Senate Budget and Fiscal Review Subcommittee No. 1 on Education

Budget Subcommitee number one on Education will come to order. And I'll ask if we would call the roll, please.

Senator Laird.

Here.

Senator Laird. Here. Senator Ochobog.

Senator Ochobog. Here. Senator Perez.

Here.

We have a quorum. There we go. This is our third hearing this year. We did a major overview on education and Proposition 98 in the first week of. We did the University of California and the California State University System last week. Next week we do the community college system.

Today we will review a whole host of issues including teacher recruitment and retention, financial aid proposals related to the UC School of Law, also the California State Library and issue number one. And I'll ask Mike Fine from the Fiscal Crisis and Management Assistance Team to come forward.

Will deal with a report that they have done on child sexual assault claims. We're also joined by extra Aaron Lillabridge from his team. And you know my rule on acronyms, so I have said Fiscal Crisis and Management Assistance Team once. So we'll expect probably to hear FICMAC the rest of the time.

And I would like to make some introductory comments before we turn it over. And this issue has come to us over time from many different stakeholders.

For myself, it was long ago, as I think two years ago this coming fall, I was at a school district in Santa Cruz and another school district in the Santa Cruz Mountains where they expressed great concern because they had old claims, one of which where they couldn't even find the insurance agent.

And so that is how it came to my attention and now it is just across the board. I have heard from cities and counties, even though they are not directly within the jurisdiction of this Committee, as well as plaintiffs attorneys and various school districts.

And so let me be clear at the beginning that the incidents of sexual assault on children should have never happened. And the adults in these cases failed. These children, some of whom are now adults. And these cases can and often do leave lifelong impacts and scars that no amount of compensation can erase.

And today we're going to look a little bit at the FICMAC, which has had a front row seat to the local education agency's financial books and operations. And that is why they were asked to research this issue and provide its recommendations, given their expertise on education finance and their unique position and relationships with local agencies.

And I thank them for their tireless effort on this. And I should remind everybody before we launch into this that the items in, in this report are just recommendations. They are not enacted. This is what our budget policy Budget Subcommitee is for. And I think while the focus is past incidents, these incidents are still happening today.

They're not incidents of the past. And I think I want to veer into difficult territory here for a second because there have been strong stakeholder views that have emerged in this. And there actually is something before the Supreme Court where some interests have asked for complete invalidation of the law that put us here that is not helpful.

And there are then people or their interests that have attacked FCMAC out of the fact that that happened. That is not helpful. And there are different solutions that have been proposed that are strong and are at the edges of this.

One is on one side that there be caps on the on any settlements and just the history of the Legislature in recent years, their caps are non starters. On the other side there's been a proposal that we have a Fund that would actually help support local cities and counties and school districts in meeting their obligations under this.

And if you read the newspaper this morning, we have a $3.5 billion problem in Mati, Cal. If you've been reading the newspaper since January 20, we are likely going to have big hits in the budget that come from the Federal Government.

This is not a year we would establish a Fund that is new that costs billions of dollars. And so even though there are people that think the solutions are in either one of those places, it is more likely that it's going to be somewhere in between there because I think both of those are unrealistic.

And so it is really up to us to vet this issue and start that conversation. And some of us are considering how we might address this legislatively. So that is the backdrop for this hearing today. And let me just ask if there are any opening comments from Senator Ochobo. Thank you.

And I should also mention, even though this is painful for some of the people that are here for this item, our practice is to take public comment at the end of all items. And we've been doing that. We're going to do that today.

And when it gets to that time, and I know since we have student aid later on the agenda, there'll be a lot of people that want to talk about that as well, I generally do a show of hands against the time that we still have in this room and decide how to limit that testimony if miraculously there are only three of you, you might get to talk for a while.

But if it is what I expect expect it's going to be, it's going to be 30 seconds or a minute and you should start to think about how you are going to distill that other than me cutting you off at some point.

And we do take anybody that wishes to expand their comments or provide comments, and they're not here, we do take them directly to the budget hearing Committee. So that is an option. So with that as our introduction, I welcome. Mr. Fine. Thank you for being here. And the floor is yours.

Thank you. Senator. Good morning, chair and Vice Chair. Good to see you both again. And thank you for the opportunity to discuss our recent report on childhood sexual assault, the fiscal implications for California public agencies. I appreciate your opening comments, Senator.

And to remind you our our normal scope of work on almost any job we do is with local educational agencies, not with other public agencies. In this particular case, it was a little broader.

And so we expanded our interaction beyond our norm with school districts, charter schools, community colleges and so on to include counties and cities and special districts as well also. Thank you, Senator Laird. And the Subcommitee who heard my annual testimony last year where we were talking about fiscal risks that local educational agencies were experiencing.

The fiscal impact of the revival statute had been on my actual list of comments for several years running. But it wasn't really until last February 24th that we started to see some data that I think we could begin to understand magnitude and the implications at that point. Kind of unknown implications, really.

And so from that context, Appreciate your leadership, Senator Laird, in bringing us forward. We were given a charge, as the Senator just indicated, in the budget trailer Bill for K12 related to the 24 budget.

It required that the fiscal crisis and management assistance team to provide recommendations to the appropriate fiscal and policy committees and the Department of Finance regarding new, existing or strengthened funding and financing mechanisms to finance judgments or settlements arising from the claims of childhood sexual assault against the broader local agencies. Our report was issued on January 31.

It contains, as you know, an introduction, a discussion of available childhood sexual assault claim data and limitations, thereon, an explanation of how public agencies secure insurance and the current insurance marketplace.

It focuses in on financing considerations, including timing considerations, school and district, community college emergency apportionment process, and as the Senator just alluded to, a victim's compensation Fund and then prevention considerations. The report contains 22 recommendations across four themes for the Legislature's consideration. I think it's important to highlight what the report is and what it is not.

What the report is, is it meets the charge that we were given by the Legislature and the Administration in the budget trailer Bill. It provides, and I think this is really important, it provides a roadmap on how to finance the indebtedness that is created by settlements and judgments resulting from uninsured or underinsured causes of action.

Those causes that are insured are a little less of the focus here, right? It is when they are uninsured or underinsured. The financing of public agency indebtedness is nuanced and thus we address hurdles of time, judicial validation, and the constitutional debt limit.

Within our discussion of the options, we also explore the special constitutional protections afforded school districts and community colleges experiencing insolvency through the emergency apportionment process. We did step outside of our scope to address the financial impact on public agencies with a focus on local educational agencies.

The report concludes that there is data and that there is a data and information gap driven by the lack of consistency, consistently classified and reported data on the subject to fully convey the magnitude of the challenge.

But using the data that we had available to us, we did set some fairly broad parameters of what we believe the impact is. Dollar wise. We Understanding how public agencies are insured is central to comprehending the local and statewide financial impact on public agencies through premiums, special assessments and other impacts from insured causes of action.

Therefore, we spent time on public entity risk pools, reinsurance and insurance, including a discussion of the current marketplace impacting public agency budgets. We introduced the concept of a first resort full service victims compensation Fund as an alternative to the time consuming and costly judicial remedy for victims.

And Senator, directly in response to your comments, we actually didn't envision the state necessarily funding it. That's certainly an option. I think it would be important probably for a state agency to administer it but not necessarily Fund it. We believe that funding could come from basically the public agencies themselves and their insurance partners.

We also stepped outside of our scope to address inconsistent and inadequate protections and preventive steps for children in the care of our educational system. What the report is not the report is not a limit in any way on the rights of childhood sexual assault survivors or limit in any way their remedies from public agencies.

It's not a call to abandon or otherwise discharge the obligations of those our judicial system holds responsible for injuries to children. It's not a call to amend the revival statute and it makes no recommendations to do so. It's not a call to set tort limits or make other far reaching tort reforms.

While the report mentions ways the state could assist public agencies financially, it does not call upon the state to appropriate funds. We do acknowledge that some of the enhanced prevention measures could result in mandate cost reimbursement considerations that the state would have to make.

The report contains 22 recommendations and using a Summary of the recommendations and for those following along on the report itself on page 41 and 42. If we just number those 221 through 22, I will put them in the four themes. Recommendations 1 and 2 are about data.

Knowing more about the volume and nature of claims requires establishing a statewide data repository with common definitions and classifications. I would say this is the lowest of our priorities.

Although understanding claims helps us inform public policy and prevention measures with regard to the future, if we understand what's going on out there, that drive or that contribute to these, then we can better address them. Recommendations 3 through 11 address financing the real heart of the report. Recommendations 3 through 6 are about timing within the judicial process.

And because of the nuanced public financing laws that we have, both federal and state and constitutional debt limit, we needed to consider timing. Otherwise it wasn't something that we would have probably raised. But timing is important when it comes to public agencies ability to actually finance the indebtedness incurred in settlements or judicial decisions.

It facilitates those funding options. And the funding options then are in recommendations 7 through 11. And within that it includes a recommendation on an alternative to our current emergency advanced apportionment statutes.

Given our task to identify financing options so that LEAs may pay their obligations and continue to instruct students and serve their community, these recommendations 3 through 11 would be our highest priority. If we were asked. Recommendation number 12, as we've just talked about, is a victim's compensation Fund. This recommendation really stands on its own.

It is really not about the retroactive claims, but about future claims. It would provide an alternative to, as I've indicated, time consuming and complex judicial system for victims to seek redress. Recommendations 13 through 22 are about prevention.

Our scope didn't include prevention, but to be very Frank, as we worked through this process, it just became evident to us that the number of claims, the egregious conduct of adults, we have trusted our kids to their care that we simply couldn't ignore.

The importance and the magnitude of what I think is really to all of us, an unaccepted societal problem. Simply put, these assaults on children need to stop and we should all do everything reasonable within our authority to prevent them. As a father, I think Erin would join me.

As a mother, these are more important than any of the other recommendations. But as fcmat, these would be our second highest set of recommendations. Less important than smoothing out the financing mechanisms, but more important than the other recommendations we made.

I fully appreciate that recommendations 13 through 22 are a mix of items and some are more important than others. Some are also easier fixes than others. And with that, Senator, I think that gives you a decent overview of process, gives you a decent overview of the report. Happy to answer any questions you may have.

Thank you. And I thought what I would do is ask at least I'm genuine. Thank you. That was a good summary of a complex report and situation. I think not everybody, even some of the major stakeholders, have read your report.

So I thought I would like to draw out a couple of the major points, even though I generally know the answers. But I thought it would be good for just knowledge and discussion. And the first one is what you went at the front of your recommendations, which is lack of data.

And for just a description, what do you believe you have in data and what do you believe is out there that you don't have that would allow us to sort of totally assess the breadth of this issue?

So I think the biggest issue with data is these claims exist in multiple public entity risk pools. Some commercial carriers and then some public agencies, of course are self insured. They may or may not have risk partners that are helping. So the data is scattered all over the place.

There is not a universal classification system for liability claims like there is for our workers compensation system. We have a universal classification system in workers comp that doesn't exist for. On the, on the liability side, every claim's in a different state. Some are settled. Those that are still pending may be at different stages of that process.

Thus the value of the claim may change on a fairly frequent basis as discovery goes on, both in settlement conversations or through trial preparation and a trial. The other issue is understanding each claim as to whether it is actually insured, underinsured or not insured.

And this is really where the impact at the, at the local educational agency and the public agency level really varies widely. Some of these claims date back. Well, we know they date. The earliest claims date back to the 1940s. Insurance companies that were around.

So let's take a school district, a school district in the 1940s probably had fairly adequate commercial insurance for the 1940s. As far as limits and coverage. That insurance company, of course, it's unlikely that they're still around today, right? They may be, but unlikely.

It wasn't until the 70s and 80s that we saw public entity risk pools come into play. Public agencies vary their membership from risk pools over time. So a claim that goes back into the 80s, maybe with one risk pool, but that public agency is with a different risk pool today.

Do they have claims based on claims made or claims occurred coverages would be a distinguishing characteristic. What are the limits that were in place at that time versus today?

That variable alone as to what is potentially covered by a risk pool or not is probably the single or by an insurance partner or risk partner is one of the single biggest variances. We know we have a claim. I'm just going to use a number.

The claims valued at $1.0 million, how much of that is self insured retention or deductible is what term you and I would use. But self insured retention is what the public agency would use.

