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National CrossTalk Summer 1999
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California's Improved Financial Aid Program
State reverses national trend toward merit scholarships

By William Trombley
Senior Editor

Sacramento, California

When California Governor Gray Davis recently signed a bill that will double the size of the state's student financial aid program over the next five years, there was no hint of the long struggle to bring the reluctant governor to this point.

Indeed, speaking at a bill-signing ceremony on the campus of California State University, Los Angeles, Davis bragged about the legislation, calling it the "most ambitious financial aid program in America."

The plan assures that students with good grades and financial need will be rewarded with "Cal Grants" that pay for tuition and fees at the state's public colleges and universities and up to $9,708 per year for California students attending private institutions.

In the past, many students who were eligible for Cal Grants did not receive them because the money ran out. In the current academic year, 136,022 high school graduates were eligible but only 57,254 received new awards.

Until now, the California Student Aid Commission has rationed the money by raising the grade point average for Cal Grant eligibility, a process that tended to favor the University of California and the more selective private schools over the California State University and the community colleges.

  State Senators Charles Poochigian (left), a Republican, and John Burton, a Democrat, played key roles in passing California’s new student financial aid bill.  
But the new law, making Cal Grants an entitlement program, like Medicare or Social Security, requires the state to provide enough funds for all eligible students.

The new legislation will take effect in fall 2001. The Student Aid Commission estimates that the number of annual new awards will increase from this year's 57,254 to 144,000 by 2006-2007. The annual cost is expected to jump from $503 million to $1.2 billion in the same period.

California's action has won praise from national financial aid experts, who have watched with some dismay as state after state has adopted merit scholarship programs, while shortchanging grants that are based on financial need.

"I'd like to think this is a harbinger, the beginning of a counter trend," said Lawrence Gladieux, former director of the Washington, D.C. office of The College Board. "So far, it has all been cost relief for those who were likely to go to college anyway."

"California is doing something quite unique," said Jane Wellman, a senior associate at the Institute for Higher Education, also in Washington. "No other state has so clearly connected the dots between financial need, merit and high school preparation."

At the bill-signing in Los Angeles, John Mockler, Governor Davis' interim secretary of education, told The New York Times, "the beauty of it is, you can say to every kid in high school, 'You do your part and get the grades, and income is not going to be a deterrent to your going to college.'"

What Mockler did not say is that Davis, who often is described as a moderate Democrat and fiscal conservative, strenuously opposed making Cal Grants an entitlement, fearing that the future cost would be too high. Instead, the governor wanted a smaller merit scholarship program, to reward high school graduates who do well on standardized state tests or in Advanced Placement classes, which are college-level courses offered in some high schools.

A bill to create the new "Governor's Scholars" was introduced early in the 2000 legislative session by Richard Polanco, a Democratic state Senator from Los Angeles. But other Senate Democrats, led by President Pro Tem John Burton, a San Francisco liberal, were opposed.
  State Senator Deborah Ortiz, a Sacramento Democrat, is principal author of the new need-based financial aid bill.  

The Polanco bill "would have benefited primarily the wealthy," said state Senator Deborah Ortiz, one of the Democrats who objected. A Cal Grant helped to make it possible for Ortiz to attend the University of California, Davis.

Meanwhile, legislative staff members from both parties, some of whom also had been Cal Grant recipients in their college days, thought the state's booming economy and $12 billion budget surplus provided a perfect opportunity to help larger numbers of financially needy students.

"We had a bill in mind, we were looking for an author and Burton was interested," said Marlene Garcia, who went to UCLA with a Cal Grant and now is higher education consultant in the state Senate Office of Research.

After many changes, the bill that Burton introduced contained these key elements:

  • High school seniors who graduate with at least a 3.0 grade point average, and have financial need, would be guaranteed a Cal Grant A, covering full tuition and fees at the nine-campus University of California or the 22-campus California State University, and a grant of up to $9,708 to attend a private college or university. But they must apply within a year of graduation.
  • High school graduates with at least a 2.0 GPA and financial need would be guaranteed a Cal Grant B award of $1,551. In the first year, this would cover "access costs" such as books and transportation, but in the second year the grant also would pay for tuition and fees. (California's current community college tuition fee is $11 per unit.)
  • Students transferring from two-year community colleges to four-year campuses would be guaranteed grants if they meet the academic and financial requirements and enter community college directly from high school.
  • The state is required to set aside enough money each year to finance all eligible students in these entitlement programs.

