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AB-1501 Student financial aid: Middle Class Scholarship Program.(2011-2012)

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Amended  IN  Senate  August 31, 2012
Amended  IN  Senate  August 24, 2012
Amended  IN  Senate  August 21, 2012
Amended  IN  Assembly  May 25, 2012
Amended  IN  Assembly  February 09, 2012

CALIFORNIA LEGISLATURE— 2011–2012 REGULAR SESSION

Assembly Bill
No. 1501

Introduced  by  Assembly Member John A. Pérez
 (Coauthor(s): Assembly Member Alejo, Allen, Ammiano, Atkins, Beall, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer, Fletcher, Fuentes, Furutani, Fong, Galgiani, Gatto, Gordon, Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mitchell, Monning, Pan, Perea, V. Manuel Pérez, Portantino, Skinner, Solorio, Swanson, Torres, Wieckowski, Williams, Yamada)
 (Coauthor(s): Senator Alquist, Corbett, De León, DeSaulnier, Evans, Hancock, Lowenthal, Pavley, Price, Yee)

January 10, 2012

An act to add Article 22 (commencing with Section 70020) to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, and to amend Section 19611 of, and to add Section 17060 to, the Revenue and Taxation Code, relating to student financial aid, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.


LEGISLATIVE COUNSEL'S DIGEST


AB 1501, as amended, John A. Pérez. Student financial aid: Middle Class Scholarship Program.
(1) Existing law provides for a public postsecondary education system in this state. This system consists of the University of California, the California State University, and the California Community Colleges. Existing law authorizes these institutions to require that mandatory systemwide fees, among other fees, be paid by students at these institutions.
This bill would establish the Middle Class Scholarship Program under the administration of the Student Aid Commission. The bill would provide that, commencing with the 2012–13 academic fiscal year, undergraduate students enrolled at the University of California or the California State University would receive a scholarship grant award credit that, combined with other publicly funded student financial aid, as defined, received by an eligible student, would be 60% of the amount charged that student for mandatory systemwide fees in that academic fiscal year if the student meets the following conditions: annual household income does not exceed $150,000; is a resident of this state or exempt from paying nonresident tuition; files specified financial aid forms; and makes timely application or applications for publicly funded student financial aid, as defined, for which he or she is eligible; and meets prescribed eligibility requirements of the Cal Grant Program, except as specified, and attains at least a 2.0 high school or community college grade point average.
The bill would provide that a student whose annual household income exceeds $150,000, and who otherwise meets the requirements, would receive a scholarship grant award credit that is reduced in accordance with prescribed calculations.
The bill would require, in order for students enrolled in their respective segments to remain eligible to receive financial aid under the bill, the University of California and the California State University to maintain their respective institutional need-based grant programs at a level that, at a minimum, is equivalent to the level maintained during the 2011–12 academic fiscal year.
The bill would continuously appropriate from the Middle Class Scholarship General Fund to the Student Aid Commission as follows: first, $150,000,000 to the Chancellor of the California Community Colleges for allocation to community college districts based on calculations of full-time equivalent credit, to be expended, after consultation with student representatives as specified, for the provision of scholarship grants to students to reduce the impact of enrollment fees or to help cover the cost of textbooks and other educational expenses; an amount determined by the Student Aid Commission to be sufficient, when combined with publicly funded student financial aid received by eligible students from other sources, to cover the cost of 60% of the amount of mandatory systemwide fees charged to resident students and students who are exempt from nonresident tuition in the 2012–13 academic year and subsequent academic years, to be allocated to the Regents of the University of California and the Trustees of the California State University for implementation of this bill; and $100,000,000 each to the University of California and the California State University for maintaining access to those segments in the 2012–13 academic year. The bill would require the Student Aid Commission to report the amount of the scholarship grant award credit for each student to the Franchise Tax Board, and to report the aggregate amount of scholarship grant award credits to the Department of Finance.
The bill would authorize the Student Aid Commission, in the event that, in any academic year, there are funds remaining in the Middle Class Scholarship Fund after funds have been allocated to all eligible students of the respective universities, to hold these funds in a reserve for fiscal uncertainties. The bill would authorize the Student Aid Commission to determine if sufficient funding is available for purposes of the bill in the 2012–13 academic fiscal year and subsequent academic fiscal years, and would further authorize the commission to reduce scholarships proportionately if it determines that sufficient funding is not available.
(2) Existing law establishes the continuously appropriated Tax Relief and Refund Account, and provides that payments required to be made to taxpayers or other persons from the Personal Income Tax Fund are to be paid from that account.
This bill, for fiscal years beginning with the 2012–13 fiscal year, would authorize an amount equal to a qualified student’s scholarship grant award credit under the Middle Class Scholarship Program, as determined by the Student Aid Commission pursuant to the bill, to be refunded from the Tax Relief and Refund Account, thereby making an appropriation.
(3) This bill would become operative only if AB 1500 of the 2011–12 Regular Session is chaptered and establishes a Middle Class Scholarship Fund.

