, commencing with the 2014-15 academic
year, establishes eligibility for Cal Grants funded by the
HEITC, subject to specified priorities. This bill provides that
HEITC funding will be used, until exhausted, to fund grants for
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qualifying students whose household income does not exceed
$150,000, as specified, and in the following order of priority:
(1) Students who meet the eligibility requirements
established for a Cal Grant A, B, or Transfer Entitlement
Award for the 2011-12 academic year.
(2) Students who meet the eligibility requirements
established for a Competitive Cal Grant A or B Award for
the 2011-12 academic year, up to the maximum number of
awards authorized for Competitive Cal Grant A or B Awards
in the annual Budget Act.
(3) All other students who meet the eligibility requirements
established for a Cal Grant Award for the 2011-12 academic
year, except that these students may have a maximum
household income no greater than $150,000.
Related Legislation: The provisions of this bill are contingent
upon the enactment of SB 1356 (DeLeon) which establishes the
HEITC Program Special Fund, and requires that all revenue in
this fund be allocated to the CSAC for purposes of awarding Cal
Grants to students eligible pursuant to the provisions of this
bill. SB 1356 will also be heard in this Committee on May 21,
2012.
Staff Comments: The program expansion created by this bill is
contingent on the enactment of SB 1356 (DeLeon), which provides
funding to increase Cal Grant awards. That bill provides that
all HEITC revenue will be allocated to CSAC to implement these
provisions. Essentially, any money collected by the Franchise
Tax Board under SB 1356 will flow directly to the CSAC to use
for Cal Grant awards. The CSAC has indicated it would be able to
absorb the increased workload associated with implementing the
new eligibility requirements and awarding additional Cal Grants.
The language of this bill suggests that the initial revenue
generated by the HEITC will supplant General Fund money that
currently funds Cal Grants. In awarding HEITC-funded Cal Grants,
this bill provides that first priority will be for students "who
meet the eligibility requirements established for a Cal Grant A,
B, or Transfer Entitlement Award for the 2011-12 academic year."
Assuming similar requirements and income ceilings are in place
in 2014-15 for General Fund-supported Cal Grant awards, the
first priority students for HEITC-funded awards would be the
same students who would otherwise be eligible for General
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Fund-supported Cal Grant entitlements. Thus, the effect seems to
be that these entitlement awards would be funded by the HEITC
instead. It is unlikely that the intent is to double their Cal
Grant award amounts by accessing two funding sources, though the
author may wish to clarify this point.
If the requirements for Cal Grant become more stringent in the
future, the HEITC funds would also be used to prioritize grants
for both the population that qualified under the 2011-12
requirements, and the population that would have qualified under
those requirements.
The 2001-12 Budget provided $1.3 billion for entitlement Cal
Grant awards; it is not known whether or not the HEITC will
generate enough money to cover all of the first priority
students each year, since it depends on the decisions of
individual taxpayers and businesses. To the extent that first
priority students, the ones who would otherwise likely receive
Cal Grants under the existing program, will receive Cal Grants
funded by the HEITC instead, there will be General Fund savings.
Any additional HEITC funding would go to fund Cal Grants for
students who meet the eligibility requirements established for a
Competitive Cal Grant A or B Award for the 2011-12 academic
year, up to the maximum number of awards authorized for
Competitive Cal Grant A or B Awards in the annual Budget Act. To
the extent that these students receive grant aid they would not
have otherwise, the segments' existing institutional aid can be
offered to other students. This would continue to be true for
the third priority group of students.
Recommended Amendments: It is unclear whether the author intends
for HEITC funding to supplant General Fund money in the Cal
Grant program, as would be the case if the first priority
students identified were given HEITC-funded Cal Grants, or if
the intent is to simply prioritize students (who would have met
eligibility requirements for entitlements in 2011-12) who lose
Cal Grants under potential program requirement changes (like the
ones proposed in the Governor's Budget). Prior versions of this
bill focused clearly on expanding grant eligibility, and it is
not clear whether the author intends to shift the focus of this
bill. The author should clarify which students will be eligible
to receive HEITC-funded Cal Grants and how that award would
interact with any other Cal Grants for which they would be
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eligible (e.g. if HEITC awards should only be given to students
who will not receive a General Fund-supported Cal Grant).