How much of that is in a company or the risk pool, its obligation and is the is the ultimate decision on either settlement or judicial decision within that policy limit or is there some exposure beyond that? And those variables frankly kind of hinder our ability to really value the dollar impact to public agencies, budgets themselves.

And your focus is always schools. Did other local governments enter into your report? Yes, they did. How so?

Through interviews with several municipalities or their representatives. Through interviews with public entity risk pools that cover government, cover public agencies other than schools and schools. Some risk pools do both. Some risk pools are schools only. Cities and municipalities or municipalities and special districts only. We talk to a variety of them to get an understanding.

We talked to several large municipalities and to a couple small municipalities. So I'll give you an example. Had a conversation with Santa Cruz County as a smaller county. Right. Had a conversation with Los Angeles County on the other end of the spectrum as a large county. Right.

Just to get a flavor for their own experiences in county government. Remember that their scope in this regard, their charge includes judicial, I'm sorry, juvenile detention and probation. It includes foster care. It includes the term group homes that we used to use. We have a more refined term today. Right.

It includes a variety of things that schools don't necessarily have. Schools have what you and I know as very traditional school school sponsored activity settings. Schools are also under the Civic center act, places of gathering for the community. So the Boy Scouts of America often use school cafeterias, multipurpose rooms to hold their meetings.

If there was an offense during that meeting, the school district may be brought into the action because they are, they are. Who allowed a local. You don't call them chapters, call them troops of the Boy Scout to meet there.

Right? In that instance, it's. It's what happens in the litigation where you might assess 5%. It's the apportionment schools. Even though schools might have the deeper pocket than the scout troop.

Well, and especially today, given the Boy Scouts bankruptcy, you know they've been through this process and have some refinement to it.

And then the next question you answered, but I'm going to ask it anyway. So do you have any way among the claims that you identified to get to some sort of dollar amount of what the risk is?

Yeah. So we didn't, we didn't ask for and look at any specific claims themselves. We interviewed folks that had knowledge about claims, a portfolio of claims, if you will, and talked to them about those observations. What data we did have that has been collected on a statewide basis but was missing several large entities.

In that case, we reached out to those entities to attempt to fill in that gap as far as total claim numbers. Total, in some cases, total victims, total dollar estimates. And again, these, these vary greatly and not everybody keeps the data in the same categories.

But we did identify what we believe to be the exposure to schools to be between 2 and 3 $1.0 billion.

And for our municipal partners, we believe it, the term we use was a multiplier of that value because we had one municipal partner that identified claims worth 3 billion on their own and they would be one of 58 counties. Right. So that's in part why we reached out.

But I doubt Alpine County has that's exact.

That's why we reached out to some small counties to understand their volume.

And the thing is, is that is just. That is retroactive and that's the past claims, in essence. Right. Or so that include any of the exposure that they think they have going forward.

So we made an attempt at distinguishing that. This gets back to also, and we noted this in our report. There's some differences in interpretation of claims, whether they are labeled, if you will, Assembly Bill 218 or not. Right. The retroactive versus the prospective. Or they wouldn't be prospective at that.

They're a claim that's outside that window of time. Right. Different risk pools actually classify them differently. So we had one risk pool described to us, if I recall this correctly, that they only classify the revival claims to those where the claim came in by the deadline that was in AB218.

Which was then extended later by another piece of legislation. And then we also have the, what I would call the tail of claims based on age that follows that deadline. They don't classify those as necessarily revival claims where others do.

And so they classify any claim that came in that wouldn't otherwise been eligible with the exception outside of.

And my, my initial observation was that the problem is really retrospective.

But what I'm gathering after looking at the report and things is that when you identify this level of an issue, that it's sort of setting the bar for what it will be going forward in a way that even though it's prospective in terms of the claims coming in or the incidents actually happening, it's not just the retrospective parts standing by itself.

I think that's an excellent summary, sir. I would, though, tend to agree with your initial thought. And that is the genesis of the reaction. And the concern is really about the retro. It's about what was unknown. And certainly the response from the insurance industry. Insurance industry is about what was unknown.

And they base their rates, they base their Reserve levels on known right actuarial science. And we say this in the report is based on a look in the rearview mirror, not right to be able to forecast potential risk going forward. So certainly the revival statutes interrupted all of that and changed history, if you will, a little bit.

But yes, there are current claims, there are claims outside of this revival period that public agencies are dealing with. But I would also remind us that they were dealing with some of these claims.

Some victims did come forward and make claims right in a, if I can say this in a timely fashion, obviously many more came through under the revival statute. But this, the subject and the history of dealing with some claims is not it by no means is new.

And then moving to the notion of a Fund, and I might have, you know, confused the issue because you were there waiting to give your report.

At our first hearing, when we looked at Proposition 98 and what's available this year, and if it's 2.4% and enrollment is dropping in lots of districts and the federal money is falling away from the pandemic, school districts across the state, as we've been reading, are just in challenge situations.

So for the school districts to put up a lot of extra money for Fund or toward a Fund that deals with the retroactive payments is challenging.

And given the fact that it is the state that funds the school districts, those cost pressures will in many ways, you can say it's the locals, but it becomes the state in backing it up. And I think that's the challenge with a Fund either way.

And when you, you looked at a Fund in the recommendations or, or just what you considered, did you consider at all the breadth of what was necessary against what you were identifying in the retroactive exposure?

We made some attempt at doing that, but we're really very challenged in that regard. The victim compensation funds we have existing in California, and our staff report speaks to one of those generally are funds of last resort.

What we envisioned here was a Fund of first resort and a Fund that provided comprehensive wraparound kinds of services of counseling, therapy, and so on as part of its service when a claim initially comes in, to basically embrace the victim and support them in every way on day one. Right.

We don't have current funds that really do that. We also understand, certainly, no question on the victim side, a Fund would be voluntary. Right. They have every right to their rights under the judicial. Pursuing judicial remedies. So the question then, is it a mandatory Fund for public agencies to contribute to, or is it voluntary?

Well, if it's voluntary, then we would not. The funding mechanism would be incomplete because we would have adverse selection in that process. The only ones that would want to contribute to the Fund would be the ones with significant risks. Right. As opposed to everybody. So we did envision some type of fee structure.

Risk pools today assess not only premiums, but fees on their Members. It could be part of that where.

And I think the commercial insurance company, as our reports mentioned, and reinsurers probably would make, be willing to consider some type of contribution to that Fund if they truly believe the Fund was an adequate remedy for victims and ultimately an overall positive process. Right. The.

The Fund that we found had the most characteristics we were looking for, as our report mentions, is the September 11th Fund in New York. And we acknowledge that Fund has significant federal contributions to it. Right. That we don't envision being available here. So it's. All of that, Senator, is why we simply make a recommendation to study it.

Not create one, but study. Have the Legislature study it and assign it to my colleagues at the. They're gonna. They're gonna kick me for this, but assign it to my colleagues at the LAO or something.

It's the reason the sergeants are keeping people from crossing the rail. The. The one last question is, in your fiscal recommendations, you looked at different ways of sliding scale paying over time, trying to deal with the apportionment. And you even. I noticed in one of them used the word receivership.

How do you think there's realistic recommendations there that allow the actual settlement or the payment of the claims, but sort of allow the. The payment and the risk to the school districts to be done over time in a way that they truly could.

Absorb it in our recommendations? I believe so, yes. So the focus of our recommendations is not at all. In fact, we don't. We stayed away from the issue of settlements or judicial decision. Once that decision is. Then how does the Bill get paid? Right. Is really what our focus was.

And so we do believe that our recommendations include sufficient considerations for how public agencies can then pay the Bill that is before them as a result of a settlement or a stipulated settlement or a judicial decision. And that is to. Is with regard to financing to amortize the cost over time.

We believe it can be done within the constitutional debt limits, obviously of the Constitution, those, those limits. And we believe it can be done in a relatively straightforward method if we solve some of the timing issues.

I think both of you fully appreciate that a public agency can't settle or receive a judicial decision on a Monday and go out and finance that by Friday or even within 30 days, which is the norm for paying a judicial obligation. Right. And so we need to consideration to allow that process to happen.

We made some recommendations that would speed that up so that the victim could get their funds quicker and, and allow the public agency to go through.

Well, I know that that when I was budget chair in the Assembly a while ago, the state had a judgment against it on a flood case that was north of here that was 463 or $467 million. And the state figured out how to finance it over 10 years so that it was something that the budget could afford.

And I think you're suggesting some version of that in any of a different level of processes.

Yes, we, we, we worked to identify what hurdles would be in place to accomplish that and then made recommendations that would break those hurdles down so that the public agencies do that. Our real focus here is how do you pay the Bill? You have, you now have this indebtedness, you have this obligation.

How do you pay it with and, and still meet your constitutional obligations and your local commitments to your school community, right to your community to serve kids or, or to provide fire services or law enforcement services in a municipality? That's what our focus was.

Thank you. I, I could probably keep going, but I think the few questions I've asked have given a good flow flavor of the complexity of the situation and what we have to do to begin to address it. And I obviously like the data part off the top just because we need to know exactly what this is in.

However we're going to address it on a policy level. Senator Ochobog has been very gracious about letting me do this. Let me ask if you have any additional questions on this matter.

Well, first of all, you did. I think you did a very fair job in addressing the issue. I do just have one simple question and that has to do with. Are you familiar with any other states who have passed similar laws to AB218. And how are they facing anything similar to what we're facing in California?

Is there any comparison?

So, Senator, as part of initial thinking on this, I recall a report, I don't remember the author, the report or the organization that put it out last spring that identified 30 states with revival statutes. They all have slightly different flavors. Some are based on age, some are based on time.

Some, like California's, is a mix of the two. Some are open, which we now have, if you will, in California, at least on a go on a prospective basis. Right. There's no longer statute of limitations on a prospective basis for these types of offenses.

What I can't tell you is do some of those states have some form of tort limits or liability limits that they apply through their judicial process? Right. Similar to maybe medical malpractice or something like that that may limit, that is.

Giving some of us delayed post traumatic stress. So please, that's not a comparison that will make me sleep well.

So I can't answer that. But California is not unique in this regard of having a revival statute. I think that's clear. And I think beyond the 30 states, if I remember reading, there were several territories of the United States that also have them.

But we don't know to what extent they're being impacted.

We don't. That's really outside of our knowledge base and expertise. We, we would have to, we'd have to inquire, you know, kind of what the environment is in each of those. Just a cursory look at media reports, which is always, not always the best source of information. We certainly see cases in other states.

Dollar values do seem to vary, just as they do on a case by case basis here in California. So I wouldn't be able to make a conclusion other than to say I know that there are a majority, clearly out of the 50 states, a majority have some form of revival statute.

Now, in light of the time frames that we have and the urgency that many of our school districts are facing, would it be, would it merit to look at what other states are doing and how they're being impacted, how long those statutes have been in place in order so that we're not reinventing the wheel and maybe we could learn lessons from those districts that have been in place longer than we have?

So certainly with respect to a topic like a victim's compensation pool, we would absolutely agree. That's in part why we say it should be studied. That was well outside of our scope and our timeline with respect to things like financing and the constitutional debt limit.

Constitutional debt limit will vary state by state because these are, these are state constitutional debt limits, not federal, not the US Constitutional. So we that I think the simple answer is yes, we can always learn from others. We need then to bring that various data back and say, does it fit in our system?

Does it not fit in our system? Is it appropriate for California and its structures? But I think the simple answer is it's always worth looking outside of our borders at other examples.

Thank you very much. Let me thank you for just your work on this in being here today. And it really sort of highlights what we have to do. And I know some of us are going to try to address this legislatively and it was good to hear some of the options today.

But if there was an easy solution, we would have taken it. And so it is really going to be up to us to figure out what to do. And this is just the opening salvo. And as you said, and I said, your reports are just recommendations and we have to figure out where to go.

So thank you very much. Thank you, Senator. Appreciate this discussion. We are going to move to issue. Number two, which is teacher recruitment and program prevention. And I'll make a brief introductory comment, but ask that the panel please come forward. We have representatives from the Department of Finance, the Legislative Analyst's Office, the Department.

Of Education and the Student Aid Commission. And we have put three sort of grant proposals in one agenda item here. And the Golden State Teacher Grant program assists students in professional preparation programs.

The loan repayment for teachers in priority Schools assist current teachers who hold educational debt and the National Board Certificate Certification Incentive Grant assist teachers who have at. Least three years of experience. And so we're going to go into order. I didn't name names, but we have.

