BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2506


                                                                    Page  1





          ASSEMBLY THIRD READING


          AB  
          2506 (Thurmond)


          As Amended  May 27, 2016


          Majority vote


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Higher          |13-0 |Medina, Baker, Bloom, |                    |
          |Education       |     |Chávez, Irwin,        |                    |
          |                |     |Jones-Sawyer, Levine, |                    |
          |                |     |Linder, Low, Olsen,   |                    |
          |                |     |Santiago, Weber,      |                    |
          |                |     |Williams              |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |20-0 |Gonzalez, Bigelow,    |                    |
          |                |     |Bloom, Bonilla,       |                    |
          |                |     |Bonta, Calderon,      |                    |
          |                |     |Chang, Daly, Eggman,  |                    |
          |                |     |Gallagher, Eduardo    |                    |
          |                |     |Garcia, Roger         |                    |
          |                |     |Hernández, Holden,    |                    |
          |                |     |Jones, Obernolte,     |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Wagner, Weber, Wood   |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |








                                                                    AB 2506


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          SUMMARY:  Requires the California Student Aid Commission (CSAC)  
          to provide a Chafee Educational and Training Voucher (Chafee) to  
          qualified students attending qualifying institutions.   
          Specifically, this bill:  


          1)Establishes, to the extent permitted by federal law, standards  
            for postsecondary educational institutions to be classified as  
            Chafee qualifying institutions. 


          2)Requires CSAC to certify by October 1 of each year a  
            postsecondary educational institution's latest three-year  
            cohort default rate and graduation rate as most recently  
            reported by the United States Department of Education.


          3)Requires a federal Chafee participating institution to meet  
            the following, consistent with Cal Grant institutional  
            participation requirements: 


             a)   A three-year cohort default rate that is equal to or  
               less than 15.5%, as certified by the commission on October  
               1, 2017, and on October 1 of any year thereafter.  


             b)   For purposes of the 2017-18 academic year, and every  
               academic year thereafter, a graduation rate of 30% or  
               greater for students taking 150% or less of the expected  
               time to complete degree requirements.


             c)   Provides that the aforementioned requirements do not  
               apply to institutions with 40% or less of undergraduate  
               students borrowing federal student loans. 








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             d)   Provides that the aforementioned requirements do not  
               apply to institutions where an eligible Chafee grant  
               recipient is attending an institution outside of  
               California.


          4)Requires CSAC to notify Chafee grant recipients regarding  
            institutional ineligibility and to provide students with a  
            list of eligible institutions.


          5)Provides that, commencing with the 2017-18 academic year,  
            current and former foster youth are entitled to a Chafee grant  
            award, and that CSAC shall allocate that award to foster youth  
            that meet all of the following criteria:


             a)   He or she meets the Chafee grant requirements as set  
               forth in the federal John H. Chafee Foster Care  
               Independence Program.


             b)   He or she submits a Free Application for Federal Student  
               Aid (FAFSA) and a Chafee grant application between January  
               1 and September 2 of each calendar year for the academic  
               year beginning in the fall of that calendar year.


          6)Provides that the amount of any individual Chafee grant award  
            shall depend on the cost of attendance at the qualifying  
            institution at which the student is enrolled.  For each  
            applicant, the award amount shall not exceed the amount of the  
            calculated financial need.


          EXISTING LAW:  Establishes CSAC to administer California's  
          student financial aid programs.  CSAC administers the Chafee  








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          program funded by federal and state monies provided through the  
          California Department of Social Services.  Federal law  
          establishes the John H. Chafee Foster Care Independence Program  
          to provide, among other benefits, education and training  
          vouchers to qualifying current and former foster youth.  


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee: 


          1)Estimated additional General Fund costs of $4 million in the  
            first year for entitlement program awards, based on 1,230  
            additional awards and an average award of $3,234.  There were  
            1,115 eligible applicants that, under the current Chaffee  
            program, did not receive an award in 2014-15 due to  
            insufficient resources.  In addition, CSAC indicates that  
            another 845 applicants were deemed ineligible from due to lack  
            of a single piece of required information. CSAC expects that  
            new administrative procedures soon to be implemented to assist  
            such applicants will increase eligibility, which would lead to  
            an entitlement award.  Annual costs would increase to around  
            $11 million in the third year and thereafter.


          2)CSAC administrative costs (General Fund) will be about $60,000  
            one-time and $270,000 ongoing for four positions to implement  
            the entitlement program.  The commission indicates that the  
            Chafee program is relatively labor intensive due to the  
            population it serves and the need to coordinate among various  
            agencies.


          COMMENTS:  Background.  The federal John H. Chafee Foster Care  
          Independence Program (CFCIP) was created in 1999 to offer  
          assistance to current and former foster care youths in achieving  
          self-sufficiency.  Federal grants are offered to States who  
          submit a plan to assist youth in a wide variety of areas  
          designed to support a successful transition to adulthood.  The  








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          Educational and Training Vouchers Program (ETV) for Youths Aging  
          out of Foster Care was added to the CFCIP in 2002.  ETV provides  
          resources specifically to meet the education and training needs  
          of youth aging out of foster care.  


          In California, the Chafee Grant for Foster Youth provides up to  
          $5,000 in grants to foster youth. The budget for the program is  
          about $11.5 million, which is evenly split between federal funds  
          ($5.6 million) and the state General Fund.  State funding for  
          the program is accounted for in the Department of Social  
          Services budget, the funding is distributed to CSAC through a  
          Memorandum of Understanding (MOU) that outlines program  
          operations; CSAC then directs money to students pursuant to the  
          requirements of the MOU.  Current or former foster youth qualify  
          for the Chafee if they are under age 22 and were in foster care  
          in out-of-home placement at any time between the ages of 16 and  
          18.  The maximum grant is $5,000 per academic year; the average  
          awarded grant in 2014-15 was $3,251.  The program serves about  
          2,228 students. 


          Purpose of this bill.  According to the author, this bill seeks  
          to address the low rates of college persistence and completion  
          among foster youth in California.  There are two deficiencies in  
          current law that AB 2506 seeks to remedy:


          1)Insufficient funding.  The funding available to the Chafee is  
            inadequate to meet the current demand, which has increased  
            considerably with the expansion of foster care in 2012.  In  
            the 2014-15 school year, 4,609 students applied for the Chafee  
            ETV and were determined to be eligible in 2014-15.  However,  
            due to insufficient funds, 1,115 eligible applicants did not  
            receive a grant.  Currently, there is no application deadline  
            or guarantee of funds and applications are processed on a  
            rolling basis until all funds are expended.  This often  
            results in students not learning whether they received a grant  
            until well into the school term.  








                                                                    AB 2506


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          2)Poor-quality institutions.  Current law does not require  
            Chafee grants to be used at postsecondary institutions that  
            meet baseline performance measures.  The Cal Grant Program  
            requires participating institutions to meet minimum rates of  
            graduation and loan repayment. The author notes reports of  
            for-profit colleges marketing specifically to vulnerable  
            student populations, including veterans and foster youth, in  
            order to access financial aid.




          Analysis Prepared by:                                             
                          Laura Metune / HIGHER ED. / (916) 319-3960  FN:  
          0003149