(3)

(4) This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Article 22 (commencing with Section 70020) is added to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, to read:
Article  22. Middle Class Scholarship Program

70020.
 The Middle Class Scholarship Program is hereby established under the administration of the Student Aid Commission. For purposes of this article, “commission” means the Student Aid Commission.

70021.
 (a) (1) Commencing with the 2012–13 academic fiscal year, an undergraduate student enrolled in the California State University or the University of California who meets the requirements of paragraph (2) is eligible for a scholarship grant award credit as described in paragraph (2).
(2) Each academic fiscal year, a student shall receive a scholarship grant award credit in an amount that, combined with other publicly funded student financial aid received by an eligible student, is 60 percent of the amount charged that student in that academic fiscal year for mandatory systemwide fees, if all of the following requirements are met:
(A) The student’s annual household income does not exceed one hundred fifty thousand dollars ($150,000), except as provided in paragraph (3). For purposes of this article, annual household income shall be calculated in a manner that is consistent with the requirements applicable to the Ortiz-Pacheco-Poochigian-Vasconcellos Cal Grant Program (Chapter 1.7 (commencing with Section 69430)) and Section 69506.
(B) The student is either a resident of the state or is exempt from paying nonresident tuition.
(C) The student completes and submits a Free Application for Federal Student Aid (FAFSA) application. If the student is not able to complete a FAFSA application, the student submits an application determined by the university he or she attends to be equivalent to the FAFSA application for purposes of this article.
(D) The student makes a timely application or applications for publicly funded student financial aid from programs for which he or she is eligible, other than the program established by this article. For purposes of this article, “publicly funded student financial aid” shall be defined as the federal Pell Grant Program, the Cal Grant Program, and institutional need-based grants.
(E) The student meets the requirements of subdivisions (a), (b), (c), and (d) of Section 69433.9, and attains a high school or community college grade point average of at least 2.0 on a four-point scale, except that a student who is exempt from nonresident tuition under Section 68130.5 shall not be required to meet the requirements of subdivision (a) of Section 69433.9.
(3) The scholarship grant award credit under this article of a student whose annual household income is greater than one hundred fifty thousand dollars ($150,000), and who otherwise meets the requirements of paragraph (2), shall be reduced by a percentage, not to exceed 100 percent, that is equal to 10 percent multiplied by a number equal to the amount by which the student’s household annual household income exceeds one hundred fifty thousand dollars ($150,000), divided by the product of one thousand dollars ($1,000) multiplied by the number of students in that household receiving a scholarship under this article during that academic year the portion of the student’s annual household income in excess of one hundred fifty thousand dollars ($150,000) as a percentage of ten thousand dollars ($10,000) so that no scholarship grant award credit shall be provided to a student with an annual household income of one hundred sixty thousand dollars ($160,000) or more.
(b) In order for students enrolled in their respective segments to remain eligible to receive a scholarship grant award credit under this article and Section 17060 of the Revenue and Taxation Code, the University of California and the California State University shall maintain their respective institutional need-based grant programs at a level that, at a minimum, is equivalent to the level maintained during the 2011–12 academic fiscal year.
(c) The University of California and the California State University shall report on the implementation of this article as part of the report made pursuant to Section 66021.1. The California Community Colleges shall report on the implementation of this article, including, but not necessarily limited to, the allocation and use of funds by community college districts, as part of the annual report made pursuant to paragraph (2) of subdivision (b) of Section 70901.

