As part of recent budget cuts, the Legislature scheduled reductions to the state’s premier financial aid program for students attending private colleges. Those cuts were expected to cost students $22 million in 2012-13 and $35 million in 2013-14. These pending cuts to financial aid raise the question: should the state use part of the $50 billion expected to be raised by Proposition 30 to restore these Cal Grants? The Budget Fact Check found:
- Proposition 30 will raise $50 billion over 7 years.
- Restoration of the Cal Grant cuts to private school students will cost taxpayers less than $45 million over the same period.
- The non-partisan Legislative Analyst’s Office has suggested that these cuts may end up costing taxpayers more if students are forced to leave private schools and to attend public schools, where state General Fund subsidizes both the Cal Grant and base funding.
What are Cal Grants?
California’s main financial aid program is the Cal Grant program, which provides grants for students who meet academic, financial and eligibility requirements to attend a qualified higher education institution of their choosing. This award may be applied to tuition and other fees at public or private colleges for students working towards an associate’s or bachelor’s degree.
Current Cal Grant award amounts:
- $12,192 at the University of California (UC)
- $5,472 at the California State University (CSU)
- $9,223 at Private/Independent Institutions (down from $9,708 due to Governor Brown’s veto of Cal Grant funding)
Cal Grant amounts at public universities are tied to tuition (fee) increases. Because California’s public systems have nearly doubled tuition in the last few years, state General Fund costs have grown exponentially for the Cal Grant program. Accounting for tuition increases at public institutions and overall participation growth, the Cal Grant program has grown from less than $500 million to around $1.7 billion over the past decade. Cost increases for the Cal Grant program since 2007-08 are almost entirely attributable to growth (both in cost and participation) at UC and CSU.
Recent Cuts to Cal Grant program:
Faced with multi-billion budget shortfalls, the Legislature adopted SB 1016 in 2012.
SB 1016 lowers the grant levels in 2013-14 for students attending private, independent institutions to $9,084 (then to $8,056 in 2014-15), and to $4,000 for those attending for-profit, private institutions.
The Governor jump started the budget cuts when he used his veto power and began cutting these grant amounts by 5 percent (from $9,708 to $9,223) in 2012-13, (Governor’s vetoes of AB 1497, Chapter 29, Statutes of 2012).
Lowers Maximum Amounts for Many New Cal Grant Awardsa
|
2011–12
|
2012–13
|
2013–14
|
2014–15
|
|
|
Maximum New Cal Grant A and B Tuition Awardsb
|
||||
|
Nonprofit and WASC–accredited for–profit institutions
|
$9,708
|
$9,223
|
$9,084
|
$8,056
|
|
All other for–profit institutions
|
9,708
|
9,223
|
4,000
|
4,000
|
|
Other Maximum Awards
|
||||
|
Cal Grant B access awards
|
1,551
|
1,473
|
Amounts to be specified in annual budget act
|
|
|
Cal Grant C tuition and fee awards
|
2,592
|
2,462
|
||
|
Cal Grant C book and supply awards
|
576
|
547
|
||
|
aRepresents new award amounts. Current law allows renewal awards up to the maximum amount in effect when the student first receives a Cal Grant award.
bMaximum award amounts at public universities continue to cover full system wide tuition and fees as established by the universities’ respective governing boards. As of July 2012, these amounts are $5,970 for the California State University and $12,192 for the University of California.
WASC = Western Association of Schools and Colleges.
|
||||
Source: LAO, The 2012-13 Budget: California Spending Plan, Figure 8, p. 23.
Does the Cut Save Money?
The non-partisan Legislative Analyst’s Office raised concerns about the cuts during budget deliberations. At state universities, tuition only covers part of the cost of education with state funding subsidizing the rest. If a student left a private university because the proposed Cal Grant cut made it unaffordable, and transferred to a 4-year public institution, the state would not save money. At that public institution, the student would still be entitled to the Cal Grant plus taxpayers would have to subsidize that student. According to the Legislative Analyst’s Office, instead of paying $9,708 for a low income student to attend a private university, that same student would cost taxpayers approximately $24,151 if they attended a UC or $12,636 if they attended any of the CSU campuses.
| CSU | UC | |
|
Average Base Funding per Student
|
$7,113
|
$11,352
|
|
Average Cal Grant Award
|
5,472
|
12,192
|
|
Total Subsidy
|
$12,585
|
$23,544
|
Bills Introduced to Restore Private School Funding
While the 2012-2013 Budget Act reduces Cal Grant award amounts for students attending private postsecondary educational institutions, Assemblywoman Beth Gaines and Assemblyman Mike Morrell have co-authored Assembly Bill 1085 to restore the Cal Grant awards for students at private postsecondary educational institutions back to the maximum amount of $9,708. This bill has the potential to save millions, assist thousands of low-income students attend private colleges, and keep state colleges and universities from becoming even more overcrowded.
