A Frugal Veto at a Time of Abundance

California higher education leaders and advocates, still riding high from a recent string of legislative wins on education funding, were dealt a blow when Governor Gavin Newsom vetoed a major reform bill that would have expanded the state financial aid program to hundreds of thousands more students.

Assembly Bill 1456 would have eliminated some barriers that barred students from guaranteed aid -- such as a GPA verification requirement for community college students -- and simplified the overall structure of the program. The bill had unanimous support among lawmakers and would have extended aid to about 160,000 students through the Cal Grant program, a state financial aid program for students in the California State University, University of California or California Community College systems, or qualifying independent and career colleges or technical schools in the state.

But Newsom, who vetoed the bill Friday, said the cost of such a major expansion was too high.

“This bill results in significant cost pressures to the state, likely in the hundreds of millions of dollars annually,” Newsom wrote in an explanation to the California State Assembly.

Democratic assemblymembers Jose Medina, Kevin McCarty and state Senator Connie Levya, all authors of the bill, issued a statement expressing disappointment in the governor’s decision.

“The bill, if signed into law, would have been the largest expansion of our state’s financial aid system in a generation,” the statement read. “For over three years, we have worked with the California Student Aid Commission, educators, and student groups to reform the Cal Grant program.”

Newsom agreed that “making the Cal Grant program simpler to navigate would benefit our students and their families,” but “future changes to the financial aid system of this magnitude should be considered as a part of the annual budget process.”

California Department of Finance officials had also opposed the bill, arguing that the legislation would be pricier to implement than the bill’s supporters predicted. The California Student Aid Commission estimated the bill would require a one-time cost of $57.8 million, plus $82.6 million per year in ongoing costs during the program's transition. Finance department officials estimated a much higher price and said the reforms would cost an extra $174.4 million per year in ongoing costs above current state appropriation levels, in addition to the initial $57.8 million.

The bill aimed to streamline the Cal Grant by dividing the program into two kinds of awards: Cal Grant 2, for community college students, and Cal Grant 4, for students at four-year institutions. Cal Grant 4 would cover tuition and fees for students in the California State University and University of California systems, and Cal Grant 2 would go toward nontuition costs for community college students, with a provision that the award amount would change in future years based on inflation.

The Cal Grant program is notoriously confusing and has a variety of award options based on students’ financial aid application responses, the kind of institution they attend and how long they’ve been out of high school, said Audrey Dow, senior vice president of the Campaign for College Opportunity, a California-based research and advocacy organization focused on student success.

“Cal Grant is too complicated and students cannot navigate and know for certain what they are entitled to, and that really hinders their ability to do long-term planning,” Dow said.

The bill would have also removed a GPA verification requirement for community college students to be entitled to Cal Grants, which would help older students who don’t have their high school transcripts.

“A student could be 40, 50 years old coming back in for retraining,” Dow said. “Imagine going back to your high school and trying to dig up a transcript. Imagine if you were educated in another county, another state, another country. It’s incredibly difficult. A lot of adults at that point just give up.”

The legislation also would have eliminated the one-year limit on time out of high school for students attending CSU and UC institutions. Students out of high school for more than a year are now shuttled into a separate eligibility pool for the Cal Grant Competitive Awards, where about 300,000 students vie for roughly 30,000 competitive grants, Dow said.

The veto of the bill comes during a surge of money and attention showered on colleges and universities and their students by state lawmakers this year, Cal Matters reported. The latest package of higher ed bills totaled about $47 billion. Newsom previously removed restrictions on age and time out of high school for community college students seeking Cal Grants in his 2021-22 budget, approved this summer. That decision made about 133,000 additional community college students eligible for the grants.

Manny Rodriguez, associate director of policy and government relations at the Education Trust-West, an advocacy organization focused on education equity in California, noted the state’s budget surplus this year -- in part the result of federal COVID-19 stimulus funds -- and called the veto of the bill a “missed opportunity.”

“Was this the one-time year we could have funded this, because next year we’re not going to have this historic infusion of dollars?” Rodriguez said.

California student groups praised the spate of new investments in higher education but also argued more reforms to the Cal Grant program should be a legislative priority.

“We are grateful for the Governor’s support for many new higher education initiatives as well as the new investment in the state’s Cal Grant program in this year’s budget, but we all know more needs to be done,” Isaac Alferos, president of the Cal State Student Association, said in a statement from the Fix Financial Aid Coalition, which includes student leaders from public state college systems. “California’s financial aid system needs fundamental changes to ensure that our institutions are truly accessible to marginalized communities.”

Daisy Gonzales, California Community Colleges acting chancellor, also commended the governor for the financial support but said the bill was critical.

“Without equitable access to financial aid programs, hundreds of thousands of low-income California community college students will be denied the aid they need to not only afford college but to excel,” she said in a release.

Proponents of the bill hope to renew their efforts to overhaul the Cal Grant program in the next state budgeting process.

“There’s no arguing that addressing the cost of college is costly,” Dow said. “But it’s also costly to the state to have an undereducated populace. When individuals have a higher education, they become the talent force of our state. It’s a worthwhile investment. I’m hopeful that next year we can put an even larger down payment on affordability.”