California Community Colleges (6870)

The budget includes a $195 million increase in California Community College Proposition 98 funding in the budget year. This is $107 per student, or 2.8 percent more than the revised estimate of per-student expenditures in the current year.

The California Community Colleges (CCC) provide instruction to about 1.5 million adults at 106 colleges operated by 71 locally governed districts throughout the state. The system offers academic and occupational programs at the lower-division (freshman and sophomore) level. Based on agreements with local school districts, some college districts offer a variety of adult education programs including basic skills education, citizenship instruction, vocational, avocational, and recreational programs. Finally, pursuant to state law, many colleges have established programs intended to further regional economic development.

Figure 1 shows the budget from all significant sources for community college education for the budget year and the two previous years. As the figure shows, CCC spending from all sources is projected to increase by $278 million, or 5.7 percent, above the current-year level.



Figure 1
Community College Budget Summary
1997-98 Through 1999-00

(Dollars in Millions)

Actual 1997-98 Estimated 1998-99 Proposed 1999-00 Change From 1998-99
Amount Percent
Proposition 98 (CCC)
State (General Fund) $1,952.4 $2,163.9 $2,283.4 $119.5 5.5%
Local property tax revenue 1,421.1 1,448.7 1,524.0 75.2 5.2
Subtotals, Proposition 98 $3,373.4 $3,612.7 $3,807.4 $194.7 5.4%
Other Funds
General Fund
Teachers' retirement $77.3 $47.8 $79.5 $31.7 66.3%
Bond payments 69.0 69.3 76.0 6.7 9.7
State operations 9.6 10.5 10.8 0.3 2.4
Other programs -- 0.4 -- -0.4 -100.0
State school funds 1.4 1.2 1.2 -- --
Other state funds 6.0 8.1 8.0 -0.1 -1.2
State lottery funds 108.8 121.7 126.3 4.6 3.8
Student fees 166.5 158.3 162.3 4.0 2.5
Federal funds 149.9 149.9 149.9 -- --
Other local 666.9 711.2 748.0 36.8 5.2
Totals $4,628.9 $4,891.1 $5,169.4 $278.3 5.7%
Students
Enrollment (head count) 1,445,335 1,475,711 1,515,533 39,822 2.7%
Full-time equivalent (FTE) 921,933 949,591 973,331 23,740 2.5
Proposition 98
Amount per FTES $3,659 $3,804 $3,912 $107 2.8%

Proposition 98 funding constitutes about three-fourths of overall community college funding. For 1999-00, the budget proposes to increase community college Proposition 98 funding by $195 million. This represents an increase of $107 per student to $3,912, or a 2.8 percent increase from the revised 1998-99 per-student amount.

Governor's Budget Proposals

The budget proposes a General Fund Proposition 98 funding increase of $119.5 million for 1999-00. Figure 2 (see page 130) shows the changes proposed for community college Proposition 98 funds in the budget year. The major changes include:

Figure 2
Governor's Community College

Budget Proposals

Proposition 98 General Fund

(In Millions)
1998-99 (revised) $2,163.9
Enrollment Growth
Apportionments $78.7
Selected categoricals 5.1
Subtotal $83.8
Cost-of-Living Increases
Apportionments $59.0
Selected categoricals 3.8
Subtotal $62.9
Funding Adjustments
Lease-payment debt service $20.5
Technical adjustments -7.3
Subtotal $13.2
Program Expansion
Partnership for Excellence $10.0
Transfer and articulation 2.5
Middle College High Schools 1.8
Subtotal $14.3
New Programs
High school report cards $10.6
Reading development partnerships 10.0
Subtotal $20.6
Offsetting Adjustments
Property tax growth -$75.2
1999-00 (proposed) $2,283.4a
Change from 1998-99 (revised)
Amount $119.5
Percent 5.5%
a Total does not add due to rounding.

