BILL ANALYSIS Ó
SB 174
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Date of Hearing: June 18, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 174 (De Leon) - As Amended: January 6, 2014
Policy Committee: Higher
EducationVote:11-0
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill specifies the allocation of funds that would be
generated by the College Access Tax Credit (SB 798), if that
bill were to be enacted this year. Specifically, this bill:
1)Provides that annual disbursements from the fund shall be for
the following:
a) To supplement Cal Grant B Program access awards up to a
limit of $5,000 per student per academic year, including
the amount already provided through the General Fund in the
Budget Act (currently $1,473 per student). The bill
prohibits any reduction in the GF portion of the access
award while funding through the tax credit, which would
expire after three years, is available.
b) To cover the Student Aid Commission's administrative
costs for making these supplemental awards.
2)Specifies that the amount disbursed per the above shall not
exceed 85% of the College Access Tax Credit Fund balance as of
April 1 of each year.
FISCAL EFFECT
1)The amount of funds allocated for supplemental Cal Grant B
access awards will depend on the amounts contributed by
taxpayers, per the provisions of SB 798, to the College Access
Tax Credit Fund net of the total tax credits claimed by these
taxpayers and state administrative costs. This amount is
unknown, but could be up to several hundred million dollars
SB 174
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annually for three years. If $240 million was made available
through the tax credit, the access award for that year would
be increased from $1,473 to $3,000 per student. (There were an
estimated 178,000 Cal Grant B recipients for the 2013-14
academic year.)
2)The Student Aid Commission will incur annual costs of around
$140,000 for three years for 1.5 positions to field additional
calls generated by additional notifications regarding the
supplemental grant, to revise the website, publication, and
award notifications, estimate and determine actual award
amounts based on available funds, and other administrative
functions.
COMMENTS
1)Background . In the first year that they receive a Cal Grant B
award, almost all recipients are only awarded a grant to cover
access costs, i.e. for living expenses and expenses for
transportation, supplies, and books. After their 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-a level maintained in the 2013
Budget Act. In 2010-11, there were a total of 94,710 new
recipients of Cal Grant B, and their average income was only
$17,407. A majority of these recipients (53%) were enrolled at
the California Community Colleges.
2)Purpose . The author notes that, adjusted for inflation, the
Cal Grant B access award today should be $5,900. At the
current level of $1,473 it has lost most of its purchasing
power over time. According to the author, there is significant
research showing 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.
3)Related legislation . The implementation of SB 174 is
contingent on the fund source established in SB 798 (De León),
pending in Assembly Revenue and Taxation. That bill, for
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taxable years 2014 through 2016, allows 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.
AB 1364 (Ting), pending in Senate Appropriations, increases
the maximum Cal Grant B access award to $1,710 in 2014-15, and
provides for an annual inflation adjustment thereafter.
4)Prior legislation . In 2013, the author carried similar
companion bills (SB 284 and SB 285), which were vetoed by the
Governor solely due to a technical error in SB 285. That error
is corrected in SB 798.
In 2012, SB 1466 (De Leon), which 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, passed off this committee's Suspense File, but was
subsequently amended to address a different subject.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081