A Review of the California National Guard Education Assistance Award Program

A Review of the California National Guard Education Assistance Award Program MAC TAYLOR • L E G I S L A T I V E A N A L Y S T • SEPTEMBER 2016 AN LAO REPORT 2 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT EXECUTIVE SUMMARY Background State Created California National Guard Education Assistance Award Program in 2009. Chapter 12 of 2009 (AB4X 12, Evans) created the program as part of the 2009-10 budget package. The program provides financial aid to members of the California National Guard and the State Military Reserve to pay for postsecondary education. It is jointly administered by the state Military Department and the California Student Aid Commission and has a budget of $2.6 million. Chapter 12 sunsets the program July 1, 2019. The legislation requires our office to submit a report to the Legislature prior to the sunset that “may include recommendations for modifying or extending” the program. This report responds to this requirement. State Law Cites Multiple Goals for Program. The main goal of the program cited in state law is to improve retention within the California National Guard and State Military Reserve. State law primarily refers to retention in general terms, implying overall retention, but also references retention of the “most competent and capable members.” Another program goal cited in state law is to enhance the skills, competencies, and abilities of California National Guard and State Military Reserve members. State Law Specifies Eligibility Criteria, Selection Process, and Award Amounts. State law requires award recipients to meet certain minimum eligibility requirements, such as having at least two years of service in the California National Guard or State Military Reserve. Unlike most other state financial aid programs, state law does not require award recipients to have financial need. Among applicants meeting the program’s minimum eligibility criteria, state law requires the Military Department to prioritize based on the skills it most needs. It further requires the department to select applicants with “outstanding ability.” State law sets maximum award amounts similar to Cal Grant awards, with certain exceptions, and it allows recipients to use their awards to pay for any postsecondary education expense, including tuition and fees, books and supplies, and living expenses. Award recipients are required to enroll at a Cal Grant-eligible postsecondary institution for at least three units per term in pursuit of a certificate or degree that the recipient does not already hold. Findings and Assessment Very Few Members Apply to the Program, All Members Applying on Time Are Accepted. Excluding its initial year, between 600 and 900 members have applied to the program each year. This is 3 percent to 4 percent of all California National Guard and State Military Reserve members. Every year since the program’s inception, the department has been able to fund all renewal applicants as well as all new applicants who apply by the department’s priority April 30 deadline. This means the only applicants not accepted into the program are new applicants who apply late. These applicants are accepted on a first-come, first-served basis until the department exhausts available funding. About 200 to 300 applications each year are not accepted during the first-come, first-served application period. Program Likely Not Improving Retention. The best available data (for California Army National Guard members) suggests that retention rates for members participating in the program www.lao.ca.gov Legislative Analyst’s Office 3 AN LAO REPORT are slightly lower than for members not participating in the program. Specifically, 59 percent of California Army National Guard members participating in the program at some point between July 2009 and June 2015 remained enlisted in the California Army National Guard as of June 2015. This rate is somewhat lower than the 62 percent average annual reenlistment for California Army National Guard members not participating in the program. Program’s Effect on Members’ Skills and Education Unknown. The Military Department has not created a list of the skills it most needs, so evaluating whether program participants are acquiring skills critical to the department’s operations is not possible. Additionally, the department does not collect data on program participants’ postsecondary enrollment status prior to their acceptance into the program, so the state has no way of knowing whether the program is increasing the number of California National Guard and State Military Reserve members enrolled in postsecondary education or increasing the units they take. The department also does not track whether program participants complete a degree or certificate. Recommendations Recommend Allowing Program to Sunset. The available data does not show that the program is effective at retaining members or increasing their skills and education. Given the program is not meeting its objectives, we recommend allowing it to sunset. Better Understanding of Problem, More Targeted Solution Needed. The program’s ineffectiveness appears to stem in part from its lack of clear focus. The program appears primarily intended to address retention, but it is largely modeled after the Cal Grant program, which is intended to expand access to education. The program also has various other goals, such as increasing members’ skills and abilities. The Legislature’s next step, therefore, could be to develop a more thorough understanding of the Military Department’s most pressing personnel problem and identify a solution tailored to that specific problem. For example, if the Military Department’s greatest problem is overall retention and insufficient compensation is the root cause, then the Legislature could explore reenlistment bonuses as a policy solution. By comparison, if the department’s greatest problem is that many of its members lack educational opportunities due to inadequate outreach and financial aid, then the Legislature could explore increasing awareness of and access to aid. Modifications Warranted if Award Program Still Desired. Though the evidence does not support extension of the existing version of the program, the Legislature could consider modifying the program. Depending upon what the Legislature determines to be the key personnel issue facing the Military Department, it could clarify the program’s policy objective and then consider modifications. For example, if retaining certain outstanding members is the key goal, then a new program could require the Military Department to grant all new awards on a competitive basis, eliminating any first-come, first-served element. By comparison, if expanding access to education is the key goal, a new program could require applicants to have financial need. Depending on which objective the Legislature seeks to achieve, it could make other modifications to the program’s eligibility requirements, selection process, and award amounts. 