Proposition 98 Spending by Major Program

Figure 3 (see next page) shows Proposition 98 spending for community college programs. "Apportionment" funding (available for the districts to spend on general purposes) accounts for $3.1 billion in 1999-00, or about 82 percent of total Proposition 98 expenditures. The state General Fund supports about 51 percent of apportionment funding, and local property taxes provide the remaining 49 percent.



Figure 3
Major Community College Programs

Funded by Proposition 98

(In Millions)
Estimated 1998-99 Proposed 1999-00 Change From 1998-99
Apportionments
State General Fund $1,539.3 $1,597.7 $58.5
Local property tax revenue 1,448.7 1,524.0 75.2
Subtotals $2,988.0 $3,121.7 $133.7
Categorical Programs
Matriculation--credit/noncredit $63.9 $66.7 $2.8
Services for CalWORKs recipients 65.0 65.0 --
Disabled students 52.3 54.6 2.3
Extended opportunity and CARE 66.3 69.2 2.9
Economic development program 33.1 33.1 --
Basic skills 22.2 23.2 1.0
Apprenticeships/CalWORKs 15.1 15.1 --
Financial aid administration 7.2 6.9 -0.3
Fund for student success 10.8 10.8 --
Faculty and staff programs 9.6 9.6 --
Other programs 16.5 16.5 --
Telecommunications and technology 28.0 28.0 --
Instructional equipment/library materials replacement 44.0 44.0 --
Maintenance/special repairs 39.0 39.0 --
Lease-payment debt service 46.6 67.1 20.5
Base adjustments 3.0 -- -3.0
Subtotals $522.6 $548.8 $26.2
New or Augmented Programs
Partnership for Excellence $100.0 $110.0 $10.0
Reading development partnerships -- 10.0 10.0
High school report cards -- 10.6 10.6
Transfer and faculty articulation 1.4 3.9 2.5
Middle college high schools 0.7 2.5 1.8
Subtotals $102.1 $136.9 $34.9
Totalsa $3,612.7 $3,807.4 $194.7
a Totals may not add due to rounding.

"Categorical" programs (expenditures earmarked for a specified purpose) are also shown in Figure 3. These programs support a wide range of activities from services to disabled students to maintenance/special repairs. For most categorical programs, spending in 1999-00 remains at the current-year level.

Enrollment Growth

We recommend that the Legislature amend current law to establish a new benchmark rate to guide the Legislature's enrollment growth decisions.

The Governor's budget proposes $83.8 million for enrollment growth based on a FTES increase of 2.5 percent in 1999-00. Current law (Education Code Section 84750[g]) states that the statewide increase in FTES shall be, at a minimum, the rate of change in the adult population as determined by the Department of Finance (DOF). This code section further states that this factor may be increased through the budget process to reflect such factors as statewide priorities, the unemployment rate, and the number of students graduating from California high schools. While the DOF projects an increase in the adult population of 1.96 percent, the budget proposes an FTES workload increase of 2.5 percent.

The growth rate of the adult population does not, by itself, accurately reflect potential enrollment growth. The calculation should account for differences in population growth among each age cohort of adults, as well as changes in rates of participation in community colleges. We believe that the DOF's annual projection of community college enrollment growth, which incorporates these factors, would provide a better benchmark for funding enrollment growth. Therefore, we recommend that the Education Code (Section 84750 [g]) be amended to delete the reference to change in the adult population. We recommend that in its place this code section refer to DOF's annual enrollment projection as a benchmark to guide the Legislature's enrollment funding decisions. The Legislature can then evaluate proposals that differ from this benchmark on the individual merits of the proposals.

If the Legislature were to make this change effective for the budget year, the new formula would generate enrollment growth of 2.7 percent. This is slightly higher than the budget proposal of 2.5 percent, thereby requiring an additional $6.5 million.

Partnership for Excellence Program

We find that the California Community Colleges are on target to establish the accountability measures and adoption of goals for the new Partnership for Excellence Program. We recommend approval of the Governor's budget bill language that asks the Chancellor to consider recommendations to enhance measures and goals of the program.

