BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: AB 1285
AUTHOR: Fong
AMENDED: June 11, 2014
FISCAL COMM: Yes HEARING DATE: June 18, 2014
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : Cal Grant B.
SUMMARY
This bill requires that Cal Grant B cover tuition and fees
in the first year of enrollment and phases in full coverage
of these fees beginning with 25% of awards in 2015-16 and
increases by 25% annually until 100% of Cal Grant B awards
cover tuition and fees in the first year beginning in
2018-19.
BACKGROUND
Current law authorizes the Cal Grant Program, administered
by the California Student Aid Commission, to provide grants
to financially needy students to attend college. The Cal
Grant programs include both the entitlement and the
competitive Cal Grant awards. The program consists of the
Cal Grant A, Cal Grant B, and Cal Grant C programs, and
eligibility is based upon financial need, grade point
average, California residency, and other eligibility
criteria, as specified in Education Code � 69433.9.
(Education Code 69430-69433.9)
Current law establishes the Cal Grant B Program which
provides funds to eligible low-income high school graduates
who have at least a 2.0 GPA on a four-point scale 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. Current law authorizes up to 2
percent of new Cal Grant B recipients to be eligible for
payment of tuition or fees or both in their first academic
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year of attendance. (Education Code � 69435.3)
Current law provides that the amount of the award for
access costs cannot exceed $1,551, but provides that this
amount may be adjusted in the annual Budget Act. (EC �
69435)
Current law defines "access costs," for purposes of the Cal
Grant Program, as living expenses and expenses for
transportation, supplies, and books.
(EC � 69432.5)
ANALYSIS
This bill :
1) Deletes the 2 percent cap on the number of new Cal
Grant B recipients who are required to be eligible for
the payment of tuition or fees or both in their first
academic year of attendance.
2) Establishes a phased in expansion of eligibility for
the payment of tuition or fees or both in their first
academic year of attendance for new Cal Grant B
recipients as follow:
a) Requires that up to 25 percent of
new Cal Grant B recipients be eligible for
payment of fees and tuition in their first year
of attendance for the 2014-15 academic year.
b) Requires that up to 50 percent of
new Cal Grant B recipients be eligible for
payment of fees and tuition in their first year
of attendance for the 2015-16 academic year.
c) Requires that up to 75 percent of
new Cal Grant B recipients be eligible for
payment of fees and tuition in their first year
of attendance for the 2016-17 academic year.
d) Requires that all new Cal Grant B
recipients be eligible for payment of fees and
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tuition in their first year of attendance
beginning with the 2017-18 academic year.
3) Prohibits the UC, CSU and qualifying nonpublic
postsecondary education institutions from supplanting
their respective institutional need-based grants with
Cal Grant B funds in order for students enrolled in
their respective segments to remain eligible to
receive financial aid.
STAFF COMMENTS
1) Need for the bill . According to the author, at the
inception of the Cal Grant program, it was assumed
that low-income students would go to community
colleges. The author contends that, while these
assumptions have changed, the structure of the program
has not. The author believes that without alterations
to the Cal Grant B program, many students may not
receive the financial aid they need, serving as a
barrier to access to obtain a college degree.
2) Cal Grant A versus Cal Grant B . Cal Grant A awards
are provided to students to cover the cost of tuition
or fees at public colleges and to assist with these
costs at private colleges and some private career
colleges. Under Cal Grant B, a student is awarded a
grant for purposes of access costs for the first year.
After the freshman year, the Cal Grant B award may
also cover tuition and fees in the same amount as a
Cal Grant A.
Traditionally, the amount of the Cal Grant A award, as
well as the portion of the Cal Grant B which covers
tuition and fees, has been set at a level which covers
the tuition/fees at California's public postsecondary
institutions. In 2013-14, the maximum awards for Cal
Grants A and B are equal to the mandatory systemwide
tuition fees at a University of California ($12,192)
and California State University ($5,472), $9,084 at
independent non-profit institutions and Western
Association of Schools and Colleges-accredited private
for-profit institutions, and $4,000 at all other
private for-profit institutions.
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According to the California Student Aid Commission
(CSAC), in 2010-11, the average income for new Cal
Grant B recipients was $17,407, versus $45,735 for new
Cal Grant A recipients. There were a total of 35,747
new recipients for Cal Grant A and 94,710 new
recipients of Cal Grant B. The largest number and
percentage of Cal Grant B recipients were at the
California Community Colleges (53%) while the largest
number and percentage of Cal Grant A recipients were
at the University of California (21%).
3) Recent statutory changes to the Cal Grant program .
The 2011 and 2012 Budget Acts made significant changes
to the Cal Grant Program. These included tighter
eligibility criteria for participating institutions, a
reduction in the award level for non-public
institutions, tighter eligibility criteria for renewal
recipients, the reduction of the amount of the Cal
Grant access award, and codified restrictions on the
use of the transfer entitlement award. According to an
analysis by the Assembly Appropriations Committee,
about 269,000 students received new or renewed Cal
Grant awards in 2012-13 at a General Fund cost of
about $1.6 billion. The previously noted reductions,
coupled with actions taken in the 2011-12 Budget Act,
impacted more than 170,000 students and reduced the
Cal Grant program by about $200 million.
4) Related TICAS findings . The Institute for College
Access and Success (TICAS) recently posted commentary
on what the Legislature could do to strengthen the Cal
Grant Program. According to TICAS, two improvements
would go the farthest to improve access and success
for low-income, underserved students at all types of
colleges. TICAS characterized the following as the
wisest financial aid investments California could
make:
a) Increase the size of the Cal Grant B access
award. The access award helps students at all
colleges limit their work hours and focus on
their studies. At just $1,473, today's access
award is worth just one quarter of its original
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value and doesn't even cover the average cost of
books and supplies.
b) Serve more Cal Grant eligible students.
