BILL ANALYSIS Ó
SENATE COMMITTEE ON EDUCATION
Carol Liu, Chair
2013-2014 Regular Session
BILL NO: SB 174
AUTHOR: De Leon
AMENDED: January 6, 2014
FISCAL COMM: Yes HEARING DATE: January 15,
2014
URGENCY: Yes CONSULTANT:Kathleen Chavira
SUBJECT : Cal Grant Program.
SUMMARY
This bill, an urgency measure, provides for the use of
funds from the College Access Tax Credit Fund (proposed to
be established by SB 798) to be administered by the
California Student Aid Commission (CSAC), for purposes of
increasing the amount of the Cal Grant B Access Award.
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. These
programs currently operate as follows:
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 grade point average (GPA) on a
four-point scale and apply within one year of graduation.
Cal Grant B* High School Entitlement Program 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
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$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.
Community College Transfer Program provides a Cal Grant A
or B to eligible high school graduates who have a
community college GPA of at least 2.4 on a four point
scale and transfer to a qualifying baccalaureate degree
granting college or university.
Cal Grant Competitive Award Program provides 22,500 Cal
Grant A and B awards available 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.
Cal Grant C Program provides funding for financially
eligible lower income students preparing for occupational
or technical training. The authorized number of new
awards is 7,761. For new and renewal recipients, the
current tuition and fee award is up to $2,592 and the
allowance for training-related costs is $576. (Education
Code § 69430 - § 69450)
Current law also authorizes the Cal Grant T program to
provide assistance to individuals who attend teacher
credential programs at colleges and universities approved
by the California Commission on Teacher Credentialing.
According to the California Student Aid Commission, the
Governor and the California State Legislature have not
permitted new awards for the Cal Grant T program since the
2002-2003 academic year.
ANALYSIS
This bill , an urgency measure, provides for the use of
funds from the College Access Tax Credit (CATC) Fund for
purposes of increasing the Cal Grant B access award.
Specifically it:
1) Declares the intent that CATC Funds supplement other
funds appropriated for the Cal Grant Program and, once
the CATC Fund is created and exists, prohibits the
adjustment of the Cal Grant B Access Award below the
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level set in the Budget Act of 2012 ($1,473).
2) Requires the State Treasurer to certify the amount of
moneys available for distribution from the CATC fund
beginning April 1, 2015 (and annually thereafter by
April 1st) for distribution for the academic year
commencing the following July, and further:
a) Prohibits the amount available for
distribution in any year from exceeding 85
percent of the certified fund balance.
b) Requires the California Student
Aid Commission (CSAC) to thereafter:
i) Determine the amount
of the supplemental awards to be granted.
ii) Determine the administrative costs
that will be incurred.
iii) Include the amounts determined in
the statutorily required budget change
proposals it submits each fiscal year.
3) Requires that the amount of the supplemental award and
the administrative costs determined by the California
Student Aid Commission (CSAC) be made available, upon
appropriation by the Legislature in the annual Budget
Act, for the purpose of making supplemental access
costs awards under the Cal Grant B program.
4) Requires that disbursements be made to the CSAC, upon
annual appropriation by the Legislature, be used to
supplement awards for access costs under the Cal Grant
B program, and to defray the CSAC's associated
administrative costs.
5) Requires that any funds remaining after all
supplemental awards are made be retained in the CATC
for allocation in future fiscal years.
6) Establishes the following conditions and restrictions
on the supplemental awards:
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a) Requires that they be made for
"access costs" as defined under the provisions of
the Cal Grant Program.
b) Caps the amount of the
supplemental award, when combined with the annual
award amount established in the annual Budget
Act, at $5,000.
c) Provides that these awards are
only payable to the extent moneys are available
from the College Access Tax Credit Fund (CATC).
d) Requires the California Student
Aid Commission (CSAC) to inform award recipients
that the award is for one academic year only, not
an entitlement, and that future supplemental
awards are subject to the availability of moneys
in the CATC.
7) Makes the provisions of this bill contingent upon the
enactment of SB 798 (De Leon), which establishes the
College Access Tax Credit Fund.
STAFF COMMENTS
1) Need for the bill . According to the author, adjusted
for inflation, a Cal Grant B award today should be
$5,900. Instead, it has lost most of its purchasing
power over time and is currently only $1,473.
Receiving more financial aid to cover non-tuition
costs will enable students to limit their work hours
while enrolled, reduce their need to borrow, and
ensure that they can focus on their studies and
graduate.
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)
3) 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
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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. 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)
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.
The Cal Grant B access award is statutorily capped at
$1,555, but was reduced by 5%, to $1473 in the 2012-13
Budget Act.
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%).
4) Contingent legislation . The ability to implement the
provisions of this bill will rely upon the enactment
of SB 798 (De Leon) which is also pending hearing in
the Senate Governance and Finance Committee today. SB
798:
a) Establishes the College Access Tax Credit
Fund (CATC) and provides for its allocation to:
i) The General Fund;
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ii) The Franchise Tax Board, the
California Educational Facilities Authority,
the Controller, and the California Student
Aid Commission for reimbursement of related
administrative costs;
iii) The California Student Aid
Commission for purposes of awarding Cal
Grants to students pursuant to the
provisions established by SB 174 (De Leon).
b) Establishes a tax credit equal to a
percentage of the contributions to the CATC.
c) Provides that CATC funds be considered
General Fund Revenues for purposes of determining
Proposition 98 funding requirements.
d) Provides for a repeal of the tax credit in
December 2017.
e) Makes these provisions contingent upon the
enactment of SB 174
The provisions of SB 174 are contingent upon the
enactment of SB 798.
5) Prior legislation .
a) SB 285 (De Leon) as amended by this
committee was essentially identical to this bill.
SB 285 was heard and passed by this committee
April 17, 2013, by a vote of 9-0. In October
2013, SB 285 was vetoed by the Governor,
whose veto message read:
This bill, which is contingent on the enactment
of Senate Bill 284, would authorize the use of
the College Access Tax Credit Fund.
I was unable to sign Senate Bill 284 due to a
technical flaw. As a consequence, this bill
cannot become operative.
The companion veto message for SB 284 (De Leon)
read, in pertinent part:
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"?the bill inadvertently impacts the Proposition
98 funding guarantee negatively. This flaw can
easily be corrected by
specifying in a new bill that the donations
transferred to the
General Fund are "General Fund revenues" for
purposes of Proposition 98. I direct the
Department of Finance to work with the author so
a new bill that avoids this negative impact can
be sent to me next January.
This bill reflects changes suggested by the
Department of Finance to respond to concerns
outlined in the Governor's veto messages.
b) SB 1466 (De Leon, 2012) as amended by this
committee, expanded eligibility for a Cal Grant
to include a student with a household income up
to $150,000, subject to specified funding
prioritization, and contingent upon legislation
that created a fund for this purpose (SB 1356, De
Leon, 2012). SB 1466 passed this committee in
April 2012 by a vote of 8-1, but was subsequently
amended to address a different subject.
SUPPORT
California State Student Association (CSSA)
Institute for College Access and Success (TICAS)
OPPOSITION
None received on this version.