Chapter 330, Statutes of 1998 (SB 1564, Schiff), established the Partnership for Excellence Program. The act required the CCCs to develop specific goals and outcome measures to improve student success and assess district performance. The act states that the goals must include at least the following areas: (1) student transfers, (2) degrees and certificates, (3) successful course completion, (4) work force development, and (5) basic skills improvement. The act expresses the state's intent to provide supplemental funding "to invest in program enhancements that will increase performance toward the community colleges' system outcome measures." The 1998-99 Budget Act appropriated $100 million to the CCC for this purpose.

The budget proposes to continue the $100 million in the budget year and augment that amount by $10 million. Figure 4 (see next page) highlights the measures adopted by the CCC board at its November 1998 meeting with respect to the five goal areas. The CCC did not add any general goals beyond those identified in Chapter 330. The Chancellor's Office will report in April 1999 on how individual community colleges allocated their share of the $100 million current-year appropriation with regard to these five goals.



Figure 4
Partnership for Excellence

Summary of Adopted Goals

November 1998
Transfer An increase from 69,574 to 92,500 in the number of students who transfer from community colleges to baccalaureate institutions.
Degrees and Certificates An increase from 80,799 to 110,500 in the number of degrees and certificates awarded. (Only certificates of 18 units or more would be included.)
Successful Course Completion An increase from 68.1 percent to 70.6 percent in the overall rate of successful course completions.
Workforce Development An increase in the number of successfully completed apprenticeship courses and advanced-level and introductory vocational courses. An increase in the number of California businesses and employees benefitting from training through contract education and in the number of individuals receiving fee-based job training.
Basic Skills Improvement An increase from 108,566 to 150,754 in the number of students completing course work at least one level above their prior basic skills enrollment.

Three Agency Review of CCC Proposal. Chapter 330 directs the DOF, the Legislative Analyst's Office (LAO), and the California Postsecondary Education Commission (CPEC) to assess whether the goals and accountability measures would clearly and reasonably meet the state's interest in accountability. Working together, the three agencies sent a letter to the CCC board and Chancellor in December that recommended the CCC enhance its accountability measures to:

The budget bill includes a provision directing the Chancellor to consider the recommendations of the three agencies, and to submit a final plan by September 1, 1999 that includes:

In light of the importance of developing comprehensive performance measures for the Partnership for Excellence, we recommend approval of the budget bill provision.

Partnership for Excellence Augmentation

We recommend that the Legislature delete $8.2 million of the $10 million increase proposed for the Partnership for Excellence Program, because the program needs only $1.8 million to keep pace with inflation. (Decrease Item 6870-101-0001 by $8.2 million.)

Last year the Legislature provided an initial investment of $100 million for the Partnership for Excellence Program. The Governor's budget proposes to increase the program by $10 million to demonstrate the Governor's support of this effort.

Basing Funding on Need. The Partnership for Excellence Program is in its first year of operation. The budget request offers no justification for an additional $10 million for the program. We believe that increases in this program should be contingent upon the community colleges articulating rigorous goals and improving student outcomes. The community colleges have yet to do this. Further, the budget provides no analytical justification for increasing base program funding ($100 million) by $10 million. Consequently, the segment has not justified a general augmentation.

It is, however, reasonable to adjust the base amount to reflect general price increases, thereby maintaining comparable purchasing power between the current and budget year. Accordingly, we recommend that the Legislature increase this program by $1.8 million to account for a 1.83 percent COLA. This is $8.2 million less than proposed in the budget.

Use Partnership for Excellence Funds To Support Transfer Proposal

We recommend that the Legislature delete the request for $2.5 million to improve the transferability of community college courses to four-year colleges, because the community colleges should do this within the Partnership for Excellence Program. (Reduce Item 6870-101-0001 by $2.5 million.)