Aman Singh from the Department of Finance and Jody Lieberman from the Department of Finance. Finance, Dylan Hawksworth Lutzko from the Legislative Analyst Office, as well as Edgar Cabral, Cheryl Cotton from the Department of Education and Jake Bremner from the California Student Aid Commission. And we'll go in that order. We'll start with the Department of Finance.

So welcome to the Committee. They've pressed the button, so let's see if it works.

Can you hear me?

I can hear noise from you moving that mic, so I think we're good. Perfect.

Okay. Good morning. Chair and Vice Chair Jodi Lieberman with the Department of Finance. I will be providing an overview of some of the teacher workforce investments included in the Governor's Budget. The Governor's Budget includes multiple investments to tackle the long standing teacher shortages that California faces.

These proposals are intended to support teacher recruitment, evidence based for professional learning and effectiveness and retention. The first Governor's Budget proposal includes $100 million one time Proposition 98 General Fund in fiscal year 25/26 for the existing National Board Certification Program.

The National Board Certification Program provides candidates who work in high priority Schools, supports them to pursue national board certification by providing 25,000 incentive to candidates who have earned their certification, provides 2,500 to candidates to pursue their National Board certification and provides 495 to candidates to maintain their National Board Certification.

Teachers who are National Board Certified have been shown to have lower turnover rates than those who are not certified and students of Board certified teachers learn more than their peers without Board certified teachers.

This positive impact a board certified teacher is backed by more than a decade of research and it is even greater for BIPOC and Low income students. According to an analysis by the Learning Policy Institute, Priority Schools saw a significant increase of teachers pursuing board certification from 415 in 2021 to 1,764 in 2022-2023.

And in 2022 the number of candidates of color increased more than five fold, making up 70% of the National Board candidates statewide. Thanks to the state's current investment, California currently ranks number three in the country for new National Board Certified teachers.

By continuing to invest in the evidence based professional development paired with financial incentives, we are supporting a stable and highly qualified workforce for our most vulnerable students.

Next, the budget includes 150 million Proposition 98 in fiscal year 25/26 for the new Loan Repayment for Teachers in Priority Schools program which will support the recruitment and retention of credentialed educators to serve in Priority Schools and California State preschool programs administered by local educational agencies. In other words LEAs.

The program provides incentives to teachers in addition to school counselors, nurses, psychologists and social workers in the form of up to 20,000 in loan payments towards educational loans. These loans will be disbursed on an annual basis of 5,000 for up to four years.

To be eligible for a loan repayment, an educator must hold a preliminary or clear teaching credential or pupil services credential serve in a Priority School or California State preschool program administered by a local educational agency, education and have educational debt service before July 1st of 2025 would not count towards loan repayment.

Loan repayment will be prioritized on a first come first serve basis and then based on unmet need from the prior year and loan repayment may be paused and resumed under certain circumstances.

The Superintendent, with the approval of the Executive Director of the State Board of Education, will select a County Office of Education or a consortium of county offices of education to run the program, which includes creating an online process for processing loan repayments, conducting program outreach and submitting a program effectiveness report by December 1st of 2026 and then biannually.

This proposal is based on existing research indicating that the average that teachers owe from student loans is over 20,000 and that loan forgiveness is an effective strategy in the recruitment and retention of talented teachers in high need locations.

The focus on priority schools is in recognition that schools serving a majority of high need students have the most difficulty attracting and retaining fully retained, fully credentialed teachers. Finally, I will turn to my colleague Amin Singh to cover our next investment.

Good morning Chair and Members or and Vice Chair. I'm Aman Singh from the California Department of Finance. And the next investment we'll be covering is the Golden State Teacher Grant Program. This is an existing program and the Governor's Budget includes a $50 million one time General Fund support amount to this program.

This one time support is intended to keep this incredibly popular grant program running for an additional year. The 2021 Budget act allocated $500 million to the Golden State Teacher Grant Program which has since been nearly fully expended or encumbered. The Governor's Budget does not propose any additional policy changes to the program.

That's not a surprise. So thank you very much. We're going to move to the Legislative Analyst Office. Good morning Members.

Dylan Hawksworth-Lutzo with the LAO we'd like to add a little bit to the background. California does have long standing teacher shortages. We'd emphasize in areas including math, science, bilingual education and special education to attempt to address those shortages.

Over the last decade, California has spent over $1.6 billion and that spending has included the Golden State Teacher Grant Program, the National Board Program, but also programs like teacher residency and integrated undergraduate credential programs, as well as others. As for the proposals and the Governor's Budget, we do recommend projecting these proposals.

Historically, there has been limited evidence from research that these or similar programs have had effects on teacher employment decisions. In addition, regarding the National Board Program, specifically it currently has funds remaining that we think will be sufficient to Fund the program through the 25/26 application period. And then data on these specific programs is currently incomplete.

So additional funding right now might be premature. If the Legislature were to reconsider funding these programs in 27/28, there'd be more data available on some of the outcomes teachers in the program currently have. If the Legislature is considered is interested in funding one or more of the governor's proposals, we do have some recommendations.

We recommend targeting the most significant teacher shortages. So either by targeting the highest poverty schools or by subject area. So again, that's math, science, bilingual education and special education. And given the state's fiscal condition, we do Recommend Using Proposition 98 General Fund. That concludes our remarks. We're happy to take any questions.

Thank you. And Mr. Cabral is just here for moral support. Okay then. Then we're going to move to the Department of Education. Welcome.

Good morning, chair and Vice Chair and the Committee. I'm Cheryl Cotton, Deputy Superintendent at the California Department of Education, presenting on behalf of our State Superintendent of Public Instruction, Tony Thurmond. So we believe that professional development and support have never been more imperative for California educators.

A high quality professional learning system does more than help educators master discrete content and instructional strategies. It contributes to a broader process of transforming practice and has a positive impact on recruitment, retention, school culture and climate, labor management dynamics, educator equity, and student and educator outcomes.

In regards to National Board Certification, I am pleased to announce that the number of teachers in California pursuing National Board Certification in high priority schools has increased from 415 in 2020 through 2021 before the subsidy program began to over 4,000 teachers over the last four years.

Perhaps the most exciting data about this five year funding program is that since the inception of the program, a total of 807 educators receiving the subsidy are now nationally board certified. This represents 79% of all new nationally board certified teachers in California through since 2021, those teachers have received the funding from the California Subsidy Award.

The additional budget allocation will provide potential nationally board certified candidates and incentive participants with the confidence that the program will continue. Currently, the program is funded through 2026 with expenditures through 2028. Therefore, new candidates in the incentive program have only been promised four years of incentive funding instead of the full five years.

So that's the challenge around not funding this program continuously. Our educators deserve high quality professional learning opportunities that support them and support our students with particular emphasis on the structures and content that we know lead to positive outcomes and meet the pressing needs of this exceptional time in public education.

A joined also by Monique McWane and Kristin Cruz Allen from our Professional Learning Support Division. And we're happy to answer any questions. Thank you.

Thank you. And then we'll move to the Student Aid Commission.

Hand the mic here. Good morning. Chair Laird, Vice Chair, colleagues, my name is Jake Brymner. I'm the Deputy Director for Policy and Public affairs with the California Student Aid Commission.

Like to express our appreciation for the Governor and Department of Finance, including additional funds for the Golden State Teacher Grant Program for the upcoming 25/26 budget year, which will enable us at the California Student Aid Commission to continue contributing to our collective efforts to bring more educators into classrooms.

As noted in your agenda and as noted by our colleagues at the Department of Finance, there's been very strong demand for the Golden State Teacher Grant program since it was established in that 2021 State Budget Act.

Since enactment of the program in that year, we've already served over 20,000 aspiring educators through the funds that we can provide through this program.

And in fact, demand has been so strong in those initial years that we are actually currently projecting that we would exhaust funds ahead of schedule, which would mean going into the 25/26 year there may not be funds for new awards for those who are trained to enter in into these credential programs.

The Golden State Teacher Grant program is really now hitting its stride.

To discontinue funding for there not to be dollars available for new awards in the next year could really undermine the momentum that we've gained so far in raising awareness around the availability of this support as well as on the part of our credential program providers in building this program in to how they think about creating affordable pathways into the profession for their credential candidates.

I'll note that when it became clear to us there may not be funds for the upcoming academic year, rather than opening the application for the program for next year, we did create an interest form so that candidates or prospective credential candidates who might be interested in the program.

Should there be funds available, we could keep them notified of the availability of awards. We've already had over 2,500 individuals indicate that they'd be interested in participating. We'd love the opportunity to serve them.

Of course, while the Student Aid Commission is not required to report on the initial outcomes of this program until later this year, and we know that you've received some qualitative documentation of the impact of this program in prior budget hearings and in prior years, we're really eager to contribute more quantitative data to help you understand the impact as you're trying to weigh these investments and understand how California can continue to build on its progress in bringing more educators into classrooms and expanding the pipeline. So we look forward to that. And here to take any questions today that you might have about the program thus far. Thank you.

Thank you. Let me lead off with a couple of questions. And this is about three programs. And everybody talked about the programs, but what they're addressing are a shortage of teachers in that the shortage of teachers is acute in certain subjects.

There's somebody that can speak to where we are with that so that we know clearly the problem we're addressing. What I'm driving at is if we're short of science teachers, do these programs address the shortage of science teachers? But I'm looking for somebody to say we are in fact short in science teachers. So now for the moral support.

Edgar Cabral with the LAO so we don't have the specific numbers on hand, but in terms of the overall trends in terms of California, and there's a number of different ways that the state tries to measure look at whether we have shortages.

One of them is looking at the number of teachers who are on an emergency waiver or permit in order to teach in a public school. Another is we do look at there's reporting data from districts in terms of their plans for hiring moving forward.

And we can compare that to the number of new teacher credentials that are new candidates who are completing their teacher credential program to see if we're having enough new candidates that are available to fill those new positions. Those numbers can vary.

But historically the areas where we've had the most challenges are I think special education first and foremost, but then also math and math science in terms of subject areas, bilingual education as well. And then in General lower income schools, there are greater challenges with having qualified teachers in those programs.

So that's part of why we've in our suggestions if the Legislature is going to spend funding there that any program be targeted to those programs. In other cases we do have some shortages that are that can ebb and flow.

Like for example, I'm sure the districts are right now saying they have they might have challenges with multiple subject credentials because of transitional kindergarten expansion. Now that being the case with after 23 years, once we've gotten to full TK implementation, we wouldn't expect there to be those same demand for new teachers.

And so I think that's part of why our suggestions have been to focus on the long standing shortages.

That's Helpful. And I know we have the College of the Arts coming up in a bit. And I asked in advance, since the voters passed the measure on arts and music, where are we? And got the numbers that in 2022 and 2023 there were 11,000 art teachers in California.

But you know, based on the passage of that, there were still 5,500 more that were needed to sort of meet the demand across the state. And so the question is, do we focus on creating those?

Let me just ask if anybody else wishes to respond, because I was going to ask if the Department of Finance at least to respond to the legislative analysts concerned that these proposals be rejected and if they weren't rejected, that they be targeted along the lines a little bit of what we were just saying. How would you respond to that recommendation that they have made?

Sure. Jodi Lieberman with the Department of Finance so our understanding is that educator shortages exist in all areas of the state and these shortages are experienced most acutely in our highest need schools. And that also shortages exist in all, in all different, in all different subject areas. There's no official list of specific shortage areas.

We would have to go through some sort of rulemaking process to decide what the official shortages are. And we're not really interested in holding up the funding for teachers at this time to figure out what specific shortages there could be.

When we know that there are shortages in all areas, we hear depending on the region, there are shortages in every subject area. Some might be more acute than others, but that doesn't mean that other areas wouldn't benefit from some sort of investment into teacher recruitment.

So we're certainly happy to have further discussions on this, but we believe that leaving it more open ended will allow more people to come into the field and benefit from the program.

Well, one thing that didn't get mentioned that I know is affecting my district acutely is one of the highest costs of living in the universe. And so you have trouble recruiting teachers because they can't afford to live there. And it doesn't matter how much training or support you give. That's the underlying issue.

And so you see, I think that the Legislative Analyst recommendation has validity, which is I think I personally support all three of these programs. I believe we should continue them. I hope they're in the budget in June and hopefully that will be our recommendation. But targeting them to where the need is seems an appropriate policy measure.