70022.
 It is the intent of the Legislature that all of the following occur:
(a) The program created pursuant to this article shall augment, and not replace, other state-supported financial aid and institutional need-based grant programs and federal grants.
(b) That the scholarship grant award credit provided to students under this article and Section 17060 of the Revenue and Taxation Code be increased to accommodate increases in the cost of mandatory systemwide fees charged to students of the University of California and the California State University, respectively, that may occur during and after the 2011–12 academic fiscal year.
(c) That the University of California and the California State University do not raise mandatory systemwide fees that would decrease the value of a scholarship grant award credit under this article and Section 17060 of the Revenue and Taxation Code.

(d)That the costs of Middle Class Scholarship Program do not exceed the funding available in the Middle Class Scholarship Fund and that a prudent fund balance exists to protect against fiscal uncertainties.

70023.
 (a) The following amount is hereby appropriated from the General Fund in accordance with the following:
(1) Each academic Notwithstanding Section 13340 of the Government Code, each fiscal year, from the revenues in the Middle Class Scholarship Fund established by Section 70025, there shall first be set aside one hundred fifty million dollars ($150,000,000), is continuously appropriated, and shall be transferred to the Chancellor of the California Community Colleges for allocation, for that academic fiscal year, to community college districts based on calculations of full-time equivalent credit weighted by a measure of participants in the enrollment fee waiver program of the Board of Governors of the California Community Colleges established pursuant to Section 76300. Funds annually allocated to a community college district pursuant to this paragraph shall be expended, after the district has consulted with the recognized campus and district student representatives in the determination of how the funds are to be expended, for the provision of grants to students to reduce the impact of enrollment fees, or to help cover the cost of textbooks and other educational expenses. It is the intent of the Legislature that the funds provided under this paragraph meet the specific needs of students at the local district level. The Board of Governors of the California Community Colleges may establish minimum criteria and standards for community colleges to award grants under this paragraph, in consultation with the appropriate statewide student association representatives, to ensure that the intent of the Legislature is met.

(2)Notwithstanding Section 13340 of the Government Code, each academic year, an amount determined by the commission to be sufficient, when combined with Cal Grants, Pell Grants, and institutional need-based grants received by eligible students from other sources, to cover the cost of 60 percent of the amount of mandatory systemwide fees charged to resident students and students who are exempt from nonresident tuition in the 2012–13 academic year and subsequent academic years is hereby continuously appropriated from the Middle Class Scholarship Fund established by Section 70025 to the commission for allocation to the Regents of the University of California and the Trustees of the California State University for implementation of this article. The University of California and the California State University shall provide the commission with any information that is necessary for the determination of this amount.

(3)For the 2012–13 academic year, one hundred million dollars ($100,000,000) to the University of California for the purpose of maintaining access to the university.

(4)For the 2012–13 academic year, one hundred million dollars ($100,000,000) to the California State University for the purpose of maintaining access to the university.

(b)In the event that, in any academic year, there are funds remaining in the Middle Class Scholarship Fund after funds have been allocated to all eligible students of the respective universities pursuant to paragraphs (1) and (2) of subdivision (a), the commission shall hold these funds in reserve for fiscal uncertainties.