The Governor's budget proposes an increase of $2.5 million to enhance the transferability of community college courses to CSU, UC and other four-year colleges. The community colleges propose to spend (1) $550,000 on workshops to assist faculty in rendering and developing curricula that is transferable and (2) $1.9 million clarifying general education requirements and certification processes. The budget indicates that the expenditures would be for limited terms; the articulation workshops would be funded for six years (through 2004-05), while the general education reviews would be funded for two years (through 2000-01). The current-year budget continues to provide $1.4 million in support of other transfer activities including, Project Assist ($589,000) and the California Articulation Number system ($835,000).

Activities Should Be Funded With Partnership for Excellence Funds. We agree that the community colleges should improve articulation with four-year colleges. (Articulation refers to the process community colleges use to ensure that courses completed at one institution will be equivalent in nature to other courses available at four-year institutions.) Without such articulation, students would not be assured that courses they take would be counted toward their degree upon transferring to another college. Without appropriate articulation, students often must repeat courses and extend the time to obtain their degrees.

The CCC has identified improved articulation as a key factor in achieving the transfer goals of the Partnership for Excellence Program. As we discussed earlier, the Partnership for Excellence Program received $100 million in the 1998-99 Budget Act. If the community colleges believe that the proposed transfer-improvement activities would be cost-effective in reaching their collectively determined transfer goals, then they should allocate $2.5 million of the $100 million provided by the Legislature for those activities. Accordingly, we recommend that the augmentation request be denied.

Value of Report Card to High Schools Not Established

We recommend the Legislature delete $10.6 million for a proposed Community College High School Report Card program because the likely benefits of the program do not justify its cost. (Reduce Item 6870-101-0001 by $10.6 million.)

The Governor's budget requests $10.6 million from Proposition 98 to fund the Governor's Community College Report Card initiative. According to the 1999-00 Budget Bill (Item 6870-101-0001, Provision 16), the $10.6 million would be used by the community colleges to both:

Proposed budget bill language requires that the Community College Chancellor, in consultation with specified agencies and groups, develop report cards for high schools on the performance of their graduates at the community colleges. The language requires the Community College Board of Governors to submit the plan to the Office of the Secretary of Education for approval by October 1, 1999. Upon approval by the Secretary of Education, the Chancellor shall implement the program. The Governor's Budget Summary states that grants for this program will be available to all 106 colleges, at an average of $100,000 per college.

Value of Proposed Report Card Questionable. The UC and CSU currently publish data on student performance and identify the high schools from which their students graduated. The Master Plan for Higher Education directs UC to draw from the top eighth of all high school graduates. It directs CSU to draw from the top third. Thus, the UC and CSU reports let high schools know how their graduates are performing in the pool of top high school graduates.

Unlike CSU and UC, the community colleges must admit all applicants, regardless of how well they performed in high school, or how well they are prepared for college. As a consequence, it is not always appropriate to compare high schools based on how their graduates perform in community colleges. For example, some high schools might be sending their top graduates to community colleges, while others might be sending lower-achieving graduates.

Furthermore, no evidence has been provided to the Legislature that describes how this program will benefit either high schools or community colleges. Consequently, annual expenditure of $10.6 million has not been justified.

Accordingly, we recommend that the $10.6 million request and related budget bill language be deleted.

Teacher and Reading Development Proposal Lacks Important Detail

We recommend the Legislature delete $10 million for the Community College Teacher and Reading Development Partnership program, because the proposal has not been adequately developed. (Reduce Item 6870-101-0001 by $10 million.)

