BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 1976 (Quirk-Silva) - Competitive Cal Grant Awards
Amended: May 23, 2014 Policy Vote: Education 6-0
Urgency: No Mandate: No
Hearing Date: August 4, 2014
Consultant: Jacqueline Wong-Hernandez
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 1976 requires the California Student Aid
Commission (CSAC), beginning in the 2015-16 award year, to award
Competitive Cal Grants using data from the three award years
immediately preceding to calculate a take-rate to estimate the
number of awards to be granted to achieve a target of 22,500
awards, and then reduces the target number of awards in the
subsequent year by the number of awards granted over 22,500.
Fiscal Impact:
Competitive Cal Grants: Approximately $5.2 million (General
Fund) in 2015-16 in increased "new" awards. Additional costs
of $9.1 million in 2016-17, $11.8 million in 2017-18, and
$13.3 million in 2018-19 and each year thereafter, in
increased new and renewal awards.
Background: Existing law authorizes the Cal Grant Program,
administered by CSAC, 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. (Education Code 69430-69433.9)
The Cal Grant A High School Entitlement Program provides tuition
fee funding for the equivalent of four full-time years at
qualifying postsecondary institutions to eligible lower and
middle income high school graduates who have at least a 3.0 GPA
on a four-point scale and apply within one year of graduation.
(EC � 69434)
The Cal Grant B High School Entitlement Program provides funds
to eligible low-income high school graduates who have at least a
AB 1976 (Quirk-Silva)
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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. Existing 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 attendance. (EC � 69435.3)
Existing law also establishes the Cal Grant Competitive Award
Program and provides 22,500 Cal Grant A and B awards to
applicants who meet financial, academic, and general program
eligibility requirements. Half of these awards are reserved for
students enrolled at a community college and who met the
September 2 application deadline. (EC � 69437-� 69437.7)
Proposed Law: This bill requires the CSAC, beginning in the
2015-16 award year to:
a) Establish a target of 22,500
Competitive Cal Grant awards to be paid.
b) Estimate the "take rate" for awards by
calculating an average of the number of awards offered and
taken for the three years immediately prior.
c) Use the calculated "take rate" to estimate the
number of awards to be granted to achieve the target of
22,500 awards.
d) For awards granted in the 2016-17 award year and
subsequent years, requires an adjustment of the target rate
and the take rate to consider and adjust for the total
amount of awards paid in the prior year.
This bill also authorizes the CSAC to exceed the 22,500 award
limit if acceptances exceed that amount provided that the CSAC
uses a specified adjustment formula in 2016-17 and subsequent
award years to grant awards.
Staff Comments: This bill seeks to increase the number of
Competitive Cal Grant awards that are actually paid to, and used
by, eligible students. To the extent that the requirements it
AB 1976 (Quirk-Silva)
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puts in place achieve that goal, this bill will result in
additional General Fund costs to provide additional Cal Grants.
Under existing law, the CSAC has the authority to award more
Competitive Cal Grants than the 22,500 cap, as long as it does
not actually pay more 22,500 awards. While it expects some
amount of attrition, the CSAC is conservative about awarding
above the cap because it does not want to create a liability it
cannot fulfill. Though recently, the CSAC has been actively
trying to increase the number of awards it actually pays out.
In 2012-13, the CSAC made approximately 26,200 Competitive Cal
Grant award offers, but paid out only about 16,400 of those
awards, which represents about 73% of the number of awards
authorized to be paid. Since then, the CSAC has increased the
number of offers and has tried to make administrative changes to
increase the take rate of the award offers. In 2013-14, the CSAC
made nearly 29,000 offers and paid approximately 19,300 awards,
which represents approximately 86% of the capped award number.
The Budget Act was adjusted to accommodate a further projected
increase in 2014-15 of a 90% payout.
This bill specifies the data to be used by the CSAC to project
the number of awards it should offer in order to pay out all
22,500 authorized awards. It allows, in cases when the cap is
exceeded despite the projections, for the CSAC to pay out all of
the awards and to offset the overage in future years. If this
bill were to result in 100% of the authorized awards being paid
out in 2014-15, a 10% increase above the projected 90% pay out,
additional General Fund costs would be approximately $5.3
million. Future year projections include increased renewal
awards, as well.