BILL ANALYSIS �
AB 1318
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Date of Hearing: April 9, 2013
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Das Williams, Chair
AB 1318 (Bonilla) - As Amended: April 2, 2013
SUBJECT : Student financial aid: Cal Grant Program.
SUMMARY : Establishes a formula for determining the maximum Cal
Grant award amount for students attending private nonprofit
postsecondary educational institutions, as defined.
Specifically, this bill :
1)States that private, nonprofit colleges and universities, as
specified, help meet the state's higher education needs by
enrolling 24% of its undergraduates and notes that the maximum
Cal Grant award for students attending these institutions has
not increased since 1999.
2)Establishes the maximum Cal Grant award amount for students
attending private nonprofit institutions accredited by the
Western Association of Schools and Colleges (WASC) at 80% of
the base funding per Cal Grant at the University of California
(UC) and the California State University (CSU).
3)Requires by the Department of Finance to determine the maximum
award amount by using the average state support per student
plus the average Cal Grant award for UC and CSU.
4)Specifies the following maximum award amounts:
a) For the 2014-15 fiscal year, 70% of the amount
calculated in (3).
b) For the 2015-16 fiscal year, 80% of the amount
calculated in (3).
c) For the 2016-17 fiscal year, 90% of the amount
calculated in (3).
d) For the 2017-18 fiscal year and thereafter, 100% of the
amount calculated in (3).
5)To be eligible for this higher award amount, requires the
total amount of institutional aid provided to California
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resident students by that institution, in any given year, is
no less than 50% of the total Cal Grant awards received by its
students, unless the institution has fewer than 50 students
receiving Cal Grants or charges an annual tuition that is no
more than 50% of the average of the annual tuition charged by
all institutions to which this bill applies.
6)Defines the following terms:
a) "Average state support per student" means the total
General Fund support for UC and CSU divided by the number
of California resident full-time equivalent students for
each four-year public segment.
b) "Institutional aid" includes scholarships and
fellowships granted and funded by a postsecondary
educational institution or by a department within that
institution, and includes scholarships targeted to certain
individuals based on, for example, state of residence,
fields of study, or athletic team participation, for which
the institution designates the recipient.
EXISTING LAW provides a variety of student financial aid grant
and loan programs, administered by the California Student Aid
Commission, to provide awards to needy and academically eligible
students, including the Cal Grant Entitlement Programs for
California residents who graduated from high school within one
year.
FISCAL EFFECT : Unknown but potentially significant.
COMMENTS : Background . As a result of recent budget deficits
and growing costs to the program, several changes to the Cal
Grant program over recent years reduced eligibility and
benefits, including annual student needs assessments to maintain
eligibility, a reduction in the Cal Grant B stipend amount,
institutional graduation and student loan default rate
thresholds for program eligibility, and a reduction in the award
amount for students attending private institutions. These cuts,
combined with actions taken in the 2011-12 Budget Act, impacted
more than 170,000 students and reduced the Cal Grant program by
at least $194.5 million.
Specifically, SB 1016 (Committee on Budget and Fiscal Review),
Chapter 38, Statutes of 2012, the education trailer bill,
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implemented the following reductions in maximum tuition award
levels beginning in 2013-14:
1)For new recipients attending independent non-profit
institutions and private for-profit, WASC-accredited
institutions as of July 1, 2012, maximum grant awards were
reduced by 6.5%, from $9,708 to $9,084, and in 2014-15, new
maximum tuition awards at non-profit institutions and
WASC-accredited for-profit institutions will be reduced by an
additional 10.5%, from $9,084 to $8,056.
2)For new recipients attending all other private for-profit
institutions, maximum grant awards were reduced by 59%, from
$9,708 to $4,000.
Need for this bill . According to the author, "The lack of a
policy has led to an unpredictable and arbitrarily determined
award, which undermines the original purpose of the Cal Grant
program, which is to allow financially needy students to choose
an institution that best serves their academic and financial
needs. AB 1318 seeks to strengthen the Cal Grant program and the
portability of the award. The majority of these students are
underrepresented in higher education and 35% of these students
are first generation college students. The average family income
for these Cal A recipients is $40,900."