The Governor's budget proposes $10 million from Proposition 98 for the Governor's Community College Teacher and Reading Development Partnership grants initiative. According to the 1999-00 Budget Bill (Item 6870-101-0001, Provision 15), the purpose of this new program is to:

Budget bill language requires the Community College Chancellor--in consultation with specified agencies and groups--to develop a plan and criteria for awarding program funds through a competitive process to community colleges. The plan would prescribe how programs receiving grants should coordinate with other segments, set stipend levels for participating students, and evaluate program performance. The budget bill language requires the Community College Board of Governors to submit the Chancellor's plan to the Office of the Secretary of Education for approval by October 1, 1999. Upon approval by the Secretary of Education, the Chancellor shall implement the program. The Governor's Budget Summary states that while this program may not be feasible in all areas of the state, $10 million provides sufficient funding to structure beneficial programs in the most needy communities to attract future teachers to those areas.

The Proposal Raises Unanswered Questions. The proposal to use community college students to help teach reading to K-12 students is appealing in theory. Such a program might, as the Governor suggests, encourage community college students to pursue teaching careers and improve reading among K-12 students. From a practical standpoint, however, the proposal fails to address some very important questions.

Funding Request Is Premature. The budget bill language provides no time prior to enactment of the 1999-00 Budget Bill for the Legislature to review a developed proposal that addresses these and other questions. The Chancellor's proposal, due to the Legislature on October 1, 1999 may satisfactorily answer each of the questions, but it would be premature to provide $10 million for a program before even basic details are available. Accordingly, we recommend that the $10 million request be denied.

Effectiveness of Middle College High School Program Unsupported

We recommend the Legislature delete $1.8 million requested to increase course offerings to high school students in community colleges because there is no information on the effectiveness of this program. We further withhold recommendation on the base funding amount of $660,000 pending additional information. (Reduce Item 6870-101-0001 by $1.8 million.)

The Middle College High School Program is a joint K-12 and CCC effort to promote the high school graduation and college enrollment of high-risk high school students. In the program, community college faculty teach high school courses to these students on the college campus. The community colleges currently allocate $660,000 per year from Proposition 98 funds for the program at several sites. The Governor's budget proposes adding $1.8 million to the program, a 173 percent increase over current-year expenditures. The community colleges provide districts with "seed" money to institute middle college programs over a three-year period. The community colleges expect districts to "institutionalize" projects by the fourth year--that is, they are expected to continue the programs out of their own budgets.

We requested both fiscal and academic effectiveness data on this program from the Department of Finance, the Chancellor's Office, and the Secretary of Education. The only information that they were able to provide was a 1990 evaluation of the initial two projects. The 1990 evaluation states "the outcome findings...while admittedly preliminary and incomplete, nevertheless indicate that the California Middle College High Schools are making a positive difference with their at-risk students." There is, however, no data substantiating this claim.

Thus, the Legislature has no real information on the effectiveness of this program in increasing the rate of college participation among at-risk high school students. It is also not known whether the community college campuses are continuing programs after their seed funding stops. Accordingly, we recommend that the request for $1.8 million to increase the program be denied. We also withhold recommendation on the base funding amount of $660,000 pending receipt of further information about the program's effectiveness.

Economic Development Program Recommendations

We recommend that the Legislature direct the California Community Colleges Chancellor to (1) end its current contract for an evaluation and follow-up work on the Economic Development Program and (2) expeditiously begin a new contract study to be submitted to the Governor and Legislature by March 1, 2000. We further recommend that the Legislature extend the sunset date for this program by one year to June 30, 2000, to allow time for the new study to be completed and reviewed.

Chapter 805, Statutes of 1994 (AB 3512, Polanco), reauthorized an existing CCC program and changed its name to the CCC Economic Development Program. The act states that the mission of the CCC Economic Development Program is to:

The Governor's budget proposes to fund the program 1999-00 at $33.1 million--the same amount as in the current-year budget. The program has grown from $9.4 million in 1996-97.

Chapter 299, Statutes of 1997 (AB 1578, Midgen), set a sunset date of June 30, 1999 for the program. The act further directed the Board of Governors to review the program by September 1, 1998 to determine whether the operation of the program should be extended beyond the sunset data. Chapter 299 further directed the Legislative Analyst, in conjunction with the Bureau of State Audits, to review the effectiveness of the program, with specific attention to the findings of the review conducted by the CCC board. The act directs the Legislative Analyst to submit is review in February 1999 as part of the Analysis of the 1999-00 Budget Bill. This analysis responds to the Chapter 299 directive.