And if we are truly short in math, science, special education and one other that was mentioned there, then we should just make sure that that's a priority within these programs so that I appreciate their shortages in every place in every way. But if it's acute, we should just be making sure that we're addressing that.

And so for the uninitiated that are sitting here wondering what this process is like, since we don't take any votes in this hearing, what it really is, is we will have 10 hearings.

We will go through every little bit of the education budget and libraries and, and give our feedback to what the Governor might have recommended in January 10, hoping that it gets addressed in the, in the revised May budget.

And so it would be my hope that the budget would not be silent on this issue in May, that it would actually say we are targeting these programs to where the most acute needs are. And, and you know, and then we'll look at that when it comes back.

And if that's not the recommendation, we may well want to negotiate that. So I'm just putting that on the table as we move through here. Senator Ochoa Bogh Questions?

Comment? I want to second Chair Laird's comments right now and recommendations as far as prioritizing our teachers of greatest need. And yes, you're absolutely right, there are needs across the continuum.

But we do, especially considering our standings when it comes to our math science outcomes, our assessment scores for our students in our state, I think really having extremely well trained teachers specialized in math and science, I think would be beneficial to our students and the state as a whole when it came to our performance performance scores.

So I think if we could do anything to incentivize our teachers to specialize and get national certification, that would be amazing, especially in those areas. Also, in addition to that, our special needs component throughout the state. I just, I'm all for professional development for our teachers.

Recruiting them is one thing, but really getting them to the higher level of training should be truly our focus. And incentivizing our teachers to get that national certification, whatever we can do to, even if it means allocating, this is where I'm going to differ.

If we could continue with the, with the funding and add additional funding to incentivize a specialization certification at the national level, I think all our students would benefit from that. So I'm just, I think that would probably be our biggest bang for our buck moving forward.

Well, thank you. And then I have one in the weeds question for the Department of Finance before we leave this item, and that is for the National Board Certification Incentive Grant program.

There were leftover unencumbered funds or, you know, from the 2021 budget, when we had a lot of money, we tried to spread things over multiple years to each the future years. That was done here. Why would we need a new allocation rather than continuing to dip into that?

So we've seen uptake for this program increase in the past year and the Administration estimates that the funds will be fully encumbered by the end of the program's life, which is fiscal year 2025/2026. Specifically, the Administration is estimating that every person who has gotten their subsidy will then be get.

They will then get their National Board certification and then collect the incentive for National Board certification. And then as I've said, we see this not just as a retention tool, but as a way to address.

I'll stipulate you're in favor of this, but the thing is, is that you just said that there was enough money from the existing encumbered funds to get through 25/26, which is the budget that we are hearing right now. Why would we put extra money in there?

Was that something that you just explained that I didn't get clearly from your comments?

Senator, I did share that the legislation and.

You should make sure your mic's on. I'm not sure I'm hearing.

Oh, I think it was on before. Click it again. Okay. There we are. Yeah. As I stated before, we do have we made the promise within our legislation that teachers would have five years of that incentive, the funding will end before our most recently, you know, teachers who have gone through the subsidy program.

The funding will end before they're able to have their, their full five years of that incentive. So at this point we're looking at.

Let me try to translate that to my question, which is does that mean that there will be more applications or need before the end of the next fiscal year that requires us to add to the amount that was appropriated in 2021, is that what you're saying?

To continue that work, yes.

Mr. Cabral. Yes, I think I want to clarify.

I think these might be two distinct issues that both may need to be considered as part of this One is I think to your question is do we have enough funds in funds available right now to set aside the amount that we set aside the 5,000 a year for the applicants? That's one issue.

I think what Ms. Cotton is mentioning is I think this program was created, I think in 21/22, and so we provided a long window, but most of the applicants are more in the more recent years. And so to give them the money over five years would go beyond what the statute allows for these funds to be held for. So.

So under current law, the Department would then have to rescind the funds back to the state. But then let me return to my question.

Yeah, that's true. Yes. There's not enough money through the end of the fiscal 25/26 unless we add to it to do that.

So I think those were based on the administration's understanding. Is the administration's projections for. We don't know yet the application process for 20 in the current year. We still don't know the number of applicants, but the Administration was assuming a 40% increase in applicants for this year and for next year.

That's what was the one year rate before. We think there's enough funding to cover. There likely would be enough funding to cover through 25/26. I think even if applications were growing at about 20% per year, you would have enough to cover.

I think the other question though is even if we do have enough money, the state may need to modify statute to extend the allowance of the, of the funds we've already provided to allow those funds to be provided to teachers past the current statute date to say 29 or 20. I don't know the exact timing of it, but. So yeah, there are two issues even if there's enough money available.

I get it, but the thing about it is, is you still sort of answered my question about the budget, but then raised the statute question. And is that a trailer Bill thing? My understanding is that would be a trailer Bill thing. Okay, then. Then to me, we have a really tough budget heading into the next year.

If we have enough money to meet the next year in unencumbered funds, we should do that. But if we have to change the statute, that implies where we'll go in the out years. We should consider that. I'll let all of you talk animatedly between now and the 1st of May, but.

But I think that's sort of what the direction is. Are there any other questions or comments then? Thank you. We appreciate you being here. And we're moving to item number three. And at least one of you gets to see Stay, which I don't. It may be a booby price.

And there'll be representatives from the Legislative Analyst Office, the University of California, the Strategic Enrollment Management part of the California State University System, California Community Colleges. Mr. Brymner.

She is the Executive Director. She's here next to.

Next to Jake, we have Daisy Gonzalez, who. Who is nominally Jake Brymner's Boss. So let's go in the order that the agenda has. We'll start with the Legislative Analyst Office. Natalie Gonzalez, welcome to the.

Hi. Good morning, Mr. Chair. Madam Vice Chair. No comments right now from the Legislative Analyst Office. Natalie Gonzalez with Legislation. Legislative Analyst Office. No comments, but we're here to answer any questions. Thank you.

Thank you. You Reserve the right to rebut. Okay, then we'll move to the University of California. Shawn Brick, welcome.

Thank you. Chair and Vice Chair. On behalf of the University of California, I want to thank you for the opportunity to speak with you about our financial aid policies, goals and outcomes. For the record, I'm Shawn Brick, Associate Vice Provost for Student Financial Support at the UC Office of the President.

The University of California is committed to making a UC education affordable for all Californians. And the main principle driving our financial aid policy is to ensure that qualified students can attend UC regardless of their economic circumstances.

The incredible support from the State of California and our partners at the California Student Aid Commission are the ones that make that possible for us to maintain that goal. I'll speak very briefly about the FAFSA and CAIDA experience.

The California DREAM Act Application Experience Last year at this time, schools across the country had no FAFSA data on which to base their financial aid offers. We couldn't even tell who had applied and who hadn't.

Furthermore, once we started receiving FAFSA data in late March and April, we discovered that about 30% of those FAFSAs needed to be reprocessed by the Federal Government. These data issues plagued UC campuses and our students and families into the summer. The experience was particularly difficult for our students from mixed status families.

Students students who themselves are citizens or permanent residents, but whose spouses or parents are undocumented. Eventually, the Biden Administration relaxed some of the identity validation in the FAFSA that allowed these families to file. By contrast, this year we're receiving FAFSA data already and within days of a student filing.

In fact, our UC Merced campus has already offered financial aid to all new and continuing students. Students. Some of our students from mixed status families continue to struggle with the new federal form.

We continue to be concerned about the ability of these students to complete a FAFSA and more so we're concerned about the anxiety that those students and families are feeling. Filing a FAFSA could expose family Members without a Social Security number. But failing to file a FAFSA means foregoing valuable federal financial aid.

With the opening the late opening of the fafsa, UC did support the move for the state's financial aid deadline from March 3rd to April 2nd. And we've also moved our own financial aid deadline in concert. As I mentioned earlier, the FAFSA delivery process is going much more smoothly for our campuses. So we're able to provide.

You mean then last year than last year there was nowhere to go but up? Well, that is true. Yeah. Just for the record. And finally, I'll just close by saying that the California DREAM act application has been working very smoothly for our undocumented students. So kudos to the California Student Aid Commission for that.

We do see declines in California DREAM act applications at UC. I think this is a statewide phenomenon that we assume is related to the elimination of the Deferred Action for Childhood Arrivals. So something that continues to concern us.

Thank you for the opportunity to speak.

Okay.

Thank you. We'll go to Noelia Gonzalez from the California State University System.

Hi there. Noelia Gonzalez, Assistant wide Director for Financial Aid Programs at the California State University Chancellor's Office. I'd like to thank you for taking the time to address these very important financial aid issues for our students. At the CSU, we are committed to ensuring that our students have access to higher education.

In collaboration with individual campuses, Chancellor's Office is actively engaging with both current and prospective students to ensure they are well informed about the financial aid opportunities available to them, including the FAFSA and the California DREAM act application. Our campuses strongly encourage all students to explore all possible financial aid options.

We do recognize the importance of providing comprehensive financial aid information to prospective first year and transfer students, enabling them to make informed decisions about pursuing higher education. Several of our campuses, as Sean mentioned, it has been an easier year with the fafsa, so several of our campuses are already delivering aid offers for the fall 2025 semester.

At the same time, we also acknowledge ongoing uncertainties surrounding the future processing and utilization of federal financial aid data. The transition in this presidential Administration has raised concerns among our students and families, particularly those from mixed status households.

Even yesterday the FAFSA was down and students were not able to file their applications that wanted to go in and try to file them out. We were experiencing outages also in the drawdown system from the Department of Education, the G5 and G6 systems.

I believe those have been fixed, but we are worried about these kind of intermittent outages in our systems. And like Sean said, thankfully the CADA has been working very, very well for our undocumented students.

We are unique, I think, in offering that alternative financial aid application, the California DREAM act, which allows our, the Student Aid Commission and our state colleges and universities to assess the student eligibility for need based grants, scholarships and other financial aid.

This is particularly beneficial for students from those mixed status families as it provides a pathway for accessing state and institutional financial aid. If they are worried about submitting their information on the fafsa, especially if their parents are missing a Social Security number. To support the students and families in making these informed decisions, we've enhanced our communication efforts.

We've updated our websites. We're doing direct outreach. We have comprehensive online resources for our students to ensure that they're aware that they have different options. That FAFSA is not the only option for these students in the mixed status family situation. Thank you. And I'm available to answer any questions.

Thank you. And now we'll move to Alison Beer from the California Community College System.

Good morning, Chair and Committee Members. My name is Allison Beer, Dean for educational services and support at the California Community College's Chancellor's Office. College affordability is a core goal of the Chancellor's Office Vision 2030, which is to provide equity in support services for our students.

By 2030, we aim to increase with equity the number of California Community College students receiving Pell Grants and California College Promise Grants, also known as CCPG, by 10%.

Despite rising financial aid disbursements in recent years, affordability remains a pressing challenge for many of our students, which has been worsened by the rollout of the New Free Application for Federal Student Aid Application fafsa, the the evolving federal policy, priorities and changes, and students increasing cost of living expenses, including food and housing.

As noted just this week with large scale layoffs at the U.S. Department of Education, we are also hearing emerging concern from our colleges regarding trickle down effects for local Administration of federal financial aid programs that our students rely on.

Ensuring students complete the FAFSA or the California DREAM Act Application or caida, is the most impactful way that we see to maximize financial aid for students to improve affordability. However, many of our students with complex family histories are being excluded from financial aid programs.

For example, many mixed status families fear that filing the FAFSA could expose them to immigration enforcement actions. The Chancellor's Office supports statutory changes allowing these students to complete the FAFSA and to complete the CADA instead of the fafsa, provided that they.

I'm glad you defined those acronyms before you started to jam them in one sentence.

Thank you. I was prepped to do so. We do support statutory changes allowing students to complete the CADA as long as they're made aware that they would forego federal financial aid and supported to make the best decisions for themselves and their families.

Yes, you had to define it so we knew we weren't renting an apartment from keda. And we know that now that CSAC is here. You're not the county supervisors. So let's see who would like to lead off. Good morning.

Good morning. Good morning. Chair Laird. Vice Chair Otrabog. It is an honor to be here with you. And last I checked, it was still still. Morning, Senator Laird. We keep meeting under difficult circumstances.

The first time I Met you was 2008, when you were the Assembly Budget Chair and then moved on to serve in natural resources at the statewide level. I was most recently the deputy and the interim chancellor for 116 community colleges.

