|Budget Issue:||Cal Grant funding.|
|Finding or Recommendation:||Recommend adopting Governor’s January budget proposal to increase total Cal Grant funding by $61 million in 2012-13 and an additional $100 million in 2013-14. The proposed increases are needed to fully fund Cal Grants under current state law.|
Cal Grants Provide Students With Financial Aid to Help With College Costs. The state’s Cal Grant program guarantees financial aid awards to recent high school graduates and community college transfer students who meet financial, academic, and other eligibility criteria. The program also provides a relatively small number of competitive grants to students who do not qualify for entitlement awards. Cal Grants cover full systemwide tuition at the public universities for up to four years and partly contribute to tuition costs at nonpublic institutions. Apart from tuition grants, some students qualify for grants that cover a portion of their living costs. Figure 1 summarizes the number of recipients and funding amounts by grant type in 2012-13.
The Cal Grant program currently is supported by federal Temporary Assistance for Needy Families funds, the state General Fund, and the Student Loan Operating Fund. The Governor proposes to increase total Cal Grant spending by $61 million in 2012-13 and an additional $100 million in 2013-14 to accommodate increases in the number of students eligible for Cal Grant entitlement awards. Figure 2 shows funding by source for the 2012-13 Budget Act, revised current year and budget year.
Current-Year Growth Related to Increased Participation. The number of students applying for and claiming Cal Grants in the current year is about 5 percent higher than projected in the 2012-13 Budget Act. Because entitlement awards are guaranteed to eligible students, costs rise with participation. The administration’s proposal to add $61 million in the current year would align funding with expected award payments.
Two Major Drivers of Budget-Year Growth. Additional growth in Cal Grant costs for 2013-14 is primarily driven by two factors.
Recommend Adopting Proposed Cal Grant Funding Increases.Because the proposed augmentations fund increased entitlement costs that the Legislature and Governor already have approved, we recommend adopting the Governor’s proposal.