Board's Contracted Evaluation Yields Little Useful Information. The CCC board contracted for an independent evaluation of the program in June of 1998. The contract amount was $429,720. The major elements of this contract called for (1) an evaluation of the first four years of operation of the Economic Development Program, (2) a report on the program's performance in 1997-98, and (3) development of revised/new data collection forms for the Economic Development Program. As of mid-January, the contract had received payment of about half of the total amount.

The contractor submitted the four-year evaluation to the CCC in November 1998. Our review of this four-year evaluation found that it lacked data that would be useful to assess the effectiveness of the program. The contractor did not provide even the most basic information on program outcomes and effectiveness. Furthermore, in collecting information for its report, the contractor used faulty survey methods.

After consulting with other state agencies and the current contractor, we conclude that the contractor does not have the expertise to provide a useful evaluation of this program. Accordingly, we recommend that the Legislature direct the CCC Chancellor's Office to end the current contract.

New Evaluation Needed. Because the current evaluation has not produced useful data and because the Legislature will need to know the effectiveness of the program to determine whether to extend it, we recommend that the CCC engage a new contractor for an evaluation. We recommend that staff from four agencies--the Chancellor's Office, Secretary of Education, DOF, and LAO--review and approve the request for proposal. This would better assure that the study would produce useful information.

Extend Program for One Year. Even though this program is in its fifth year of operation, the Legislature has not been provided any data on program performance and outcomes nor with data that links expenditures to program performance. However, because additional time will be needed to conduct a new evaluation of this program, we recommend that the sunset date for this program be extended to June 30, 2000. This will allow time for a CCC contractor to complete a meaningful evaluation for legislative consideration.




Student Aid Commission (7980)

The Student Aid Commission provides financial aid to students through a variety of grant, loan, and work-study programs. The commission's proposed 1999-00 budget includes state and federal funds totaling $689 million. This is $34.9 million, or 5.3 percent, more than estimated expenditures in the current year. The commission receives about $390 million, or 57 percent, of its funding from the federal government.

The budget requests $386 million from the General Fund for the commission. This is $34.3 million, or 9.7 percent, more than estimated expenditures in the current year. Of the total General Fund amount, 98 percent is for direct student aid for higher education. The balance is for the cost of operating the commission.

Major General Fund Budget Changes

Figure 1 shows the major changes proposed for the commission's budget in 1999-00. As Figure 1 shows, the budget requests a General Fund increase of $34.3 million. The major factor driving this change is the out-year costs ($30 million) associated with increases in the number and amount of Cal Grant A awards provided in the previous three years. The Governor's budget also includes $5 million to provide 1,672 additional first-time Cal Grant A (836) and Cal Grant B (836) awards in 1999-00. The annual cost of this augmentation would increase to about $15 million by 2002-03 because each year the additional first-time awards will be given to new students, while awards to prior recipients are renewed.



Figure 1
Major General Fund Changes

In Student Aid Commission

(In Thousands)
1998-99 General Fund Budget $352,068
Costs of prior grant increases $30,139
Add 1,672 new Cal Grants 5,000
Add two research staff 200
Relocate offices 162
Added grant-processing costs 133
Technical and other adjustments -1,337
Proposed 1999-00 Budget $386,365
General Fund increase $34,297
Percent increase 9.7%

The Cal Grant Program

The Cal Grant program consists of four parts. Figure 2 (see page 146) summarizes the purpose, eligibility requirements, and awards for the Cal Grant A, Cal Grant B, and Cal Grant C programs. We discuss the newly implemented Cal Grant T program below.