I thought you were going to say for 116 days.

No, for 116 community colleges where we met during a global pandemic and now I'm in this role. It has been exactly seven months and I'm jumping in to work with all of our colleagues across the state. But it has not been an easy time. I know that.

For this hearing, I wanted to really brief you on the numbers today because we have 20 days to reach California's high school students. These are our first time applicants. Why do we care about that population? Because they are that early indicator for where higher education is headed, meaning how many more students will enroll.

And they're also that early indicator as we think about employment, workforce needs, and more importantly, when you think about the global context of college affordability, unemployment and homelessness. So I share that with that context. And I'm joined here by Deputy Director Jake Brivner, who shares that same urgency and so does the rest of CSAC.

Our portfolio includes serving all of K12, so all of our local educational agencies of higher education, which includes the institutions that serve our students from Cal Grant all the way to Pell, and all of the specialized programs in the state. It includes serving and training the staff that work at these institutions to navigate state and federal policies.

And then of course, on ramping new programs that the Legislature creates specifically to reengage Californians with education. So what do the numbers look like and what is the focus for csac, especially as I think about the next six months in my first year in this role. First, I want to share.

Senator Laird, right now, where we are sitting, you have approximately 9.4% declines for your seniors in your district. Vicerog, Your district is 10.5% below in terms of the seniors in your district.

The largest gap, please. It doesn't mean older people are expiring.

No high school seniors. First time applicants.

Just checking.

Of course, the greatest, when you look at other districts, of course, other Senate districts, 33% is the highest. So as a state, we have a lot of room to.

You don't have to give the number, but where is there 33%?

Zero, my goodness. It's a lot of our part of the region, a lot of our rural communities. Okay. Yes, that's correct. And so all of the comparisons I'm sharing with you, we are comparing ourselves to California's biggest year, which was our 2324.

That's when the state Legislature took leadership to adopt a universal FAFSA completion application for all high school seniors. And so when we compare ourselves to that year, we're also then navigating, can we do better than last year? So that means our last year. And then can we do even better than that?

And so what I can tell you right now is we are projecting that we will be able to surpass last year's numbers. That means we're still playing catch up, right? We've got to close the gap to that universal FAFSA completion year. Our colleagues here today from all of the segments shared many, many of the challenges, right?

Everything from federal application opening late, which required the California Student Aid Commission to then adapt the California DREAM act application to that same opening date.

In addition to that, California Student Aid Commission was then able to ensure that we could open the California DREAM act application for mixed status families and expediting that process and then most recently, working with President Drake and the UC system. Shawn, thank you.

We were able to extend the deadline to April 2, which is what now gives us the additional 20 days. This of course, comes from a lot of learning in California. You as a Legislature changed that deadline twice last year, not once, but twice so that we could catch up as a state. So thank you.

And as we are doing this work, we're now hoping that many of the FAFSA glitches can be addressed into the future. But as of this morning, I can tell you that our own state call center has received a lot of phone calls. Two main things. Number one, no one can be reached at the federal U.S.

Department of Education. So when our students are looking to complete their FAFSA application, they are being stuck. And then number two, when we think about the future for technology glitches, particularly for those mixed status families that our UC and CSU colleagues mentioned, Caida California DREAM act application is really their best solution at this point in time.

That does mean that as the state, we should worry about what federal dollars are being left on the table as long term solution to address college affordability. I want to end by just sharing that the stakes are really high. We have been tremendously busy working with all of our colleagues.

I've been so proud of our student associations who have been working diligently to reach back and go back to their high schools, their Alma maters, and they have a student town hall this Friday at 1pm all the student associations in the state have come together to have a town hall.

But in addition to that, all of the folks that you see here on this panel today, they are all a part of our statewide implementation implementation work group.

The California Student Aid Commission has never done that, but it has been tremendously helpful to be able to reach regents with additional events, being able to be on the ground, help navigate a Very difficult time for California.

But as we move into the future, my hope is, as you're considering all of your options here throughout this budget session, that you're thinking not just about the defense, but the offense for California. And here's what I mean by that.

Right now we're fixing things with deadline extensions and opening up our California solution, the California DREAM act application, as that band aid solution. And my hope is that we can really think about the long term strategic solution for California.

And what I mean by that is focusing not just on access, on the completion of an application, but expediting a student through the process. Every year we are helping students renew an application. If TSA can figure it out, so can we. And more importantly, when we think about student student success outcomes, I really think about bills.

I wish Senator Perez was here. She has a piece of legislation to really think about the California DREAM act application as a tool for all Californians and to ensure that we are tracking any federal dollars that we leave on the table and that here in California we can have a solution for all of our students.

And then of course, the Legislature has already taken leadership on the K through 12 side, really thinking about financial aid applications as a universal action, as a part of the student experience. There's an opportunity for the Legislature to do the same when we think about California's community colleges.

So I end my remarks by just saying thank you for your work. We have a lot of more work to do as I think about the future for CSAC. And here are the numbers as I close up. 53,000 more students who are high school students need to be reached in the next 20 days. 53,000.

In order for us to be able to reach the numbers for 2324. In terms of mixed status families, if we are to recover and reach the numbers from last year, we need 7,600 more mixed status families.

And that's just to be able to beat the numbers, as you said earlier, to be, we, we can only go up from here. So with that, I want to thank you for your time. Happy to answer any questions.

Thank you. I was going to allow Senator Ocho about the courtesy this time of going first. So any questions?

I've always said Senator Larry is one of my favorites and he's always quite the gentleman when it comes to chairing our Committee. So grateful to serve with him and thank you for the courtesy. I do have a question and then a comment. So we've extended the the application process for about a month.

I'm kind of curious as to why only a month? I mean, considering the fact that there has been other delays, especially in the past, and considering the Low enrollment as of right now, why only a month and not a little longer than that?

Yeah, that was within the statute that CSAC was allowed to take within their administrative solutions. We tried a legislative solution this year, but there was just not enough time.

As soon as we learned from the Federal Government that there would be delays, we attempted to run a Bill, but in order to make a difference, right now it's 30 days. That is what the California Student Aid Commission, what I am allowed to extend it. Anything else would require legislative action, and.

We'Re kind of late for the legislative part of it. As of right now, you have a.

Lot of options to weigh. Right. The first thing we would say is our colleagues in higher education, uccsu, need time to then package that aid. It's very important that students are receiving and completing those applications in order to enroll. Right now we're all aligned that April 2nd is that timeline where we can help students.

Okay. It just comes by so, so, so quickly and especially right now as students are also, if I'm not mistaken, also preparing for their. zero, my gosh, their exams, their AP exams as well, and final exams. Right. Is that correct on that coming up.

At the high school level? Absolutely.

That's a lot to navigate. Now, this may not be quite the space to ask the following question, but I'm just kind of curious and I'm not sure where it would be, but I'm just throwing it out there and let the seeds fall where they may in bloom. But there was a concern. So there's been.

We just had an oversight hearing with regards to CalFresh and our students and the need for, for our students to have a lot of aid within that scope. Has there been any effort?

And I know at the state level, but locally in my area in San Bernardino, there has been conversations about having our K12 sort of coordinate with our community colleges in our county, in our state to sort of flow the information as far as when they're Low income and it just gets transitioned into, just naturally, organically into their college experience so that they're not applying every single time and having to worry, you know, trying to follow what's available and not available.

Has there been any effort at the state level to coordinate all of these aids for students, especially when we know that they're coming from homes, from Low socioeconomic demographics, to be able to coordinate all of that from high school and just kind of roll that over so we're not continuously doing so much.

Admin was really mindful of your time. We have a handout for you. I spent my first six months making sure that the commissioners could adopt a five year strategic plan.

And as a part of that strategic plan, we call out the coordination that is needed from Calkids to CalFresh and how the California Student Aid Commission, our portals basically which are accessed by all of our financial aid, our students, our parents, they submit a lot of information to CSAC could then create a tab, for example, for Cal Kids or CalFresh.

We already know their income, we know the last three years of their taxes so that we can then help the other state agencies track and be able to automate those resources. So there are a lot of entities speaking with each other. It will require some legislation for those data sharings to be expedited.

But I also know our colleagues at the community colleges are really invested in doing that automation as well.

Okay, well, if there's anything I can do to help with that, I would love, love to help coordinate the legislation in order to ensure that our students are not having to reapply every single time. And it just gets transitioned.

Thank you. And a couple of questions, but a comment first because it was suggested we be affirmative rather than just defensive. And we're having a rough time given what's going on at the federal level.

And I think if due to budget things we weren't able to trigger the framework that was in the previous budgets to try to move ahead.

And when we were talking in the last item about is the money really necessary for one of the items in the next item, the governor's proposed a 43% cut in the middle class scholarship if you include the one time money. And so those are exactly the things we're trying to balance here.

If we could save money in the last one and apply it to the middle class tax cut, yes, we would like to move ahead in who is covered and what the coverage is and across the board. But right now we're really trying to balance a lot of things.

One thing I was going to ask sort of got answered, but let me maybe start with the Student Aid Commission on the Department of Education and fafsa. What's the status right now? What signal are they sending? You mentioned people not being there in the Department to handle it.

But for California students that are trying to deal with that application, what's the deal right now?

Thank you, Chair Laird. It's a really important question. It's facing a lot of our students right now. I'd first, note that some of the announcements that have come forth have created a great deal of confusion for students.

Conversations around the potential elimination of the Department of Education that happened earlier in this year prompted many students that we see on social media or that our counselors or our local outreach partners are working with to ask, is FAFSA still going to be around? Will there still be financial aid for me come this next academic year?

So we have an information gap that we're trying to bridge and trying to remind students that there's still financial aid that's there for them despite these reorganization plans. There's still an application that's available, both the fafsa, but also, as our colleagues noted, we do have an alternative application with the California DREAM act application. So that's one concern.

Another piece that I would call out, and again, our colleagues alluded to, is the return of some of these technical challenges for those families where a parent or a spouse contributing to the application may not have a Social Security number, the mixed status families.

Right now, there are increasingly technical deficiencies with the application that are preventing those students from being able to complete the application process. We'd been very excited that earlier in the cycle it looked like that had been resolved. Right now we are still really hearing about an increasing number of glitches.

I note that because one difference in how the Department is managing the FAFSA process this year relative to the prior year is that in the prior year there had been a running list, what was called the known issues list.

And those were the documented glitches and deficiencies with with the application, and then potential workarounds or timelines for how those issues might be resolved by the Department of Education. There's not such a list that's being maintained this year. And some earlier communications from the Department had indicated that they see the financial aid application as fully functional.

Given that, and then some of these staff layoffs that you may have read about. Earlier this week, it was announced that there was approximately a 50% reduction in force at the agency, the Department of Education, that would affect every division at the Department.

We do have some concern that the timeline for how those issues and those technical deficiencies will be resolved will be impacted. And then, of course, as Dr.

Gonzalez noted, that when students are trying to get that assistance they need from the call center that federal student aid maintains, we're hearing some concerning things about the inability to get questions answered at that level.

So it is impacting us in a number of ways right now that really are going to undermine how students can access all the support that's available to them for this next year.

Okay, thank you for that update, as painful as it was. And then the UC, I think, representative mentioned, are you seeing just out of the fears of immigration issues, other than that, are you seeing that affect the different programs that you're involved with right now? I don't know who wants to talk about that.

For those of you at home, everybody's pointing at each other.

Yeah, I'm happy to provide comment, but unfortunately it's not a great update. We are seeing, as our colleague from UC noted, a continued year over year decrease in the number of California DREAM act applications that are submitted.

And when you look at the timeline, it does seem to correspond with the rescission of the Deferred Action for Childhood Arrivals, the DACA program, which has called into question how many of these students could then, you know, access employment opportunities with their education. We know there are many such ways that they can do so.

But getting that resourcing and that information to them is a challenge and is a gap as it relates to how they then see college as part of that pathway for themselves after they graduate from high school.

In addition to that, something that was implemented with the FAFSA that rolled out last year for this first time was this greater degree of data collection from parental contributors to the application. They were interacting with it in a way they hadn't before. Our colleagues noted that too. That is still maintained this year.

And is that factor that many students are weighing right now as it relates to sharing personally identifiable information for a family Member that may not have a Social Security number? And that is unfortunately something that we're seeing in the application rates that Dr.

