BILL ANALYSIS �
AB 1318
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Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1318 (Bonilla) - As Amended: April 22, 2013
Policy Committee: Higher
EducationVote:13-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill establishes a formula for determining the maximum Cal
Grant award for students attending nonpublic postsecondary
educational institutions that provide a threshold amount of
institutional financial aid. Specifically, this bill:
1)Establishes the maximum Cal Grant award amount for students
attending nonpublic institutions accredited by the Western
Association of Schools and Colleges (WASC) at the following
percentages of the base funding per Cal Grant student at the
University of California (UC) and the California State
University (CSU), i.e. the average state support per student
plus the average Cal Grant award for UC and CSU:
a) 56% for 2014-15.
b) 64% for 2015-16.
c) 72% for 2016-17.
d) 80% for 2017-18.
2)Specifies that to be eligible for the higher award amounts
above, the total amount of "institutional aid," as defined,
provided to California resident students by an institution, in
any given year, must be 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.
FISCAL EFFECT
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Estimated General Fund costs are $13.5 million in 2014-15
increasing to $105 million in 2017-18. Costs would depend on
the number of institutions meeting the eligibility threshold and
the number of Cal Grants awarded to eligible students at those
institutions. The California Student Aid Commission indicates
that students attending 68 non-profit institutions and one
for-profit institution (with four locations in California) would
initially qualify under the parameters of this bill.
COMMENTS
1)Background . The Cal Grant Entitlement Program guarantees
financial aid awards to recent high school graduates and
community college transfer students who meet financial,
academic, and other eligibility requirements. Cal Grants cover
full systemwide tuition at the public universities for up to
four years and a portion of tuition costs at nonpublic
institutions. About 269,000 students received new or renewed
Cal Grant awards in 2012-13 at a General Fund cost of about
$1.6 billion.
2)Budget Actions . As part of the solution to the state's budget
deficits, several changes to the Cal Grant program in recent
years reduced eligibility and benefits, including requiring
annual student financial needs assessments to maintain
eligibility, reducing the Cal Grant B stipend amount, enacting
institutional graduation and student loan default rate minimum
thresholds for maintaining program eligibility, and reducing
the award amount for students attending private institutions.
These reductions, combined 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.
With regard to nonpublic institutions, the 2012 education
trailer bill (SB 1016, Committee on Budget and Fiscal Review)
implemented the following reductions in maximum tuition award
levels beginning in 2013-14:
a) For new recipients attending independent non-profit
institutions and private for-profit, WASC-accredited
institutions as of July 1, 2012, maximum grant awards will
be reduced by 6.5%, from $9,708 to $9,084. 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.
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b) For new recipients attending all other private
for-profit institutions, maximum grant awards will be
reduced by 59%, from $9,708 to $4,000.
Prior to 2001-02, the state had a longstanding statutory
policy linking 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 Legislative
Analyst's Office 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.
The LAO has noted that the state benefits from providing some
students an incentive, via a Cal Grant, to attend a nonpublic
school rather than a state institution, which also receives a
state subsidy to serve that student.
3)Purpose . 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."
4)Related Legislation . There are several other measures on
today's committee agenda that either reverse budget-related
Cal Grant reductions or propose significant expansions to the
Cal Grant program.
a) AB 1085 (Gaines and Morrell) reverses, for 2013-14 only,
a recent budget action to reduce maximum Cal Grants awards
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for students attending nonpublic postsecondary educational
institutions.
b) AB 1241 (Weber) extends 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 apply no later than March 2 of the 4th academic
year after high school graduation.
c) AB 1285 (Fong) expands 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.
d) AB 1287 (Quirk-Silva) reverses a budget-related
reduction that requires renewing Cal Grant recipients to
meet annual income and asset criteria to maintain program
eligibility.
e) AB 1364 (Ting) reverses a budget-related 5% reduction to
the Cal Grant B access award, resulting from a Governor's
veto, and furthermore increases this stipend fourfold, from
$1,473 to $5,900, and indexes the stipend to changes in the
Consumer Price Index.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081