Every year the state turns away hundreds of
thousands of eligible applicants because there
aren't enough competitive Cal Grant awards: in
2013-14, there were 16 eligible applicants for
every available award. Competitive award
recipients tend to have higher GPAs and lower
incomes than other Cal Grant recipients. Those
turned away have an average family income below
$21,000 and a family size of three.
5) Supplanting other forms of aid ? The CSU reports that
on average, 86 percent of CSU first year Cal B
students are awarded a State University Grant, which
covers the cost of tuition fees. In addition, the CSU
reports that nearly 75 percent of undergraduate
financial aid recipients have their fees fully covered
by grants or waivers. According to the UC about 10
percent of UC undergraduates received a Cal Grant B
award in 2011-12, and most UC students with a Cal
Grant B award generally entered as transfer students
or were among the 2% of Cal Grant recipients whose
awards provided first-year tuition coverage. In
addition, beginning in 2007-08, the UC acted to shift
new students from Cal Grant B to Cal Grant A, to
ensure that the student received the highest award
possible over the four year period.
6) Increased fiscal impact with no control by the state .
This bill would increase the costs of the Cal Grant
program, specifically, the cost to the state for Cal
Grant B recipients, the lowest income financial aid
recipients in the Cal Grant program. However, it
appears that these costs may already be covered
through institutional aid programs at the public
institutions, and that the bill may simply be shifting
the costs of tuition/fees from the institutions to the
Cal Grant program. While this may result in the use
of institutional aid to serve other enrolled students,
unlike the Cal Grant program, the Legislature does not
currently dictate the criteria for eligibility for
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institutional aid program funds. Campuses would have
the discretion to reallocate the "savings" realized as
the result of the Cal Grant program based upon their
own internal criteria and priorities.
7) Are the non-supplanting provisions effective ? This
bill prohibits a qualifying institution from
supplanting its institutional need-based funds and to
maintain funding amounts for these grant levels equal
to that maintained for undergraduate students during
the 2013-14 academic year, as a condition of continued
Cal grant participation. As noted in staff comments 5
and 6, the bill would essentially allow campuses the
discretion to use those funds to assist whatever
students the university determines are eligible for
the increased institutional aid resources.
Staff recommends the bill be amended to instead
require that, students who receive a Cal Grant B that
includes tuition costs in the first year shall have
the amount of institutional aid equal to that award
used to offset the highest interest rate loans
extended to the student as part of their financial aid
award, and, if no such student loans are part of the
award, the institution shall use these funds to offset
the highest interest rate loan awards for other Cal
Grant recipient students.
8) What about using the savings to assist middle class
students ? According to TICAS Cal Grants help
thousands of students get to and through college, but
even so, college remains least affordable for
California's lowest income students, regardless of
what type of college they attend. According to TICAS,
at UC, the lowest income families pay 64 percent of
their discretionary income to cover college costs,
while the highest income families pay 21 percent.
Additionally, the Legislature has recently taken other
action to assist middle class families with college
costs. As part of the 2013-14 Budget, the Legislature
established the Middle Class Scholarship Act which
provides up to $305 million annually to pay up to 40
percent of a student's UC or CSU tuition for families
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earning up to $100,000 annually in household income.
The Act also provides that financial aid would
decrease, on a sliding scale, to 10 percent of tuition
at $150,000 in household income.
9) Does this bill cover fees for students who get Board
of Governors (BOG) waivers ? Current law, under
statutes establishing a long-term Cal Grant policy (EC
� 66021.2) provides that payment of the first year
fees under the Cal Grant B program specifically
exclude community college students who receive a Board
of Governors (BOG) fee waiver. Is it the intent that
the changes in this bill override this exclusion?
Should the costs currently covered through a BOG fee
waiver be shifted to the Cal Grant program? Although
law establishing the 2 percent cap on Cal Grant B fee
awards in the first year clearly cross references the
BOG fee waiver exclusion, this bill does not clearly
apply that same exclusion. According to the
California Community Colleges, any student who is
currently awarded a Cal Grant B would be eligible for
the BOG fee waiver. If it is the desire of the
committee to advance this legislation, staff
recommends the bill be amended to make this exclusion
clear.
10) Related Legislative Analyst Office (LAO) overview . In
2013-14, The LAO prepared an overview of financial aid
proposals for the Legislature. The LAO noted that
current law (Education Code � 69500) establishes that
the primary purpose of student assistance programs is
to provide all Californians equal opportunity and
access to postsecondary education. The Legislative
Analyst Office (LAO) also noted that some proposals
could serve other objectives, such as expansion of
institutional choice and improved affordability.
Finally, the LAO provided the following ranking of
various proposals that were before the Budget
Conference Committee in 2013 based upon the likelihood
of their improving access, consistent with the
statutory purpose outlined in current law.
a) Increase Cal Grant amounts for living
expenses, books and vocational education.
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b) Increase Cal Grant amounts for qualifying
private colleges.
c) Increase the number of Cal Grants directed
at older, nontraditional students.
d) Increase funding to the University of
California, California State University and
community colleges for enrollment growth.
e) Cover first-year tuition for low-income
students who generally do not qualify for tuition
aid because they have a sub-3.0 GPA.
f) Eliminate income and asset test requirement
for Cal Grant renewals.
g) Fund middle-class scholarship program.
SUPPORT
American Association of University Women
California Competes
California Federation of Teachers
California State Student Association
California Student Aid Commission
Education Trust West
Los Angeles NAACP
Public Advocates
Southern California College Access Network
The Institute for College Access & Success
University of California Student Association
Young Invincibles
OPPOSITION
None on file.