Analysis: California’s FY23-24 State Budget

College Affordability Prioritize any future financial aid investments for Cal Grant Reform. The MCS program will be allocated $227 million one-time in 2023-24 and $289 million one-time in 2024-25. This will maintain current level of the program in that school year. The funding level for 2024-25 needs to be set in this budget, since the California Student Aid Commission needs to make award decisions for the 2024-25 school year during the 2023-24 budget year. TICAS agrees that the modified MCS program is a step towards building a pathway to debt-free college in California by setting the goal of meeting the total cost of attendance, establishing a reasonable expected student contribution, and accommodating more low-income students. We remain concerned with specific structural pieces that prevent the program from equitably prioritizing the needs of the most vulnerable students, many of whom attend CCCs and are not eligible for an award. If the Legislature were to invest financial aid dollars in 2024-25, we respectfully remind them that the original financial aid promise was to invest in Cal Grant Reform in 2024-25. We hope to work with the Governor, the Senate, and Assembly to ensure Cal Grant Reform can happen in 2024-25. Support long-term commitment to student housing through a new funding mechanism at all three public systems. The California Student Housing Revolving Loan Fund will be allocated $200 million in 2023-24 with an intent to increase this to $300 million from 2024-25 through 2028-29. This will provide zero-interest loans to qualifying campuses of the UC, the CSU, and the CCC for construction of affordable housing projects.

Additionally, the budget eliminates the 2022-23 appropriation for the Student Housing Grant program but provides $81.3 million ongoing General Funds to support debt service for student housing projects in 2022-23, 2023-24, and 2024-25 funded with revenue bonds. UC and CSU housing projects will be funded with revenue bonds issued by those systems, and community college housing projects will be funded through local revenue bonds to be issued by community college districts. Lastly, the budget approves housing projects at Merced College, Riverside College, Cabrillo College, Cerritos College, College of the Redwoods, College of San Mateo, and San Diego City College.

TICAS appreciates the long-term commitment to student housing through a new funding mechanism at UC, CSU, and the CCC system. While we do have equity concerns regarding the CCCs ability to fund housing projects via bonds – especially for those in rural areas – this is a net positive. Investing in building affordable student housing is a critical and necessary part of a long-term approach to meet students’ basic needs, lower college costs, make college accessible for our neediest students, and achieve California’s 70 percent postsecondary attainment goal. Moving forward, we ask that students with unique housing needs, such as those with dependents and those without safe, reliable housing be clearly prioritized as the segments build out their student housing projects. Furthermore, if funding becomes available we hope that it can be used to support CCCs. Support in concept the expansion of MCS to foster youth at UC and CSU along with SSCG access for foster youth at the CCCs. The Legislature will include $5.2 million General Fund in 2023-24 and ongoing to expand eligibility for the Middle Class Scholarship to foster youth. This will include changes in trailer bill language to cover the total cost of attendance (TCOA) for CSU and UC students who are current or former foster youth by providing these students with a maximum award.

Additionally, the Legislature will include $14 million ongoing to the Student Success Completion Grant so that students who are current or former foster youth receive $5,250 per semester, or quarterly equivalent, for 12 or more units of study to help cover their unmet need.