  Bill Lucia, chief of staff for state Senator Charles Poochigian, played a key staff role in the successful effort to double the size of the “Cal Grant” program.  
For Democrats, increasing financial aid for college students has long been an important issue. But last year and this year, in a somewhat surprising move, Senate Republicans pushed for more Cal Grant money and for lower fees at the public colleges and universities. Many of them agreed to support Burton's bill.

"This measure had very strong support from all along the political spectrum because it has a strong element of merit," said Republican state Senator Charles Poochigian, who played an important role in persuading some of his conservative Republican Senate colleagues to accept the bill's "entitlement" language.

At a key Senate Education Committee hearing last April, the two measures were joined-Senator Polanco's bill creating merit scholarships and Senator Burton's sweeping expansion of Cal Grants. Burton's message to Governor Davis, a fellow Democrat, was clear: Support the Cal Grants bill or there will be no "Governor's Scholars."

For the next couple of months, legislators and staff members met with administration representatives, mostly from the Department of Finance, to try to resolve their differences. The tone of the meetings was not friendly.

"I would characterize the administration's behavior as hostile," said Bill Lucia, Senator Poochigian's chief of staff. Lucia, 35, received a Cal Grant that made it possible for him to attend UC Santa Barbara. "Without that grant, I don't know that I would have had access to that kind of opportunity," he said.

Another Senate aide called the Cal Grant negotiations "pretty grim…The Finance Department people would say this (the entitlement idea) was crazy, stupid, it couldn't be done…Many of their remarks were rude and cutting."

After Finance Director Tim Gage became chief negotiator for the administration, the meetings often were held in Gage's office, and the atmosphere became more cordial, according to several participants.

By this time, Governor Davis had revised his next year's budget, increasing Cal Grant spending by $70 million, but he and Gage refused to make Cal Grants an entitlement, fearing that future costs would be too high. An administration source, asking not to be named, said one estimate showed the cost could soar to at least $3.5 billion a year by 2006-2007.

Legislative staffers say the administration's figures were wildly exaggerated. "A big part of the negotiation process was to show how the Department of Finance numbers were flawed," Bill Lucia said.

Some sympathized with the governor's position. "The two sides couldn't agree on the numbers," said Christopher Cabaldon, vice chancellor for policy, planning and external affairs in the statewide community college chancellor's office. "It wasn't clear who would be eligible and what the financial impact would be, so I can understand the governor being cautious."

When the Legislature recessed on July 7, the two sides still were far apart. But shortly after lawmakers returned to Sacramento in early August, things changed. "It was clear that this was finally on the governor's radar screen and the Department of Finance people began to be cooperative," Lucia said.

Some believe this happened because Senator Burton threatened an override if Davis vetoed the bill. "I suspect we could have done that," Senator Ortiz said. "People were pretty firm in their beliefs on this." An administration source said, "On paper, yes, they had the votes for an override. It was a credible threat but I doubt it would have happened."

Others credit John Mockler, the interim secretary of education and a veteran Sacramento lobbyist and legislative staffer, for persuading Davis to accept the idea of making Cal Grants an entitlement program.

"I think John pointed out how bad it would look if a Democratic governor was overridden on a bill that helped low-income kids go to college," one Democratic senator said.

Mockler himself would say only that his role has been "vastly overstated."

Whatever the reasons for the governor's reversal, serious negotiations between the administration and the Legislature finally began, two weeks before the legislative session was to end.

Several administration proposals to limit the scope of the program were accepted: Only graduating high school seniors or those one year out of high school would be eligible for a Cal Grant A; the community college "transfer grants" would apply only to students 24 or younger; and only those attending institutions accredited by the Western Association of Schools and Colleges would be eligible for grants.