Gonzales noted is that are students from mixed status families who represent, according to Pew Research, over 12% of California students in K through 12 education. That we are seeing a stronger rate of decrease for those families than we are for other families who are trying to apply for the FAFSA right now.

Okay, thank you. Anybody want to add anything before? I have one last question, and it's of the Student Aid Commission and it's just part of the April 2 deadline extension was for students in Los Angeles and Ventura Counties due to the fires.

Is that going to have any impact on things going out the door or money being available? What's the other side of that? That's great for everybody that's involved that was disadvantaged by the fire, but is that going to put any administrative issues on.

No. And that we had been able to, thanks to legislation that was approved last year, proactively extend the deadline for students that were in those counties that were impacted by the fires, because those were declared states of emergency.

So we had administrative authority to extend that deadline before we were able to extend the broader deadline state on a statewide basis in partnership with our UC colleagues.

So those deadlines now align and we believe that there should still be enough time for those students to apply and to receive information in order to make that enrollment decision before upcoming registration deadlines. Okay, thank you.

Did you have an additional question?

I did. Just clarifying. So we've seen a decline in students hesitation in applying this particular year, but last year we also saw a decline in student participation. Right.

And so I just want to make sure that, because right now the way that it's being implied is just implied that maybe because of the current new Administration at the federal level, but we've seen a decline even with the Previous Administration. Is that correct?

That's correct. In 23-24, our first year of what we called the all in effort implementation of the universal financial aid requirement policy, we had a historic year in California that we want to try to get back toward in the following year.

Last year we had this challenging rollout of the new federal application that did result in significant decrease relative to the year prior that historic high year. This year we are seeing a different nature of decreases that are resulting from some of these concerns that our colleagues have presented on today.

And when you say a different concern, how do you, how do you quantify that with the application process?

Happy to add, I think there's additional context that's important. So you're talking about two different populations. On one side, the California DREAM act application has now been open for undocumented students and mixed status families. So mixed status families are where the student is a US citizen, but one of their contributor doesn't have a Social Security number.

So the declines have been on both sides. So when we think about our undocumented students, there have been historical declines in General. Right. So you're talking about three years of declines very much connected to federal long term solutions to address the reality of those students.

Then on the other side for mixed status families, the increased fear, the data security, that's really what's impacting those numbers. Two weeks ago, 38% declines. When it came to mixed status families, as of this morning, 31% declined.

So when I was mentioning the numbers of just for our high school seniors, our first time applicants, for us to serve Those US Citizens where there is a parent or guardian or, you know, husband or wife who's a contributor on their application. Just for our high school seniors, we're behind 7,600 students. So the numbers keep getting worse. Right. So the declines keep getting worse for both populations.

Okay. But I just wanted to make, just to be fair, you know, with the different administrations and with Democrats and Republicans being at the federal level and the declines that we've seen, I just want to make sure that we're fair in conveying the information as far as the impact and the impact that it has on both our immigrant students and our students from mixed households. So just wanted to be a little fair.

Oh, you can be more than a little fair. You don't have to limit your fairness. Thank you. We appreciate that. And magically, when we move to the next item, we have exactly the same panelists. So we're going to move to issue number four, the Cal Grant and Institutional Aid update.

And I don't know if any of you have opening comments you'd like to make. We'll start with Legislative Analyst Office.

Thank you. Natalie Gonzalez with the Legislative Analyst Office. On page 21 of the agenda, you can see that from the revised 24-25 spending level for Cal Grant, the Governor's Budget increases spending by $109 million, or 4.5%, for 25-26. This brings total spending for Cal Grants to $2.6 billion.

This higher spending is driven both by a projected increase in the number of recipients and the average award amount. As page 22 of the agenda shows, CSAC projects a 1.3% increase in the number of Cal grant recipients in 25-26.

It also projects a 3.2% increase in average Cal Grant award amounts, primarily driven by UC and CSU's tuition increases. As Cal Grant awards generally cover full tuition at both those segments, the Administration will revise these estimates as part of the May revision.

These estimates, though, may likely change given CSAC is continuing to unpack how different factors might be affecting estimates. Thank you and happy to take any questions.

Thank you. We'll move to the University of California.

Thank you again. For the record, I'm Shawn Brick from the University of California. We provided a handout to you on how UC's financial aid program works. Yes, it's a visual summary of our overall financial aid strategy. There's a lot of detail, but I hope it provides a comprehensive overview and I'll be brief in my description of it.

So UC's financial aid is based on the Total cost of attendance, which includes not just tuition and fees, but books and supplies, rent free, food, et cetera. So the height of the graph represents that estimated total cost of attendance. Parent income is the central measure for how we assess dependent students ability to pay.

And so the x axis on the graph is moving from left to right from the lowest income students to more middle income students. And as you would expect, as we go from left to right, we're expecting more of parents and we're providing less in the way of unique UC financial aid.

To make sure that the student contribution is manageable, we use our own need based grant to fill in the gaps. So that includes backfilling with UC Grant for any financially needy student who might be missing a Cal Grant or a Pell Grant.

So a student whose age is above the age cap that's in the current entitlement program and misses out on a Cal Grant, UC backfills with its own need based grant. An undocumented student who does not have access to a Pell Grant will backfill for that missing Pell Grant.

All UC students are assumed to contribute to the cost of their own education through part time work and if necessary, student loan. That student contribution, or as we sometimes call it, self help, is represented by the blue section at the top.

And you'll notice that that self help is lower for the lowest income students on the far left side of the graph. And that is part of our President Drake's path to debt free program.

The middle class scholarship, while it's not pictured, would lower the self help and the parent contribution from the rest of the students, bringing us closer to our goal of having a debt free education by 2030. And we think our financial aid model is working.

54% of UC students pay no tuition as a result of contributions from the Cal grant program and UC's need based grant program. And increasingly our students are able to graduate without debt. Last spring, 2/3 of California resident students graduated without debt.

And those who did borrow left with an average of $17,200, which is far below the national average. My own professional experience has afforded me the opportunity to talk to my peers in a lot of other states. And they are all very jealous of what we're able to do here in California.

And that's due to the strong partnership we have with the state with our California Student Aid Commission. That's all I have to say. So thank you again for your time.

That's great. Thank you. Now we'll move to the California State University system.

Hi again, Noelia Gonzalez for the California State University System, the CSU is committed to helping our students ensuring that they are achieving their educational dreams. We do administer the State University Grant or the SUG to our eligible students who meet program criteria and do not receive another fee paying grant such as the Cal Grant Fee Award.

Our first time freshmen who are awarded a Cal Grant B also receive the State University grant in their first year to support their educational expenses. In the 23-24 academic year, the California State University awarded over $1.0 billion in grants, scholarships and waivers to our students.

That was made up of about $700 million in the state University grant program, 81 million in tuition fee waivers, and 150 million in University scholarships. In 2024, the California State University Board of Trustees adopted a series of financial aid principles aimed at ensuring consistency, equity and efficiency in financial aid Administration across all campuses.

These principles will be implemented system wide beginning in the 25-26 academic year and include the following key initiatives Maximizing state and federal financial aid Ensuring that our students are applying for all funding available to them Standardizing Financial Aid Administration so we're strengthening the collaboration and coordination across our 23 campuses to create a more consistent and equitable financial aid experience.

The Chancellor's Office has invested in new software to streamline document collection, processing and communication, ensuring uniformity across all of our 23 campuses. Aligning campus allocations with enrollment and financial need so we are adjusting those financial aid allocations based on current enrollment and demonstrated student need to ensure equitable access to all of our financial aid programs.

This past year, about 60% of our students do not pay tuition as it is covered by either a state University grant, a Cal Grant, or a fee waiver. In our spring 2024 class, only 35% of our students borrowed and had a student loan debt, and that average loan debt was about $15,000.

We are seeing every year we've seen a continual decrease in our loan borrowing for our students. Thank you and I'm available to answer any questions.

Thank you very much. We'll move to the Community College System.

Hello, Allison Beer for California Community Colleges Chancellor's Office As I mentioned in my previous remarks, increasing access to financial aid for eligible students is central to the chancellor's office Vision 2030 priorities during the 23-24 academic year, California's 115 community colleges dispersed approximately $3.5 billion in financial aid to 860,000 students.

This includes a combination of federal, state, and institutional aid programs. The federal Pell Grant is the largest source of financial aid for community college students, which accounted for $1.75 billion in awarded aid for our system.

This is followed by the Chancellor's Office financial aid programs, the first of which being the California Community College Promise Grant CCPG, which has the largest number of recipients with 790,000 students receiving the fee waiver valued at $651 million. CCPG is the most accessible Chancellor's Office program because it has the fewest eligibility requirements.

Students only need to be in good academic standing with the college and have a relatively small amount of $1,000 in UNME. The student success Completion Grant, SSCG was increased in spending of $370 million with more than half of awarded aid to students enrolled in between 12 and 15 units.

Over time, eligibility for SSCG has expanded, including through higher awards for former foster youth and beginning in the 25-26 academic year. Eligibility will also be expanded to students with disabilities enrolled in nine or more units as long as they meet other eligibility requirements.

We also have our California College Promise program which is A B19 funding of its $91 million budget. About half of that was spent on fee waivers and direct aid to students. We anticipate that in the upcoming years, increased direct aid will also be provided through this program as Federal emergency Covid funds are winding down for Cal Grants.

Community colleges dispersed only $260 million to about 150,000 students, highlighting the outdated Cal Grant system which was designed for traditional students. Our community college students are older. Most of them work to achieve their dreams of transferring to four year universities, earning bachelor's degrees, graduating and entering the workforce at livable wages.

For this reason, the Chancellor's Office will continue to strongly advocate for the Cal Grant equity framework to ensure community colleges can students can afford the true cost of attendance which includes textbooks, supplies, housing, food, transportation, child care and more.

I will conclude my remarks with another top priority for the Chancellor's Office which is equitable resources for community college financial aid offices. The current funding formula for financial aid Administration is outdated. When it was established, the funding formula accounted for only 108 colleges. Today we have 116 colleges, yet the formula remains unchanged.

This leaves our colleges with about a 6% funding deficit. Additionally, the funding formula only considers our CCPG fee waiver.

Despite growth in other financial aid programs including Pell Grants and ccpg, we will continue to advocate for updates to the student financial aid Administration funding formula to reflect the actual number of financial aid applicants and recipients and implement a recurring cost of living adjustment for financial aid Administration funding.

These changes are critical to ensure California's community colleges can effectively support students in accessing and receiving financial aid. Thank you. And that concludes my remarks.

Thank you. We'll move to the Student Aid Commission.

First. I'd like to note our deep appreciation to the Governor and to the Legislature for their continued support of these tremendous investments for students. As our colleague noted, we are in professional settings where we know that this is really the envy of the nation in many ways.

As our colleague at LAO noted, there were some shifts in Cal Grant participation that given the challenges we just were discussing with financial aid applications, are probably not surprising in terms of student participation in the Cal Grant program in this year particularly. And Cal Grant can be a bit deceptive sometimes.

We refer to it as if it's one program. There are really eight different flavors of Cal Grant. And in the Cal Grant that serves our recent high school graduates, we did see a slight decrease.

And that reflects the unique challenges that students faced last year with that new FAFSA who were applying for financial aid for their first time. Our projections moving forward, we anticipate rebounding, as Dr. Gonzalez was noting in terms of where we stand with our data to date.

And we will of course continue to keep the Administration and Legislature apprised as we monitor financial aid application data so that we can provide updated numbers going into the may revise based on where we are with student applications for aid at that time.

I'll note too, and you alluded to this earlier, Chair Laird, in terms of the framework to redesign the Cal Grant and remove some of the structural barriers that have prevented students who are very Low income, meet financial criteria but are unable to access the grant due to other non financial eligibility requirements.

I want to note Again, as Dr. Gonzalez spoke to earlier, that our commissioners approved a student success blueprint in December with three key goals around equity for students and access, support and success.

And I note this again because our equity goal around access makes a priority of referencing the need for us to expand state aid for those Low income students while further simplifying the program that will increase its predictability. And of course, as you noted, Chair Laird, those provisions remain in state law, but unfunded.

We at the Commission continue to remain supportive of these enhancements to our states landmark financial aid program and its ability to better serve Low and middle income families. And we stand ready to advise the Legislature and the Administration as you consider potential means to eventually Fund or phase in those important reforms for our students. Thank you.