(2) For the 2012–13 fiscal year, the appropriation made pursuant to paragraph (1) shall not be allocated to the Chancellor of the California Community Colleges until May 2013.
(3) For purposes of making the computations required by Section 8 of Article XVI of the California Constitution, including computation of the state’s minimum funding obligation to school districts and community college districts in subsequent fiscal years, the appropriation made pursuant to paragraph (1) shall be deemed to be “General Fund revenues appropriated for community college districts,” as defined in subdivision (d) of Section 41202, and included within the “total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B,” as defined in subdivision (e) of Section 41202, for that fiscal year.
(4) Each fiscal year, the commission shall report to the Franchise Tax Board the amount of the scholarship grant award credit for each student, as provided in subdivision (d) of Section 17060 of the Revenue and Taxation Code. The commission shall also report the aggregate amount of scholarship grant award credits to the Department of Finance. The University of California and the California State University shall provide the commission with any information that is necessary for the administration of the Middle Class Scholarship Program.

(c)

(b) (1) For the 2012–13 academic fiscal year, the commission shall determine if five hundred sixty million dollars ($560,000,000) is sufficient to cover the costs of the scholarships scholarship grant award credits as defined described in paragraph (2) (4) of subdivision (a) of this section and Section 70021. If five hundred sixty million dollars ($560,000,000) is not sufficient for this purpose, then the scholarships shall be reduced proportionately by an equal percentage for all recipients of scholarships scholarship grant award credits under this article and Section 17060 of the Revenue and Taxation Code.
(2) (A) Beginning with the Governor’s Budget proposal for the 2013–14 fiscal year, and in the Governor’s Budget for each fiscal year thereafter, the Department of Finance shall include a fund condition statement for the Middle Class Scholarship Fund display of revenues and scholarship grant award credits provided under this article and Section 17060 of the Revenue and Taxation Code for the past, current, and proposed fiscal years prepared in accordance with existing law.
(B) The For the 2014–15 fiscal year and each fiscal year thereafter, the commission shall determine, from the information provided pursuant to this subdivision, if sufficient funds will be available to cover the costs of the allocation to the California Community Colleges and the scholarships pursuant to paragraphs (1) and (2), respectively, of subdivision (a) of this section, and Section 70021, for the upcoming fiscal year. If the funds are not sufficient, then the scholarships shall be reduced proportionately by an equal percentage for all recipients of scholarships under this article and Section 17060 of the Revenue and Taxation Code.
(C) The purpose of this subdivision is to ensure that the Middle Class Scholarship Program costs do not exceed funding available in the Middle Class Scholarship Fund.

SEC. 2.

 Section 17060 is added to the Revenue and Taxation Code, to read:

