By John Fensterwald - Educated Guess

Gov. Jerry Brown and  Assembly Speaker John Perez are heading in opposite directions on college financial aid. Brown proposes to pare back eligibility or amounts of aid  for 72,000 of 244,000 low- or modest-income families receiving Cal Grants. Perez on Wednesday proposed a massive scholarship program for nearly 200,000 University of California and California State University students in the solid and upper ranks of the middle class. But then, Perez is counting on an extra $1 billion by eliminating a corporate tax break that Republican legislators say they won’t abide.

Perez’s Middle Class Scholarship program would provide aid for families that earn as much as $150,000 per year but don’t qualify for college aid, which, in the case of eligibility for Cal Grants, is $80,200 for a family of four. Students would receive up to  $4,000 a year in CSU tuition and $8,200 in UC tuition. Community colleges would get $150 million in fee reductions to spread out as they determine.

The money would come from getting rid of a three-year-old tax break that lets corporations choose the  basis on which they would pay their California income taxes. Democrats went along with the change, which was pushed through without hearings, at the urging of business lobbies, as part of secret budget negotiations in 2009. Remorseful Democrats have been trying to rescind the break ever since, and require that corporations’  taxes be based on the percentage of sales they do in California. But because it would constitute a tax increase, a two-thirds majority vote in the Legislature would be needed, and Republicans are already saying no. (Now, this would be a good bargaining chip for pension reform.)

There’s no question that the middle class has been walloped by tuition and fee increases, which have risen, since 2007-08:

• 84 percent, to $12,192, at UC;
• 97 percent, to $5,472, at CSU (scheduled to rise to $5,970 this September, a 115 percent increase since 2007-08);
• 130 percent, to $780, for a full load of credits at a community college.

At the same time, the Legislature also has given the California Student Aid Commission one of the largest increases in the state budget over the same period, rising 85 percent from $812 million to $1.5  billion this year, roughly tracking tuition increases, according to an analysis released Wednesday by the Legislative Analyst.

The primary program the Aid Commission operates is Cal Grants, which provides aid to income and academically eligible students at UC, CSU, and, to a limited extent, community colleges. Students who attend private colleges also are eligible.

Cal Grant A, for high school students with a 3.0 Grade Point Average, provides full CSU and UC tuition. Cal Grant B, for students from more needy families (up to $50,000 in income) with at least a 2.0 GPA, provides $1,551 toward books and living expenses in the first year and subsequent years, plus full CSU or UC tuition starting the second year.

UC has also channeled one-third of every increased tuition dollar toward its own Blue and Gold Opportunity Plan to supplement Cal Grants, covering other expenses as well, including campus fees, books, and housing. It’s open to families earning up to $120,000 per year – some of the families that would be covered by Perez’s plan. UC says that the combination of Cal Grants and Blue and Gold Plan covered tuition and fee increases for 99,000 students – 55 percent of its undergraduates – this year.

Big cuts in Cal Grants

However, Brown is proposing to cut Cal Grants by $372 million in 2012-13, including:

• $131 million by raising the minimum Grade Point Average, making 24,000 students ineligible. He wants to raise the GPA of Cal Grant A from 3.0, a B average, to 3.25, and Cal Grant B from 2.0, a C average, to 2.75.  In the LAO analysis, Steve Boilard, principal analyst for higher education, said the idea has merit, because there is a correlation between GPA and likelihood of success in college, “but we think it goes too far.” An exclusive focus on GPA also may discourage some high school students from taking harder courses, the report said.

• Saving $171 million by cutting Cal Grants to students at independent, nonprofit colleges and universities by 44 percent and cutting awards for students at private, for-profit colleges by 59 percent.

According to the LAO, which opposes this idea, Cal Grants were established 57 years ago to enable more students to attend college at a time when state colleges were crowded, and they’ve been available since then. Since 2000, the maximum grant has been $9,708. Brown would lower Cal Grants to nonprofit colleges to $5,472 – what financially needy CSU students receive from Cal Grants – and to $4,000 for students attending for-profit schools.

The LAO said that the nonprofit/profit distinction masks more important distinctions in the quality of the colleges and their rates of success. It also said the result of the cuts could be to force more students to pursue UC or CSU degrees at a time when there aren’t seats available, thus denying more students opportunity for a degree.

The LAO offers alternative ways to save money on Cal Grants in the short run. Long-term, it recommends restructuring awards based on need and phasing out Cal Grants to families that can better afford expenses. Currently, there’s an arbitrary eligibility cutoff, leaving some families without grants for minor changes in income.

The LAO also recommends substantial changes to fee waivers granted by the Community College Board of Governors, although Brown doesn’t propose changes in his budget. The waivers from course fees now cost the General Fund nearly $850 million. Nearly one-third of students at community colleges receive them. The financial eligibility requirements are loose, and the waivers are open-ended.

The 21-member community college Student Success Task Force recommended changes to the waiver process, including requiring that students declare a concentration of study and achieve a minimum academic average to continue receiving fee waivers. The LAO agreed, and projected up to $100 million in savings if the changes were made. The waivers should also be need-based, the LAO said.