Thank you. I feel like some of the comments we made in other items apply to this in just Sort of the global thing.

And I want to compliment UC on your chart only because the previous chancellor, UC Santa Cruz, a close friend, I just pounded him all the time by the fact that every time somebody talked about a tuition increase, they thought it applied to everybody equally and that there was such a percentage of people that had financial aid that the public's conception was always that when the tuition went up, it was applying to the lowest income students, which it never was because of financial aid.

But I never thought UC was doing a good enough story of telling that story in a way that there was an understanding about that situation. And this chart does that. So that's why I'm saying thank you. So, Senator Ochoa Bogh, do you have any questions?

Just a comment, just highlighting what we've seen in the agenda that when the state spends more in Cal Grants or the state hesitant to spend more on Cal Grants when UC, CSU actually increases their tuition rates, I have here the agenda indicates 48 million of the Cal grant cost increases due to those tuition increases.

And you know, we talked about the cuts that we're doing to UC and CSU and the impact that's going to have on them. And then we are going to. We're. Going to spend, let's say we'll spend 48 million more in Cal Grants for that higher tuition.

It's just interesting how, you know, when we state, when the state cuts in one area, we're going to give it in the other area. It's just, it's, it's just funny how that works. It just, it's interesting to me that how we're just literally putting one bucket of money here, taking it from here and just putting it there.

But it's the same. And I'm not sure. I was having a conversation with our consultants yesterday and I said, you know, when we're, when we're shuffling the money and we're doing what we're doing, cutting here and adding it here, but it's the same difference which one yields more funding to either the student value or the University value.

And it's interesting because I'm just looking at it from that, you know, from that perspective as to when it comes, especially because of the budget cuts and because of where we're heading financially, I'm really looking at the dollar yield and where it makes the biggest bang for the buck. And so any comments on that perspective? Because I'd love to hear your perspective, if you have any.

I would have to say that the broader question of the University's budget is beyond My sort of expertise, and I wouldn't want to comment on that just from the financial aid guys perspective. I think the important thing is just to make sure that if tuition does go up that we make sure that we take those concerns off the table for those families as they're making those decisions. So it's, we've, we've long supported the Cal Grant program addressing tuition and fees for that for that reason.

Anyone else?

Senator, I might answer this question from a slightly different angle. And I first want to thank and recognize the work of our segmental partners in trying to address those concerns as they arise and leveraging their institutional aid funds to try them, as Senator Laird was speaking to, to keep students whole when there are those types of increases that are on the table.

And of course, the nature of our Cal Grant program also makes sure that that state financial aid is playing that role. One piece that I'll speak to because I think what I hear in your question is this something we often are asked around, return on investment and how we can really best advise policymakers about where to target additional funds, particularly in a resource constrained environment.

And at the Student Aid Commission, while we have prior state legislation that required institutions receiving Cal Grant Dollars to report on student outcomes, that data is limited to just reporting on an aggregate level.

This means that the Student Aid Commission doesn't have the data to analyze the fullest impact that we could on student enrollment, persistence and completion if we were to have unitary student level data. We handle millions of records every year.

So we know that we could receive that data in a safe way that protects student and family data and would then enable the Student Aid Commission to provide better assessment on the return on investment of financial aid programs. And while CSAC and Senator Laird, I know you're very familiar with the Cradle to Career data system.

We've been in conversation with them. We know that we'll never be able to get all of the data we would need to do this kind of analysis from Cradle to Career. But we would like to work with the Legislature and Administration this upcoming year and in this budget process to identify means where we can receive that data so that we can provide that kind of analysis.

And help answer the question that you just posed, Senator, at least as it relates to the financial aid programs that we administer at the Student Aid Commission and while in doing so working with Cradle to Career to identify areas where we can avoid duplicative reporting so that we're not asking institutions that already share that type of data to share it again somewhere else so we would Love to be able to collect that data to better answer those questions in the future.

Okay, thank you.

Yeah. And I am doing a Bill to try to open up at least one additional data source clearly to cradle the career so that that can just be a full continuum of information as possible. Well, we appreciate that, panel. We're going to move to issue five, the Middle Class Scholarship proposal and update.

And miraculously, it's mostly the same panel again. So we have in this time in the agenda the order of the Department of Finance first, then the Legislative Analyst's Office, then UC, then CSU, then Student Aid Commission. So let's begin with the Department of Finance. Any questions or comments about the Middle Class Scholarship.

Hello again. I'm Aman Singh with the Department of Finance. I'll begin with a quick overview of the Governor's Budget proposal for the Middle Class Scholarship. The budget provides $527.2 million for the middle class scholarship, which is the state's second largest scholarship program after Cal Grant.

Initial estimates indicated that there will be over 327,000 middle class scholarship recipients in the budget year. That's compared to about 750,000 college students who receive Cal Grants. So it's a pretty significant amount.

The middle Class scholarship funding level has changed from $926 million in the current year 24-25 to $527.2 million in the budget year 2526 as described on pages 25 and 26 of the agenda. This is due to two large factors.

The first is the expiration of a $289 million one time General Fund investment that was made in the 20 budget act per an agreement between the Legislature and Administration. This agreement also included an ongoing $110 million reduction beginning in 25-26.

The Governor's Budget does not make any changes or augmentations to the agreement reached in the 2024 Budget Act. And there are no policy or programmatic changes proposed to the Middle Class Scholarship at this time. Thank you.

Thank you. We'll move to the Legislative Analyst's Office.

Hi, Natalie Gonzalez with the Legislative Analyst Office. As mentioned, consistent with last year's budget agreement, the 25-26 budget plan reduces funding for middle class scholarships by $110 million in ongoing General Fund support. This brings ongoing funding for the program down from 637 million to 527 million.

And as just mentioned by the Department of Finance, the $289 million in one time funds provided for 24-25 expires this year. Therefore, under the current budget plan, CSAC estimates that middle class scholarship awards will cover approximately 18% of students' remaining cost of attendance in 25-26 compared to an estimated 35% in 2024-25.

Additionally, CSAC is anticipating a larger than expected number of middle class scholarship recipients for 24-25. CSAC is estimating an almost 30% increase in the number of middle class scholarship recipients in 24-25 compared to the previous year. Originally the Department was estimating around a 12% increase.

CSAC estimates this larger number of recipients will drive up middle class scholarship costs by slightly more than $100 million in order to keep award coverage at 35% of students remaining cost of attendance thank you and happy to take any questions.

Thank you. We'll move to the University of California.

Thank you. I will be brief. We are concerned about the proposed reduction in the middle class Scholarship program under the Governor's Budget taking into account the one time funds as you mentioned, Chair Laird, that's a 43% cut that would lead on average to a reduction of about $1,360 per UC recipient.

To assist with the current year shortfall, UC is dispersing the middle class Scholarship awards in our spring quarter with part in partnership with the Department of Finance and CSAC to make sure that the students are remain whole. The UC campuses would then be reimbursed for that in the new fiscal year.

Reductions in the middle class Scholarship program will slow UC's progress and it's a goal to have a debt free education for all students by 2030. Since it's a program that addresses the total cost of attendance, it would need to increase every year just to keep pace with inflation and maintain where it has been. From the UC perspective, the current shortfall in the program can be laid at the feet of better FAFSA as well.

As I explained earlier, we had imperfect data coming from the Federal Department of Education and struggled throughout the summer to make sure we had all of the data available to submit to the California Student Aid Commission, which really was given an impossible task in trying to estimate ahead with all of the changes that took place at the federal level.

That explains why CSAC had challenges estimating the phase in percentage. I think I defer to my colleague Jake to elaborate, but it also is important, I think, to just note that some of this wasn't about the FAFSA errors. It was also about the formula changes.

As a result of the formula changes, UC's student body became needier, or at least appears needier and that meant that we had to spread our financially needy, financially needier.

This wasn't an emotional issue.

It was. No, our students are strong. Yes, resilient. That meant that we had to spread our own UC grant dollars more thinly across the student body. And so that would also drive up the need for middle class scholarship. And I will conclude my remarks there and have happy to take questions.

Thank you. We'll move to the California State University System.

So we are very appreciative of all the efforts at the Administration and Department of Finance in identifying a current year solution for the Middle Class Scholarship Program. This resolution ensures that the eligible students will receive their full awards that they were promised at the beginning of the academic year.

As Shawn mentioned, the over or the overextension of the 24-25 middle class scholarship funding was in large part due to the issues with the Federal Department of Education and their poor processing of the Free Application for Federal Student Aid, the FAFSA.

While many of our students did apply before the deadline of July 2, many of those applications were not processed in a timely manner by the Department of Education. And a significant number of those processed applications contained missing or incorrect Student Aid index values.

Like Sean said, the recalculation of the reformulation of the Student Aid Index made our students needier, financially needier, so that we saw an overextension of our own institutional aid programs as well.

We are also concerned about a reduction in the middle class scholarship funding for the 25-26 academic year because that would directly impact our CSU students and limiting the financial support that is currently available to them. Maintaining adequate funding is essential to ensuring that our students continue to have access to the financial resources necessary for their academic success. Happy to answer any questions.

Thank you. We'll move to the Student Aid Commission.

Well, first I'll join my colleagues in thanking the Administration and the legis and legislative leadership for working with us to identify a solution for the Middle Class Scholarship program awards for 24-25 and thank our UC, particularly those quarter institutions as well, for their collaboration in this effort so that we could maintain the amount of support that was provided to students or indicated to them earlier this year.

I'll speak a little bit to some of the data to help you understand and help folks understand how we saw a greater number of students eligible for the Middle Class scholarship program for 24-25 and how that differed from what we'd initially projected at CSAC based on the data we received from our campus partners due to all of those FAFSA issues that we spoke to earlier.

We'd extended the Priority State Aid deadline not once, but twice. And we had a separate extension of the application deadline specifically for the Middle Class Scholarship Program. And that program typically has a deadline that aligns with the Priority State Aid deadline.

But the difference with the Middle Class Scholarship Program deadline is it is in fact one for both new students who are applying for the first time, but also students who are renewing their Middle Class Scholarship, the returning students. For students in our Cal Grant Program, they can renew their award at any time.

The Middle Class Scholarship has a unique deadline because of its unique nature. For the Student Aid Commission to project the award amounts that it can provide to students through these funds, we must know the total amount of funding available for the program as approved in the state budget. How many students are eligible to participate?

That's based on the data we receive from our campus partners and then all the other aid that those students can receive. And that factor into the statutory formula for Middle Class Scholarship Award amounts given its last dollar nature and design.

For the 24-25 year, there were approximately 33,000 students that applied for the middle class scholarship between May 2, which had been that priority state aid deadline, and July 1, which is where we set that specific deadline for the Middle Class Scholarship Program. That helps explain, as our LAO colleague noted, why there were more students eligible overall.

That doesn't fully account for why the Student Aid Commission didn't have the full data that we needed to make the best informed estimate for how much we could provide to students to avoid potential overage while still maximizing all the funds that we have available.

And of course, we also saw and experienced that same challenge that our campus partners did with the delays in receiving some data from the FAFSA that had been generated due to those technical issues.

So in the initial data that we had received from our Middle Class scholarship participating institutions, UCs and CSUs, but also a handful of baccalaureate degree granting community colleges, we'd received records that suggested that there were approximately 250,000 students that would be eligible for a Middle Class Scholarship Award. We knew that we would receive additional records after that.

We do every year. And given the nature of the Middle Class Scholarship Program, those students are still eligible so long as they applied by the right date. So every year we're progressively adding more students to the Middle Class Scholarship Program as we move forward.

In the prior year, that had been about 32,000 student records that were received after September and through the remainder of the academic year. This year, CSAC has already received more than 68,000 records since that same period, so more than double the prior year.

It's important to note, and this, I think, speaks to the delay in how our campus partners received this data as well, that over 80% of the late records that we received were actually students that applied before May 2. So it's not just attributable to those students that were applying in that late extension period.

So this suggests to us several areas where the Student Aid Commission, our segment colleagues and policymakers can work together to strengthen this program for students.

First, we at the Student Aid Commission will be pursuing updates to our program regulations for Middle Class Scholarship to establish specific deadlines by which our campuses must report student data for eligibility as well as record the payments that are made through this program.

Without that data, the Student Aid Commission can't make reliable estimates on student award eligibility or track utilization of the program funds throughout the year. These changes would be best supported by other refinements to the program's statutory structure that keep its goals intact.