17060.
 (a) (1) For fiscal years beginning with the 2012–13 fiscal year, there shall be allowed to a qualified student a credit against the “net tax,” as defined in Section 17039, in an amount equal to the qualified student’s scholarship grant award credit determined by the Student Aid Commission pursuant to Section 70021 of the Education Code and other applicable provisions of Article 22 (commencing with Section 70020) of Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code.
(2) The amount of the scholarship grant award credit determined by the Student Aid Commission under paragraph (1) shall be provided to the qualified student in writing, and that amount shall be paid pursuant to subdivision (c) in lieu of the qualified student claiming the scholarship grant award credit on any return that may be filed under Part 10.2 (commencing with Section 18401) with respect to the income of the qualified student for any taxable year.
(b) For purposes of this section, “qualified student” means a student that meets all of the requirements of Section 70021 of the Education Code to be eligible for a credit under this section.
(c) The credit allowed under this section shall be payable to the California State University or the University of California, as the case may be, for the benefit of the qualified student, and shall be applied by the California State University or the University of California, as the case may be, to reduce the qualified student’s mandatory systemwide fees, within the meaning of Section 70021 of the Education Code, for a fiscal year.
(d) The Student Aid Commission shall provide the Franchise Tax Board with information for each qualified student regarding the amount of the credit allowed under this section, the student identification information for the qualified student benefitting from the credit, and whether the credit is payable to the Regents of the University of California or the Trustees of the California State University. Based on this information, the Franchise Tax Board shall make payments from the Tax Relief and Refund Account on behalf of the qualified student to either the Regents of the University of California or the Trustees of the California State University, as the case may be.
(e) (1) The credit allowed under this section shall be administered by the Student Aid Commission as described in Article 22 (commencing with Section 70020) of Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, in the manner determined under regulations issued by the Student Aid Commission. The University of California and the California State University shall provide the commission with any information that is necessary for the administration of the Middle Class Scholarship Program.
(2) The Student Aid Commission may prescribe rules and regulations necessary to carry out the purposes of this section, including any rules and regulations necessary to establish priorities, procedures, processes, requirements, and rules identified in, or required to implement, this section, including rules relating to the priority of applications received and the allocation of credits in whatever priority is contained in those regulations.
(3) The allocation methodology and the amount of scholarship grant award credits determined by the Student Aid Commission may not be reviewed, revised, or adjusted in any administrative or judicial proceeding.
(4) The Student Aid Commission may adopt regulations under paragraph (2) as emergency regulations in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. For purposes of the Administrative Procedure Act, including Section 11349.6 of the Government Code, the adoption of those regulations shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare, notwithstanding subdivision (e) of Section 11346.1 of the Government Code. Notwithstanding subdivision (e) of Section 11346.1 of the Government Code, any regulation adopted pursuant to this section shall not remain in effect more than 180 days unless the Student Aid Commission complies with all provisions of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, as required by subdivision (e) of Section 11346.1 of the Government Code.
(f) Except as provided for in subdivision (c), the credit under this section shall not be available to offset, reduce, or otherwise diminish any debt, liability, or financial obligation owed to the state.

SEC. 3.

 Section 19611 of the Revenue and Taxation Code is amended to read:

19611.
 (a) The Tax Relief and Refund Account is hereby created in the General Fund. Notwithstanding Section 13340 of the Government Code, all moneys in the Tax Relief and Refund Account are hereby continuously appropriated, without regard to fiscal year, to the Franchise Tax Board for purposes of making all payments as provided in this section.
(b) Notwithstanding any other provision of law, all payments required to be made to taxpayers or other persons from the Personal Income Tax Fund shall be paid from the Tax Relief and Refund Account.
(c) The Controller shall transfer, as needed, to the Tax Relief and Refund Account:
(1) From the unexpended balance of the annual Budget Act appropriation for Item 9100-101-001, Schedule 80-Renter’s Tax Relief, an amount determined by the Franchise Tax Board to be equivalent to the total amount of renters’ assistance credits and refunds allowed under Section 17053.5.
(A) If there is no unexpended balance of the appropriation, as provided for in paragraph (1), the Controller shall transfer sufficient moneys from the Personal Income Tax Fund to make the renters’ assistance credits and refunds until there is an unexpended balance.
(B) Subsequent to there being no unexpended balance of the appropriation, as provided for in paragraph (1), and there being a transfer of moneys from the Personal Income Tax Fund to make the renters’ assistance credits and refunds, reimbursement shall be made from the unexpended balance of the appropriation as provided for in paragraph (1) to the Personal Income Tax Fund. However, if no such appropriation is subsequently made, reimbursement shall be made from the General Fund.
(2) From the disability fund, the amount transferable to the General Fund pursuant to subdivision (a) of Section 1176.5 of the Unemployment Insurance Code.
(3) From the Personal Income Tax Fund, such additional amounts as determined by the Franchise Tax Board to be necessary to make the payments required under this section and Section 17060.

SEC. 2.SEC. 4.

 This act shall become operative only if Assembly Bill 1500 of the 2011–12 Regular Session is chaptered and establishes a Middle Class Scholarship Fund.

SEC. 3.SEC. 5.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to provide urgently needed financial aid to California public postsecondary students in time for the beginning of the 2012–13 academic fiscal year, it is necessary that this act take effect immediately.