TICAS believes that foster youth are a promising population with unique challenges which deserve to have a pathway to debt free college. Prioritizing this group can conceptually set a precedent for how MCS and the SSCG can be restructured to meet the TCOA for our lowest income and most vulnerable students first before moving up the income scale. If paired with Cal Grant Reform in 2024, foster youth would continue to be eligible for their supplemental $5,000 Chafee award while using MCS as a “fill the gap” program to meet their TCOA. We do have some concerns about keeping the full-time unit threshold for access to the SSCG since a majority of CCC students, and likely foster youth, do not attend full time, and maintaining the self-help provision for access to MCS. A more equitable alternative would be to buy-out the self-help amount for UC and CSU foster youth students and to create a sliding scale option that will allow part-time students to get this supplemental award at the CCCs. Once more, we see this as progress, not perfection, towards a path to debt-free college for foster youth. Support extending the state-wide financial aid application – including the California Dream Act Application (CADAA) – deadline from March 2 to April 2 for the upcoming application cycle. The final budget agreement will extend the deadline for every financial aid program administered by the Student Aid Commission, from March 2nd deadline to April 2nd in 2024, if FAFSA is not available by Oct. 1, 2023. TICAS appreciates that students will get additional time to fill out the FAFSA due to the delay of releasing the new application. This deadline extension should be clearly communicated to students, families, and local education agencies across the state through a state-wide public service information campaign that encourages students to fill out their financial aid applications as soon as possible before the deadline. This will give higher education institutions the information needed to disseminate financial aid award letters and packages. Modify the Californians for All College Corps stipend so it is not taxed and supplements financial aid grants. The final budget agreement does not make any adjustment to this program as originally created in 2021. TICAS recommends the Legislature and Governor develop a solution so these funds can supplement current financial aid grants and not be taxed or counted as income for participating students. We appreciate this innovative program which can play a role in helping students cover their out-of-pocket costs as part of the debt-free pathway through college. However, we have concerns that the stipend being earned by students could be taxed as income and not treated like financial aid. Middle Class Scholarship clean-up to exclude certain aid from counting towards MCS award amounts. The final budget agreement will exempt emergency housing assistance and emergency basic needs assistance that are only more than the student contribution amount of $7,898 from the MCS award calculation in 2023-24. Commencing with the 2024-25 academic year, the budget language incorporates in the calculation of MCS award amounts, institutionally operated non-need-based scholarships in the category of scholarships that are only more than the student contribution amount of $7,898. Adds clarification language to ensure that a student’s gift aid does not exceed the allowable gift aid under federal regulations. TICAS agrees with cleaning up these sections of the MCS program. One notable challenge with implementing MCS 2.0 is that award amounts often need to be adjusted throughout the year. These adjustments may happen for several reasons, including to reflect any new gift aid a student receives (such as merit scholarships or emergency grants). These adjustments create frustration and potential hardship among students, particularly when award amounts are reduced partway through the year. Institutional Supports Support base funding for UC & CSU Compacts and cost-of-living-adjustment for CCC Roadmap The Legislature approved the 5% base increase for both the UC and CSU systems. Additionally, they approved the 8.22% COLA for the CCC system TICAS supports sustained and reliable funding for our postsecondary systems. Moving forward, policymakers should continue monitoring the segments’ progress towards their respective goals to ensure that increases in funding are directly benefiting students through academic and non-academic support. Support additional staffing capacity for the CA Student Aid Commission. The Legislature approved a total of $638,000 for five positions beginning in 2023-24 to support financial aid workload. TICAS appreciates this critical capacity investment in CSAC that will ensure that they have the necessary staffing to help implement recent programs and their expanded role implementing Universal FAFSA/CADAA completion at the high school level. Support additional funding for the Cash for College program. The final budget agreement will provide $103,000 ongoing for this program. Down from the one-time investment of $500,000 in the 22-23 Budget. TICAS appreciates that there was some ongoing investment into this critical program that helps students, parents, and local education agencies in completing and submitting a FAFSA or CADAA. Last year’s one-time $500,000 investment in the program allowed Cash for College to expand to several new regions that had not previously received any support, resulting in an increase of financial aid workshops in California. Unfortunately, the reduction from the 2022-23 funding level may lead to reductions or cutbacks by many of the new regional partnerships and could set back the progress made last year. Moving forward we should make a request to increase funding. Support and build upon the Student Enrollment and Retention funding at CCCs The final budget agreement will reduce the amount provided in 2022-23 for recruitment and retention from $150 million to just over $94 million. Additionally, the budget will give districts flexibility in retention and recruitment, COVID-19 Block Grant, and deferred maintenance and instructional equipment. TICAS would have greatly preferred specific funding for recruitment and retention initiatives, but we do appreciate that the flexibility can mitigate the impacts of reductions. Moving forward, we would like to ensure that funding prioritizes high-impact student success strategies and that reporting requirements demonstrate how colleges have used this flexibility. Accountability & High-Quality Education Support funding for the Cradle-to-Career Data System. The final budget agreement approves $15,260,000 for the Cradle-to-Career (C2C) Data System. TICAS appreciates the continued commitment to and funding for C2C. Insights from the data system will be useful in identifying equity and performance gaps, directing resources where needed, and helping students make informed educational and career decisions. Reject Trailer Bill Language that will allow out-of-state, online post-secondary institutions to access the Golden State Teacher Grant The final budget agreement will allow out-of-state, private post-secondary institutions to access the Golden State Teacher Grant for one-time $10,000 awards. Key provisions include authorization by the Commission on Teacher Credentialing, the institution operating as a non-profit entity offering exclusively online services to California residents, WASC accredited, and a cohort default rate below 10% amongst other provisions. TICAS agrees that growing and supporting our teacher pipeline is a critical state goal. We do have some concerns over the precedent this is setting for having out-of-state private and online institutions accessing state grant programs. Additionally, we have questions on the efficacy of exclusively online education since the research remains unproven and learning outcomes tend to lag, particularly for BIPOC students, male students, and students with academic challenges. Moving forward, California should invest in and further strengthen the work being done by in-state postsecondary education systems with in-person courses rather than expose them to the unnecessary risk of exclusively online programs based out-of-state. Support and build upon the Trailer Bill Language on Cohort Default Rate (CDR). The final budget agreement will use of the three-year CDR rate certified in 2020 for Institutional Eligibility for the Cal Grant program. TICAS appreciates this continued CDR rate as the best available measure. In the future, we recommend that California convene a workgroup to explore additional metrics that could build upon or work in tandem with CDR to ensure that that schools meet a meaningful minimum standard to continue receiving access to taxpayer-funded aid.