BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: AB 1318
AUTHOR: Bonilla
AMENDED: May 24, 2013
FISCAL COMM: Yes HEARING DATE: June 26, 2013
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : Cal Grant award at nonpublic postsecondary
institutions.
SUMMARY
This bill establishes a statutory formula which increases
the amount of the current Cal Grant award for students
attending private colleges accredited by Western
Association of Schools and Colleges (WASC) and establishes
an institutional aid threshold which must be met for
institutional eligibility for the Cal Grant program.
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 provides for a long-term Cal Grant policy that
requires that the maximum Cal Grant A award and the Cal
Grant B award, for students attending each respective
segment, equal the amount of the mandatory systemwide fees
at the University of California and the California State
University, as specified. This policy also requires that
the maximum Cal Grant award for students attending
nonpublic institutions equal the tuition award level
established in the Budget Act of 2000, or the amount as
adjusted in subsequent annual budget acts.
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(EC � 66021.2).
Notwithstanding the provisions of EC 66021.2, current law,
enacted through the 2012 budget, sets the maximum amount of
the Cal Grant award for students who attend private
postsecondary institutions. Beginning in the 2013-14 award
year, this amount is $4,000 for new recipients attending
private for-profit institutions. For new recipients
attending private non-profit institutions or private
for-profit WASC accredited institutions, the amount is set
at $9,084 for the 2013-14 award year and $8,056 for
2014-15. (EC � 69432)
ANALYSIS
This bill :
1) Establishes a formula for calculating the maximum Cal
Grant award for a student attending a nonpublic
postsecondary educational institution accredited by
the Western Association of Schools and Colleges
(WASC). More specifically it:
a) Requires that the award be set and
maintained at 75 percent of the
base funding per Cal Grant student at the
University of California and the California State
University.
2) Establishes a phasing in of the maximum allowable
award per the following schedule:
a) Requires that the maximum award be
70 percent of the amount calculated per the
formula established for the 2014-15 award year.
b) Requires that the maximum award be
80 percent of the amount calculated per the
formula established for the 2015-16 award year.
c) Requires that the maximum award be
90 percent of the amount calculated per the
formula established for the 2016-17 award year.
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d) Requires that the maximum award be
100 percent of the amount calculated per the
formula established for the 2017-18 award year.
3) Requires that a WASC accredited postsecondary
educational institution be deemed a "qualifying"
institution, for purposes of the Cal Grant program, if
the total amount of institutional aid provided to
California residents in any award year is at least 50
percent of the total Cal Grant awards received by its
students.
4) Creates an exception to #3 if the institution either:
a) Has fewer than 50 students.
b) Charges tuition that is no more
than 50 percent of the average of the annual
tuition charged by all institutions subject to
these provisions.
5) Defines institutional aid to include scholarships and
fellowships granted and funded by a postsecondary
educational institution, or by a department within
that institution that includes scholarships targeted
to certain individuals.
6) Makes a number of related declarations and findings.
STAFF COMMENTS
1) Need for the bill . According to the author, "Since the
enactment of the Cal Grant Entitlement program there
has been no policy for setting the maximum award for
students attending private college and universities.
The absence of such a policy has led to a 33 percent
decline in the value of the award in current dollars,
and 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
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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."
2) Other 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.
3) History of the bill's formula provisions. This bill
establishes a formula for calculating the amount of a
Cal Grant award for students attending private
institutions. According to a 2005 report by the
California Postsecondary Education Commission (CPEC),
Recommendations for Adjusting the Maximum Cal Grant
Award at California's Nonpublic Colleges and
Universities, prior to the enactment of the Cal Grant
Entitlement program in 2000,the maximum Cal Grant
award for students attending non-public colleges and
universities was specified in state law. The current
formula in the bill reflects the same language which
had existed in statute prior to 2006 and, according to
the CPEC, was previously developed in consultation
with representatives from all of California's
postsecondary education institutions as well as the
Legislative Analyst's Office and the Department of
Finance. According to the CPEC, both the Legislative
Analyst Office and the California Student Aid
Commission recommended that the Legislature adopt a
long-term Cal Grant policy that would link the maximum
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Cal Grant award for students attending nonpublic
colleges and universities to the weighted average
General Fund subsidy the state provides for
financially needy students attending the University of
California and California State University.
While the CPEC endorsed the adoption of this long term
policy, it also recommended that in exchange for these
additional Cal Grant resources, the State ensure that
participating non-public colleges and universities
were held accountable to the state. CPEC recommended
that for those students receiving Cal Grant support,
that nonpublic institutions be required to annually
report data on the number of California Cal Grant and
non-Cal Grant students enrolled along with the
retention and graduation rates of their Cal Grant
recipients versus non-Cal Grant recipients, which, in
combination with data from the State's public higher
education institutions would enable the State to
determine its success in providing financially needy
Californians with higher education access and choice.