Figure 3 (see page 147) shows--for selected past years--how the Cal Grant's program activities compared to the program's statutory goals. It indicates, for example, that the budget would support about 50,000 first-time Cal Grant A awards in 1999-00, which would meet 70 percent of the statutory goal of providing Cal Grants to one-fourth of California high school graduates. (In most years, the statutory goal represents roughly one-half of graduates that go immediately to college.)

In an effort to increase the supply of credentialed teachers in the state, Chapter 336, Statutes of 1998 (SB 2064, O'Connell), created the Cal Grant T program, which provides one-year grants for tuition in accredited teacher-training programs. The act specified that the eligibility for Cal Grant T awards shall be based on academic criteria similar to that used in the Cal Grant A program. The award levels for the Cal Grant T program are the same as those shown for the Cal Grant A program in Figure 2.

Figure 2
Description of Cal Grant Programs
1999-00
Cal Grant A Cal Grant B Cal Grant C
Choice--based on financial need and academic performance Access--based primarily on financial need, preference for initial attendance at community college Vocational--based on financial need
Eligibility
Income ceiling: $63,500 for dependent student with five family members Income ceiling: $35,915 for dependent student with five or more family members Income ceiling: Same as Cal Grant A
Asset ceiling: $42,000 Asset ceiling: $42,000 Asset ceiling: $42,000
Freshman and juniors (transferring from a community college to a 4-year school grade point average (GPA) cut-off: 3.15 (1998-99) Applicants ranked based on family income, family size, GPA, family education background, and marital status of parents Applicants ranked based on work experience, educational performance, and recommendations
Sophomores and juniors (nontransfers) GPA cut-off: 3.38 (1998-99)
Plan to enroll at least two years at UC, CSU, or nonpublic institution Plan to enroll at least one year at a college Plan to enroll at least four months at community college, independent college, or vocational school
Average Family Income of New Recipients (1998-99)
$33,592 $13,818 $26,411
Maximum Award
Tuition and fees:

Nonpublic: $9,036

UC: $3,609

CSU: $1,506

Tuition and fees:

No award in the first year, then same as Cal Grant A

Tuition and fees:

Nonpublic: $2,360

UC: $2,360

CSU: $1,506

Other costs: none Other costs: Up to $1,410 Other costs: Up to $530
Number of New Awards Annually
21,788 21,788 2,089
Proposed Budget (In Millions)
$257.7 $103.1 $3.9
Number of Current Recipients
60,893 54,122 3,775

Figure 3
Cal Grants--Statutory Goals Compared to Actual Awards
Selected Years
1978-79 1988-89 1999-00 Proposed
Goal: Number of Awards
25 percent of high school graduates 69,637 67,264 72,420
Actual number of new awards 23,062 29,270 50,337a
Percent of goal 33% 44% 70%
Goal: Cover UC and CSU Feesb (For Financially Needy Students)
University of California
Weighted average tuition and fees $720 $1,554 $4,034
Maximum award 675 1,080 3,609
Percent of goal 94% 69% 89%
California State University
Weighted average tuition and fees $212 $815 $1,872
Maximum award 203 324 1,506
Percent of goal 96% 40% 80%
Goal: Support Private Institution Recipients at Level of Public Institution Funding
Specified costs and fees at public institutions N/A N/A $9,852
Maximum award (Student Aid Commission estimate) $2,700 $4,370 $9,036
Percent of goal N/A N/A 92%
a 47,337 for Cal Grant A,"B," and "C" plus 3,000 for Cal Grant T awards.
b Cal Grant A and "B."

The Cal Grant T Program Should Be Expanded

We recommend increasing General Fund support for the Cal Grant T program by $2.5 million, because the program successfully assists students in obtaining teacher training.

Program Off to a Fast and Successful Start. The 1998-99 Budget Act appropriated $10 million to fund up to 3,000 awards in the current year. In just the first seven weeks of the program (that is by an October 1998 initial application deadline), the commission received over 6,000 applications for grants. For the current year, the commission awarded a total of 2,044 grants totaling $9.4 million to students attending California State University (CSU) (1,046), University of California (UC) (227), and independent colleges (771). Of the 2,044 recipients, 2,018 were independent of their parents and had average annual incomes of under $15,000. Families of the 26 dependent recipients had annual incomes averaging $31,000. The average age of recipients was 30 years.

