BILL ANALYSIS �
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: AB 1364
AUTHOR: Ting
AMENDED: May 24, 2013
FISCAL COMM: Yes HEARING DATE: June 26, 2013
URGENCY: No CONSULTANT:Kathleen Chavira
SUBJECT : Cal Grant B.
SUMMARY
This bill, beginning in the 2014-15 academic year,
increases the maximum amount of the Cal Grant B access
award to $1,710, and provides for its annual adjustment
upward (but prohibits its adjustment downward) based upon
the California Consumer Price Index beginning January 15,
2014.
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 year of
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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 , beginning with the 2014-15 academic year:
1) Increases the maximum Cal Grant B Access award from
$1,551 to $1,710 but provides that the award amount
cannot exceed the student's calculated financial need.
2) Deletes the specific authority to adjust the amount of
the access award in the annual Budget Act.
3) Requires that the access award be adjusted annually to
reflect the percentage increase, if any, in the
California Consumer Price Index (CPI) for all Urban
Consumers, as specified.
4) Requires that the California Student Aid Commission
(CSAC) calculate and certify the percentage change
using data from the two most recent indices reported
in June of each year and further:
a) Requires that the calculation and
certification by the CSAC occur by January 15,
2014, for the 2014-15 academic year.
b) Requires that the calculation and
certification by the CSAC occur by September 1,
2014, for the 2015-16 academic year.
c) Requires that the award remain at
its most recently certified level in the event
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the CPI decreases from the prior academic year.
STAFF COMMENTS
1) Need for the bill . According to the CSAC, the access
award level has increased only 4.5 percent since the
late 1980's, while in the same time period, the CPI
has grown by 86 percent and the costs of textbooks and
supplies has grown by 280 percent. The CSAC reports
that, adjusted for inflation, a Cal Grant B award
today should be $5,900. According to the author, the
estimated total average cost of living expense for a
college student is approximately $17,000 per year.
Adjusting the award level to $1,710 would provide an
award to meet the 2013-14 average cost of textbooks
and supplies. Given the return to the state of a
college educated individual, this bill would enable
more people to actualize their fullest potential and
at the same, invest in the future of our state.
2) Access costs ? 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) The Cal Grant B access award is
statutorily capped at $1,555, but was reduced by 5%,
to $1,473 in the 2012-13 Budget Act. This bill would
delete the statutory authority to adjust the amount in
the budget act, ostensibly in an effort to ensure that
the award amount would be at least $1,710.
3) 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
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taken in the 2011-12 Budget Act, impacted more than
170,000 students and reduced the Cal Grant program by
about $200 million.
4) 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. As noted in the background of this analysis,
although the amount of the award for access costs
cannot exceed $1,551, this amount may be, and has
been, adjusted downward in the annual Budget Act.
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.
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%).
5) Why California Consumer Price Index (CPI) ? According
to the CSAC, the California CPI for Urban Consumers is
used to calculate all elements of the student expense
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budgets except tuition. The CSAC applies the CPI to
the prior year's amounts to arrive at the current year
budgets. CSAC also noted that income and asset
ceilings are adjusted based upon a California per
capita income figure. To the extent that the access
award is expected to apply to the costs outlined in
the student expense budgets, the use of the CPI for
this adjustment is consistent with the manner in which
these costs are determined by the awarding agency.
6) 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
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 (UC), California State University
(CSU) 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.
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f) Eliminate income and asset test for grant
renewals.
g) Fund middle-class scholarship program.
7) Middle Class Scholarship . As part of the 2013-14
Budget, the Legislature recently enacted, AB 94
(Committee on Budget, 2013), which among other things,
establishes the Middle Class Scholarship Act. Under
the Act, up to $305 million will be provided annually
to pay up to 40 percent of a student's UC or CSU
tuition for families 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.
8) Conflicting legislation. Legislative Counsel has
identified a conflict between this bill and AB 1285
(Fong), which is also on the committee's agenda today.
AB 1285 amends the same provisions as this bill in
order to increase the Cal Grant B award to
additionally cover the cost of tuition/fees in the
first year of the award.
9) Similar legislation . SB 1285 (DeLeon) provides for
the use of funds from the College Access Tax Credit
Fund (CATC) (to be established if legislation is
enacted to create the CATC) to increase the amount of
the Cal Grant B Access Award up to a maximum of $5000
per award per academic year. SB 1285 was heard and
passed by this committee in April 2013 by a vote of
9-0, and is currently awaiting action in the Assembly
Committee on Higher Education.
SUPPORT
California Community College League
California Competes
California State Student Association
California Student Aid Commission
Education Trust West
Los Angeles NAACP
Public Advocates
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Southern California College Access Network
The Institute for College Access & Success
Young Invincibles
OPPOSITION
None received.