Maximum award amounts . The author intends the Department of
Finance to base the maximum award amount on the following
estimates by the Legislative Analyst's Office (LAO) of the
average General Fund of educating a Cal Grant student at UC and
CSU.
-----------------------------------------------
| | UC | CSU |
|---------------------------+--------+----------|
|Average base funding per |$11,352 | $7,113 |
|student | | |
|---------------------------+--------+----------|
|Average Cal Grant award |$12,192 | $5,472 |
|---------------------------+--------+----------|
|Total subsidy |$23,544 |$12,585 |
-----------------------------------------------
Thus, the maximum award amount would be $14,451 per year when it
is completely phased in.
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Basis for formula . Prior to 2001-02, the state had a
longstanding statutory policy that linked the maximum Cal Grant
for financially needy students attending private institutions to
the average General Fund cost of educating a financially needy
student at UC and CSU. When the Cal Grant Entitlement program
was created in 2000, this policy was replaced with a new
provision linking the maximum private-student Cal Grant award to
whatever amount was specified in the annual budget act. The LAO
has long recommended re-establishing the private Cal Grant
formula to establish a rational policy basis for the award and
promote consistency among student groups.
Eligible institutions . Students who attend independent
nonprofit private institutions would be eligible for this higher
award, provided the institution provides a 50% institutional aid
match for a student's Cal Grant award, excluding schools with
less than 50 Cal Grant recipients and tuition less than 50% of
the average of all institutions eligible for the maximum award.
For-profit institutions would not be eligible for this higher
award amount. The previous private Cal Grant policy did not
distinguish between nonprofit and for-profit institutions, and
it is not clear why for-profit institutions would not be
included in this bill. If they are, all regionally accredited
institutions should be eligible consistent with a court ruling
(Daghlian v. DeVry University, Inc., 582 F. Supp. 2d 1231, 2008)
that found that California could not favor WASC over other
regional accreditors.
Other measures to expand Cal Grant benefits . A similar measure,
AB 1085 (Gaines), would restore the annual Cal Grant award
amount for students attending all private institutions to
$9,708. Other measures before this Committee to increase Cal
Grant eligibility or benefits include:
1)AB 303 (Calderon) would extend eligibility to the Cal Grant
Entitlement program to California residents who are current or
former members of the United States Armed Forces.
2)AB 1241 (Weber) would extend the Cal Grant Entitlement program
period of eligibility from one to three years, allowing an
applicant for Cal Grant A and B Entitlement Awards to submit a
complete financial aid application no later than March 2 of
the 4th academic year after his or her high school graduation.
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3)AB 1285 (Fong) would expand Cal Grant B funding by eliminating
the 2% cap on the number of Cal Grant B awards that cover the
first year of tuition and fees.
4)AB 1287 (Quirk-Silva) would remove statutory provisions
requiring renewing Cal Grant recipients to meet annual income
and asset criteria to maintain eligibility.
5)AB 1364 (Ting) would increase the Cal Grant B access award
amount to no less than $5,900 and annually adjust the minimum
award amount by the percentage increase in the Consumer Price
Index.
Previous legislation . AB 358 (Liu) of 2005, which was vetoed,
expressed legislative intent that the maximum Cal Grant for
students attending independent and nonpublic colleges and
universities shall be equal to 90% of the weighted public cost
of educating a needy student at UC and CSU but no less than
$9,708.
REGISTERED SUPPORT / OPPOSITION :
Support
Association of Independent California Colleges and Universities
California Institute of Technology
California Lutheran University
Chapman University
Jonathan Choy, Director of Financial Aid, Biola University
Claremont McKenna College
Menlo College
National University
Pepperdine University
Point Loma Nazarene University
Santa Clara University
St. Mary's College of California
University of San Diego
University of the Pacific
University of Southern California
Westmont College
8 Administrators, University of LaVerne
Opposition
None on file.
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Analysis Prepared by : Sandra Fried / HIGHER ED. / (916)
319-3960