4) Narrow application ? This bill proposes a policy for
establishing a Cal Grant award amount which would
apply only to WASC accredited institutions, both
profit and non-profit, in an attempt to ensure that
"financially needy students can choose an institution
that best serves their academic and financial needs."
What is the policy rationale for excluding non-WASC
accredited institutions? Could this policy be subject
to challenges similar to those raised in Daghlian v.
DeVry University, Inc., 582 F. Supp. 2D 1231, 2008,
which found that California's then practice of solely
exempting WASC accredited schools from state oversight
by the Bureau of Private Postsecondary Education
violated the Commerce Clause of the federal
Constitution? If the state chooses to implement a
policy for determining participation in a state funded
financial aid program by nonpublic entities, is the
accrediting body an appropriate basis for distinction?
5) Budget related activity . As part of the 2013-14
Budget, the Legislature recently enacted, AB 94
(Committee on Budget, 2013), which among other things,
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requires the University of California and the
California State University to annually report on
specified performance measures for the preceding
academic year in order to inform budget and policy
decisions, and promote the effective and efficient use
of available resources, beginning with the 2013-14
academic year. These performance measures include data
on the number of transfer students, the number and
proportion of low-income students, graduation rates,
transfer rates, degree completions, costs per degree,
the number of Science, Technology, Engineering and
Math (STEM) degrees and other measures.
This bill establishes an institutional aid threshold,
and exceptions to that threshold, for participation in
the Cal Grant Program by a nonpublic WASC accredited
institution. Is institutional aid the only, or best
measure of performance by a nonpublic institution in
order to access limited state financial aid funds?
Should any of the performance measures identified in
AB 94 be examined for nonpublic institutions as a
means of promoting the effective and efficient use of
state financial funds?
6) An alternative process . This committee recently heard
and passed SB 195 (Liu) which establishes statewide
goals for guiding budget and policy decisions in
higher education and proposes a collaborative process
that includes the Governor, Legislature and the
segments of higher education (defined to include the
California Community Colleges (CCC), the California
State University (CSU), the University of California
(UC), the independent colleges and universities, and
proprietary postsecondary institutions) to develop and
recommend appropriate metrics to be used for the
purpose of monitoring progress towards the goals. In
addition, SB 195 requires the metrics to be used for
the purposes of the annual reporting requirements for
institutions that participate in the Cal Grant
program.
SB 195 is currently awaiting hearing in the Assembly
Higher Education Committee.
In light of staff comments # 3, #4 and #5, shouldn't
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the schedule for phasing in the awarding of the Cal
Grant award, the appropriate measures for being
identified as a "qualifying" institution, and any
distinction between accreditation bodies, non-profits,
and for-profits, be deferred to the more deliberative
process outlined in SB 195?
While the bill may appropriately make a declaration of
a long term policy for relating the award amount for
nonpublic institutions to the amount of the UC/CSU Cal
Grant award, the remaining elements of the bill appear
to be premature.
If it is the desire of the committee to advance this
legislation, staff recommends the bill be amended to:
a) Delete line 11 on page 5, so that the
policy that the award amount be related to the UC
and CSU Cal Grant amount is not limited to WASC
accredited institutions.
b) Delete lines 18-36 on page 5 to eliminate
the required phase in per the specified schedule
and to eliminate the institutional aid criteria
and exceptions as determinants of institutional
eligibility for the Cal Grant program.
c) Insert Legislative intent language that
qualifying nonpublic postsecondary educational
institutions be determined pursuant to the
enactment and implementation of metrics as
provided for in SB 195 (Liu) and that an
appropriate measure of institutional aid be among
the performance measure established for nonpublic
institutions, on page 5 after line 17.
1) Related Legislative Analyst Office (LAO) overview .
The LAO recently 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
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could serve other objectives, such as expansion of
institutional choice and improved affordability.
Finally, the LAO provided the following ranking of
various proposals for the Budget Conference Committee
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.
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 for grant
renewals.
g) Fund middle-class scholarship program.
SUPPORT
Association of Independent California Colleges and
Universities
Azusa Pacific University
California Baptist University
California Catholic Conference
Claremont McKenna College
La Sierra University
Mills College
Mount St. Mary's College, Los Angeles
Point Loma Nazarene University
Santa Clara University
St. Mary's College of California
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University of Redlands
University of Southern California
University of the Pacific
OPPOSITION
None received.