Augment Cal Grant T. The Governor's budget proposes to continue funding for the Cal Grant T program at its current level of $10 million. In our analysis of the Governor's K-12 initiatives on teacher quality, we recommend that the Legislature redirect $2.5 million to the Cal Grant T program from proposals that less directly affect the supply of new teachers. Specifically, we recommend that the Legislature:

Therefore, we recommend deleting $1 million for the planning of these programs. We recommend using the $1 million instead to expand the Cal Grant T program. This would provide an additional 220 prospective teachers with teacher preparation scholarships.

Accordingly, we recommend that funding for the Cal Grant T program be increased from $10 million to $12.5 million.

In addition, the previous two budget acts appropriated a total of $13.8 million to the CSU to increase enrollments in teacher-preparation courses by 2,702 students. The Governor's budget proposes to continue funding for these additional enrollments. In our analysis of the CSU budget, we note that CSU cannot document that it is indeed training these additional students. We recommend that if CSU cannot provide evidence at budget hearings that it is training them, that the Legislature consider shifting the $13.8 million to the Cal Grant T program.

Financial Need Formulas Should Include Federal Tax Credits for Tuition

We recommend the Legislature adopt supplemental report language that directs the Student Aid Commission, in consultation with the California Community Colleges, California State University, and University of California, to develop a methodology to include the availability of federal tax credits in calculations of student financial need.

When financial aid officers on community college, CSU, and UC campuses assemble financial aid packages for their students, they calculate the financial resources available to each financial aid applicant. Such resources include a student's personal and his or her family's income (for dependent students) and grant aid already received from other sources (for example, federal Pell grants and state Cal Grants). The campuses frequently augment federal and state grants with campus-based aid, depending on a student's unmet financial need. Under current law, the segments have broad discretion in calculating financial resources and unmet need of financial aid applicants.

Federal Tuition Tax Credits Provide Financial Aid. The federal Taxpayer Relief Act of 1997 created the Hope Scholarship and Lifetime Learning Credit programs. (Please see our February 1998 report Taking Advantage of New Federal Higher Education Tax Credits for a detailed description of these programs.) These programs provide certain taxpayers annual income tax credits for up to $1,500 of college tuition and fee expenses. To be eligible for a tax credit, independent students, or families of dependent students, must not have adjusted annual gross income of more than $50,000 (for single tax returns) or $100,000 (for joint tax returns). Lower-income taxpayers without a tax liability cannot receive any tax credit. The credits are intended to help middle- and upper-middle income taxpayers with college expenses.

Financial Need Calculations Should Account for Tax Credits. According to the segments, financial aid officers do not include the availability of tax credits when calculating students' financial resources. As a result, some students are receiving some financial aid from the state when they could obtain that aid from the federal government in the form of income tax credits. In its December 1998 report, Federal Tuition Tax Credits and State Higher Education Policy: A Guide for State Policy Makers, the National Center for Public Policy and Higher Education recommended that states include the federal tax credits in calculations of financial resources and need for financial aid. As the report states "low income students could benefit from the portion of state financial aid that would otherwise be awarded to those higher income students now served by the new federal tax credits." We agree.

Section 69506.5 of the Education Code authorizes the commission to modify the methodology financial aid officers use to calculate students' financial need. Accordingly, we recommend that the Legislature adopt supplemental report language that directs the Student Aid Commission in consultation with the community college, CSU, and UC financial aid officers, to develop a financial aid process that includes the availability of federal tax credits as income when calculating students' financial needs. We recommend that the language also require the commission to report to the Legislature by August 31, 1999 on how this change will be implemented in the financial aid process.




 
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