BILL ANALYSIS Ó
SB 174
Page 1
Date of Hearing: June 10, 2014
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Das Williams, Chair
SB 174 (De León) - As Amended: January 6, 2014
SENATE VOTE : 34-0
SUBJECT : Student Financial Aid: Cal Grant Program
SUMMARY : Provides for the use of funds from the College Access
Tax Credit Fund (Fund) to increase Cal Grant B access awards,
administered by the California Student Aid Commission (CSAC) up
to a maximum of $5,000 per award per academic year, contingent
upon enactment of SB 798 (De León). Specifically, this bill :
1)Finds and declares that California's fiscal crisis resulted in
deep cuts to public postsecondary education resulting in
increased costs and time-to-degree for students; educational
attainment levels predict the overall economic performance of
states, California's educational attainment now ranks among
the bottom 10 states; estimates show that the Fund will allow
CSAC to fund larger access grants to California's neediest
students; and, all Californians deserve access to affordable
postsecondary education.
2)Provides that monies appropriated from the Fund are in
addition to other monies appropriated for the Cal Grant
Program, and that during the existence of the Fund the amount
of the Cal Grant B access award may not be adjusted below the
amount in the 2012 Budget Act.
3)Requires the Treasurer, on April 1, 2015, and each April 1
thereafter, to certify the amount of monies available for
distribution from the Fund for the following academic year and
provides that the amount available for distribution may not
exceed 85% of the Fund balance.
4)Requires CSAC to determine the amount of the supplemental
awards to be granted and to include that amount in the annual
budget change proposals previously submitted to the Department
of Finance by the Commission. Upon appropriation by the
Legislature to the CSAC in the annual Budget Act, the monies
become available for making awards to students.
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5)Provides that any monies available in the fund after making
supplemental awards shall remain in the fund for allocation in
future fiscal years.
6)Provides that disbursements from the Fund shall be made for
the following purposes:
a) To supplement awards made for "access costs" as defined
under the provisions of the Cal Grant Program. Limits the
amount of the supplemental award, when added to the annual
access award amount established by the Budget Act, to
$5,000.
b) To defray the administrative costs incurred by the
Commission in connection with these responsibilities.
7)Provides that awards are only payable to the extent monies are
available from the Fund. Requires the Commission to inform
award recipients that the award is for one academic year only,
is not an entitlement, and that future supplemental awards are
subject to the availability of monies in the Fund.
8)Becomes operative only if SB 798 (De León) is enacted and
becomes operative on or before January 1, 2015.
9)Declares this act an urgency to take effect immediately in
order for this program to be funded by donations to the
College Access Tax Credit Fund made during 2014, to provide
adequate funding for Cal Grant B access awards beginning in
the 2015-16 academic year so that students receiving these
awards can stay enrolled.
EXISTING LAW authorizes the Cal Grant Program, administered by
CSAC, to provide grants to financially needy students to attend
college.
FISCAL EFFECT : According to the Senate Appropriations
Committee, $140,000 in staffing costs to CSAC to administer the
program expansion, reimbursed by the Fund. This bill prohibits
the Cal Grant B Access Award amounts funded in the annual Budget
Act from being reduced below 2012 Budget Act levels, for the
duration of the existence of Fund. If budget reductions became
necessary, the Cal Grant B Access Award would be protected at
the expense of other programs. To the extent that expanded Cal
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Grant Access Awards provide additional funding to students in
California's public postsecondary institutions, that funding may
supplant some institutional aid from the segments.
COMMENTS : Background . In the first award year, Cal Grant B
students are awarded a grant to cover access costs, defined as
living expenses and expenses for transportation, supplies, and
books. After the freshman year, the Cal Grant B award may also
include tuition and fee coverage in the same amount as the Cal
Grant A award. Current law limits the access award to $1,551,
but allows the amount to be adjusted in the annual Budget Act.
The 2012 Budget Act reduced the award to $1,473; that amount was
maintained in the 2013 Budget Act. According to the Commission,
in 2012-13, the average income for new Cal Grant B recipients
was $16,511. There were a total of 128,426 new recipients of Cal
Grant B. The largest number and percentage of Cal Grant B
recipients were at the California Community Colleges (48%).
Purpose of this bill . According to the author, this legislation
will increase the underfunded Cal Grant B access award amount
for California's lowest income students to improve graduation
rates. The Author notes that, adjusted for inflation, the Cal
Grant B access award today should be $5,900; instead it has lost
most of its purchasing power over time and is currently set at
only $1,473. According to the author, there is significant
research that shows that students who work more hours take
longer to graduate; Grant aid is the proven equalizer that
allows low-income students to persist and complete degrees at
rates that equal those of their higher-income peers. This bill,
in coordination with SB 798, is intended to enable CSAC to
double the Cal Grant B access award during tough economic times.
Contingent enactment . The implementation of this bill is
contingent upon the funding source established in SB 798 (De
León), which would, for taxable years 2014 through 2016, allow
taxpayers, upon receipt of California Educational Facilities
Authority certification, to receive a tax credit for a specified
percentage of cash contributions made to the Fund. SB 798 is
pending hearing in the Revenue and Taxation Committee.
Related legislation . AB 1364 (Ting), which was approved by this
Committee by a vote of 9-3 on April 9, 2013, proposes to,
beginning in the 2014-15 academic year, increase the maximum
amount of the Cal Grant B access award to $1,710, and provide
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for annual adjustment upward based upon the California Consumer
Price Index beginning January 15, 2014. AB 1364 is currently
pending in the Senate Appropriations Committee.
Prior legislation . SB 284 (De León, 2013) which was identical
to this bill, was approved by the Legislature and subsequently
vetoed by Governor Brown due to a technical error contained in
the companion measure, SB 285 (De León, 2013) that negatively
impacted Proposition 98 funding guarantee. The companion
measure to this bill, SB 798 (De León) corrects this technical
error.
SB 1466 (De León, 2012), as heard in this committee, expanded
eligibility for a Cal Grant to include a student with a
household income up to $100,000, subject to specified funding
prioritization, and contingent upon legislation that created a
fund for this purpose (SB 1356, De León, 2012). SB 1466 passed
this committee in July 2012 by a vote of 8-1, but was
subsequently amended to address a different subject.
REGISTERED SUPPORT / OPPOSITION :
Support
California Catholic Conference
California Community College Chancellor's Office
California Competes
Californians for Shared Prosperity Coalition
California State Student Association
Community College League of California
EARN
Los Angeles Area Chamber of Commerce
Southern California College Access Network
Student Senate for California Community Colleges
Students First
The Campaign for College Opportunity
The Education Trust-West
The Institute for College Access and Success
University of California Student Association
Young Invincibles
Opposition
None on file.
SB 174
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Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960