We can make the Middle Class Scholarship a more stable program for students and avoid the potential for pulling back funds when there's not sufficient resources available.

If in each budget act we set what that phase in factor is that our colleague at Lao spoke to that 35% for this year, for example, and then we can work through the budget process. I'm almost there, Senator. I know you have other items.

So we can establish that phase in factor through the budget process that will avoid pulling back dollars. And then we can adjust in years where there are funds remaining at the conclusion of a year where we haven't awarded those to students, we propose that you roll those in to the next academic year.

So we keep the program funds there for students. That's essentially what we're doing this year in the current year to solve for this issue. However, it won't solve for another challenge with this program, which is providing earlier awareness to students about their eligibility for support through this program.

Because we don't have that data, we need to make award determinations. We would recommend you consider looking at a way to maybe guarantee a certain share of funds for students or certain overall funding amounts so that we could provide earlier awareness to students as they're making enrollment decisions before May.

So with that, I'll look forward to any other questions that you might have on the. Zero, I don't think you'll look forward to them.

Thank you. Because I just make a comment which is I appreciate everybody talking about what went into being $103 million short in the Middle of the Year. We can't be $103 million short in the middle of the year again.

And there is grumpiness among certain stakeholders about what, where the money is proposed to come from and what it is to do.

And I know I was with, how do I say this, a top segment leader of one of the segments, when that person got the text that this was happening and experienced that momentary explosion of displeasure at the fact that in the middle of the budget year this was going to have to be figured out.

And so I get all the reasons, but you know, when we're sitting here talking about a proposal between not continuing the one time money And a reduction that is a 43% reduction, it's like we're going to be looking for money everywhere to keep our commitment for this program going forward.

And that leads to my one question, which is last year, and it probably is a reason that there was a one time money where it was very clear. We said it was an agreement between everybody. But the real desire was last year there was a proposal to cut, I Believe56 the Middle Class Scholarship Program.

And the analytical justification was, is it was that it would return to the level it was in something like 2021 before we expanded it because we had money and yet we had expanded the number of people on it significantly in a way that if it, if we had approved that recommendation and it returned to the 2021 level, would have been a big reduction to everybody that was on it.

It wasn't like the money was the same and the people were the same. There were many more people on the program since that happened. And so my question is, is, is if there's a 43% reduction, does that mean the same number of people are on it?

And then there's this net reduction in what their scholarship amount, that is the equivalent of that. Everybody's nodding their head. Does somebody want to say something verbally?

I can confirm that's correct, Senator Laird. The program statute requires us to look at all the students that can qualify the appropriation that's available through the Budget act, all of the other financial aid those students receive to identify what the unmet need is.

And then we see to what degree we can stretch that appropriation across all eligible students to represent that percentage phase in factor that I spoke to.

So when there's a reduction in appropriation, but while the student population remains relatively consistent and so does all those other forms of aid, that then results in less on a per student basis when the appropriations decreased.

Okay, thank you, Senator. Ochoa Bogh, do you have any questions or.

Comments on this comment? Just, you know, we have the Governor that's proposing a reduction of nearly $400 million to the Middle class Scholarship. That's combining the cut of 110 million with the expiring 289 million from last year's one time increase.

And as we saw last week, the Governor is also suggesting that we cut funding to the UC and the CSU. So overall, the message is actually, you know, not a pleasant one. It looks like the current Administration is not prioritizing college affordability overall.

And it's concerning because we emphasize how important education is as a means to overcome so many societal impediments. And really, especially as a daughter of immigrant parents who has emphasized the importance of education is just, it's not a very good look for the Administration. And I think we need to really assess how we're going to prioritize.

And you know, and I feel really, I feel deeply for the middle class because overall I think they're the ones, the middle class families are the ones who are hit the hardest in any economy because, you know, we always have safety nets for those that are in the Low socioeconomic demographic.

The high, you know, income folks can navigate resources, but it's always the middle class that gets hit with less aid, less tools to work with. And so I would like the Administration to rethink what we're doing to a middle class scholarship program because overall they're the ones that hit, those families are hit the hardest.

So I'm not pleased. And I'm just going to say that I'm not pleased overall. And I know we're going to have really hard decisions. That's why I'm trying to think creatively and outside the box. And you know, what is it that we need? This is needed.

So I would just humbly ask that we rethink what we're doing with the middle class scholarship program.

Me too. So that's great. And I think that's our general direction coming out of this item, is that we were looking for money and other items. And this is a place that I hope it goes. And you know, far be it from us to connect to the last election.

We were both on the ballot and we were both hearing affordability. Affordability, affordability. And this is one of the classic cases where that is exactly right. And if we're going to maintain two thirds of the people graduating from the University of California without debt, it's going to be because this program is there in a robust way.

So that's just something we. Last year we figured it out, it was tough. A 56 cut was recommended and we got back in the negotiations in the final budget. And that's the direction we're going to have to head this year. So thank you all.

And then as we move to the next item, there's only a small change. I think we're going to add two people from the California College of the Arts, David House, the President, Remy Hathaway, the chief financial officer. And then we'll be with Aman Singh, Natalie Gonzalez, Dr. Gonzalez from the Student Aid Commission, and Jake Brymner.

So, okay, is there another name suggestion substituted? No, Jake. Okay, great. Well, then let's go in that order and begin with the Department of Finance.

All right, I'll kick us off. Once again, the Governor's Budget proposes $20 million in one time General Fund support for core operational costs and student retention at the California College of the Arts, which is a private, nonprofit college located in San Francisco, California.

The California College of the Arts is facing a budget shortfall resulting from enrollment declines following the COVID 19 pandemic. The objective of providing this funding is to allow the California College of the Arts to remain open in a fiscally sustainable manner.

The Administration has expressed strong interest in supporting the college and has determined that it is in the state's interest to keep this historical Northern California institution open. Finance has determined that the California College of the Arts degree programs and key mission are distinct from what is offered by local CSUs and UCs.

Further, California college of the Arts proposal to develop arts education teaching credential pathways and professional certificate programs were of key interest to the Administration. Thank you.

Thank you very much. We'll go to the Legislative Analyst Office.

Thank you. Natalie Gonzalez with the Legislative Analyst Office. As mentioned, California College of the Arts has been facing a continual budget deficit over the past few years. In 24-25, the state provided $2.5 million in one time General Fund support to the college. For 25-26, the governor's proposal provides 20 million in one time funding for the school.

This funding would help as the college continues to address its operating deficit. Though we recognize California College of the Arts fiscal challenges, we recommend rejecting the proposal for four reasons. First, last month the college announced it had raised nearly $45 million in new philanthropic donations.

The school indicates that these funds will help them address their current budget deficit. Second, the school is not the only college in California facing fiscal challenges due to enrollment declines. Some of California's public universities are facing similar challenges. Third, due to the state's fiscal situation, CSU and UC are facing proposed budget reductions in 25-26.

As the state is projected to face budget deficits in the out years, it is not in the fiscal position to support the school. Fourth, though the state is not legally prohibited from providing fiscal support to private higher education institutions, it is not in the state scope of responsibility and has been done very rarely. Again, given these four reasons, we recommend rejecting the proposal. Thank you and happy to take any questions.

Thank you. Now we'll move to the California College of the Arts. Welcome, Mr. President.

I think it's on now. Yes. Good afternoon, Chair Laird and Vice Chair, My name is David Howse and I have the honor of testifying before you for the first time as the new President of the California College of the Arts in San Francisco.

In my 14th month here and I'm joined by my Chief Financial Officer, Raymie Hathaway, and Members of my leadership team who can also help to address any questions you might have. For over a century, California College of the Arts has been a pillar of California's economy.

Founded in 1907, our mission remains clear to prepare students for careers in art, architecture, design and writing. Careers that impact our society.

As you are very fully aware, as we've heard this morning, higher education figures faces many difficult challenges to stabilizing once stable institutions across the state, including both public and private colleges like California College of the Arts.

We've seen this with the closure of the San Francisco Art Institute and Mills College merger with Northeastern, a Boston based institution, California College of the Arts is at a critical moment. We have taken significant steps to right size the college, including deep budget cuts, staff reductions and securing 45 million in philanthropic support.

This stabilizes us in the short term, but long term sustainability requires a combination of cost cutting, fundraising and state investment. All of which are critical to our future and its contribution to the creative economy here in California. As mentioned, the state's 2.5 million investment had an immediate impact, supporting critical operations and inspiring additional philanthropic contributions.

This year we again appreciate the Newsom administration's recognition of California College of the Arts impact as a vital pipeline for the creative industries here in the state.

A one time $20 million investment will allow us to expand enrollment through program innovation, restore critical student resources, ensuring that our students have the support they need and to make long term overdue investments in campus infrastructure to provide safe, high quality learning spaces, ensuring that the students continue to the state. Excuse me.

The college continues to contribute to the state's creative economy and workforce. While we are a private institution, our impact expands and extends far beyond our campus. 75% of our domestic students are Californians and they fuel the state's creative industries including design, film, gaming, architecture and fine arts.

California College of the Arts graduates lead at Pixar, Apple, ido, Google, Mattel, as well as top galleries, museums and architecture firms like Gensler. They create businesses, design public spaces and enrich California's cultural landscape. California College of the Arts has a top return on investment of all art and design colleges in North America.

We're also committed to expanding access to to high quality arts education not just for college age degree seeking students, but for working artists and educators who need flexible immersive programs to advance their careers. To meet this demand, we are launching several new and innovative programs that directly align with the state's workforce and education goals.

1. low residency Master's in Fine Arts launching in academic year 26, which will expand access to advanced arts education for working California professionals. 2. Credentialing and continuing education, making California College of the Arts distinctive programs more accessible to non traditional California learners. 3.

A three year Bachelor in Fine Arts, an accelerated more affordable degree pathway for California students and fourthly arts teaching credential program addressing California's shortage of qualified arts educators by creating pathways for undergraduates, graduates, graduates and working artists to earn a state approved single subject arts credential for K12 education.

The teaching credential program will launch in fall of 2026 pending accreditation from the California Commission on Teacher Credentialing. This program will be instrumental in preparing arts educators for K 12 public schools, particularly in underserved or under resourced communities. Aligning directly with the state's commitment to expanding access to high quality arts education.

California College of the Arts is not only integral to California's economy, but we complement and expand the state's higher education landscape, offering specialized programs not available at UC and CSU campuses.

This request is not made lightly, but without the investment, our ability to serve our students, expand enrollment and continue to lead in art and design education is at serious risk. Thank you for your consideration and we're open to questions you might have.

We do not yet.

Of the college because there's been a juxtaposition of the philanthropy, but there's a desire to expand into training teachers for art schools. And so the philanthropy stabilizes your existing stuff. And if you were to get support from the state that would allow you to expand into the into teaching preparing our teachers.

Is that the correct way to look at this? That is correct. And if Let me just drill down slightly, you mentioned it, but what does it take for you to have classes, have the certification turn people out?

And I think in one conversation I had with somebody there was a period of time where there was classroom training before there. What's the sequence of that you get funded for the budget year. How does that turn into a process that turns out our teachers?

My understanding is there are three stages in the accreditation process we've completed stage one are now in stage two. Stage three will be completed soon. We'll be able once that is complete. We will be able to begin advertising to attract those students into that, into that program, essentially starting in the summer of 2026.

So that is the pathway that we are on to moving forward. So as soon as that's phase three is secured, we can begin actively recruiting for the first class, essentially.

Okay. And I think over the next couple of months we might want to tease that out to just make sure we understand how that works and make sure that we understand that there would be value.

And I mentioned earlier in an item that shortage of teachers for arts and I think music, but for arts for sure, just given what happened in the passage. So I think this has some merit and is worth teasing out as we head to May. Let me ask if there are any questions or comments from Senator Ochoa Bogh.

Yeah, sure. So couple. I'm trying to understand all of it because it is a private college. I'm trying to understand the role of the state within that capacity, considering the fact that, as you heard previously, we're cutting funding to our UCs, our CSUs, all of our schools are being impacted, middle class scholarships being cut.

And here the Governor's office is, you know, wanting to allocate, what is it, $22.5 million or 20. 20 million, $20 million into the program. So I'm trying to understand, and I understand the teacher shortage that we have across the state, especially when it comes to the arts. Did you folks.

Because I noticed that you folks raised $45 million just this past month, within the past month in February. Is that correct?

That's correct.