But an administration proposal to raise the grade point average cut-off for a Cal Grant A from 3.0 to 3.1 was not accepted. And a new category of "competitive grants" was created, with half of the annual 22,500 slots earmarked for community college students. These are intended for students who make a late decision to attend college or who interrupt their education for some reason and later want to return.

On August 16, Governor Davis announced he had reached agreement with legislative leaders on both the Senate bill (Senator Ortiz was now its principal author) to expand Cal Grants, and make them an entitlement, and on the Polanco merit scholarship bill.

Both bills passed the Assembly, 77-1 (and the lone dissenter later said he had made a mistake) on August 28, and two days later they were approved by the Senate, 40-0.

In a September 1 press release, Davis praised the legislation for creating the "greatest educational opportunity for students since the G.I. Bill." And on September 11, he signed both bills into law.

"This is the way the process is supposed to work," said a Davis aide who did not want to be identified. "The Legislature has a bill. The governor agrees with some of it, disagrees with other parts, and they work it out. I think we ended up with a damned fine bill."

A more accurate analysis might be that a bipartisan coalition, guided skillfully by Burton, the Senate president pro tem, and helped immeasurably by energetic staff work on both sides of the aisle, forced the governor to accept a major increase in student financial aid that he did not want.

The degree of bipartisanship was unusual for legislators who often are at each other's throats.

"I don't know if we'll ever have this kind of cooperation again," Senator Ortiz said. "I've worked on bipartisan bills before, both in the Assembly and Senate, and I've never seen this much cooperation."

This attitude extended to staff members working for both parties.

"We all did a really good job of keeping each other informed," said Terry Anderson, Senator Burton's education consultant, who has worked in the Senate for 18 years. "Nobody tried to make political gain on this, there wasn't any back-stabbing and there wasn't much ego. It was a really great experience."

  Terry Anderson, education consultant to state Senator John Burton, said bipartisan cooperation on the Cal Grants bill was “a really great experience…there wasn’t any backstabbing and there wasn’t much ego.”  
The involvement of so many past Cal Grant recipients-Senator Ortiz, Marlene Garcia, Bill Lucia and Danny Alvarez, who is education consultant to Assembly Speaker Bob Hertzberg-was important.

Those who crafted the legislation believe that excluding representatives of the colleges and universities, both public and private, from the decision-making process was another important reason for its success. Several past efforts to expand the Cal Grants program had bogged down in bickering over how many grants should go to which system. "This time, we consulted them but that's all," a key legislative staff member said.

The entitlement program is not expected to have much effect on the University of California and on the independent colleges and universities, where Cal Grant awards are already $9,420 a year, but will have a substantial impact on the California State University and especially on the state's 107 community colleges.

"I think that's true," Marlene Garcia said, "and that's as it should be-that's where the biggest problem has been." Last year, Cal Grants accounted for only three percent of the financial aid dollars available for community college students.

In part, this is because students often decide to attend a community college well after the filing date for a Cal Grant application, which is March 2 of the preceding academic year. To try to correct this problem, the new legislation provides a second filing date of September 2, close to the start of classes, for community college students.

Much will depend on the ability of the two-year colleges to spread the word that Cal Grants are more readily available, and then to provide students with adequate information and guidance.

"To reach California's least sophisticated students, including many on the lower end of the income scale, requires a major outreach effort," said Mary Gill, coordinator of student financial aid programs in the statewide chancellor's office. "But we do not have enough staff to do the job properly, and there is no money to hire more people."

The bill also requires UC, Cal State and the private colleges to provide at least as much institutional money for financial aid as they have in the past, but this will be difficult to monitor, especially in the private schools. Both UC and Cal State now spend more than $100 million a year on grants for students who were eligible for Cal Grants but did not receive them because the money ran out.

There are other questions.

"There is always some untidiness when you establish something like a 'B' average cut-off," said Michael S. McPherson, president of Macalester College, who has written frequently about student financial aid. "Will students take easier courses to get a better GPA? How do you account for differences among high schools? Why should someone with a 3.1 GPA get a grant while another with a 2.9 does not?

"Still, on the whole, this is a really welcome development," he added. "Perhaps it will lead to some rethinking in states that are now considering HOPE-type (merit scholarship) programs."
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