4 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT INTRODUCTION State Creates California National Guard It contains five main sections. First, we provide Education Assistance Award Program in 2009. background on the California National Guard, the Chapter 12 of 2009 (AB4X 12, Evans) created the State Military Reserve, and financial aid programs. program as part of the 2009-10 budget package. The Second, we provide an overview of the award program provides financial aid to members of the program, including information about its history, California National Guard and the State Military goals, eligibility requirements, award amounts, Reserve to pay for postsecondary education. and funding. Third, we describe our findings on Chapter 12 cites improving retention as the main the program’s participants and outcomes. Fourth, goal for the program. we assess the program’s effectiveness. Lastly, we LAO Review Required Prior to Sunset in 2019. provide recommendations for the Legislature to Chapter 12 sunsets the program July 1, 2019. The consider on reauthorizing the program. (For ease of legislation requires our office to submit a report to reference, we refer to the program as the “National the Legislature prior to the sunset that “may include Guard Award program” or “National Guard recommendations for modifying or extending” the awards” throughout this report.) program. This report responds to this requirement. BACKGROUND In this section, we provide background on California Air National Guard. The state Military (1) the California National Guard, (2) the State Department oversees the budget and operations of Military Reserve, and (3) student financial aid the California National Guard. programs. Most California National Guard Members Serve Part Time. In California, just over three- California National Guard quarters of National Guard members serve part Each State Has a National Guard. The time. Depending on their prior military service, National Guard for each state serves as a reserve they enlist or reenlist for a period ranging from one force for the United States Army and the United to eight years. Part-time members attend regular States Air Force. During times of war or national trainings or perform other required activities one emergency, the federal government can call up, or weekend per month and two weeks during summer, “activate,” a state National Guard for federal duty. and new part-time members must complete an When a state National Guard is not activated for initial training program lasting from several weeks federal duty, the state can activate it for its own to months. Many part-time members also have jobs purposes. For example, a state might activate its in the civilian sector. When activated for federal or National Guard to respond to a state emergency state duty, part-time members typically convert to such as a flood. California’s National Guard serve full time. If a part-time member is employed currently has 19,300 members in two separate in the civilian sector upon activation, federal and branches: 14,800 members in the California state law generally require the employer to rehire Army National Guard and 4,500 members in the the member upon return from active duty. Just www.lao.ca.gov Legislative Analyst’s Office 5 AN LAO REPORT under one-quarter of California National Guard In addition to federally funded benefits, part-time members serve full time. These members typically members can receive state-funded benefits. For manage logistics and trainings. instance, some states offer tax exemptions on Most National Guard Members Are Paid by the members’ pay or discounts on state hunting and Federal Government. Over 97 percent of California’s fishing licenses. In addition to the state-funded National Guard members receive their pay directly education benefit discussed in this report, from the federal government. For this reason, California also provides worker’s compensation, funding for these members’ pay does not appear in a survivor death benefit (for when members die the state budget. About 2 percent of members receive while on duty), and access to the state’s retirement their pay from both federal and state funds, with system (though members must pay both the less than 1 percent receiving their pay solely from employer and employee contributions). Part-time the state. Members paid by the federal government members called up for federal or state active duty perform activities related to the federal role of the can receive additional benefits, such as state-funded National Guard, while members paid by the state health benefits for those called to state active duty. perform only state-related activities. Some members Full-time members of the California National perform both types of activities and therefore are Guard who are paid by the federal government paid from both federal and state funds. receive benefits comparable to federal military National Guard Pay Varies by Rank and employees, whereas full-time members who are Experience. In California, annual pay for part-time paid by the state receive benefits comparable to members participating in regular trainings ranges state employees. from $2,800 for the lowest-ranked members with Federal Government Authorizes Number the least experience to $23,500 for the highest- of National Guard Positions for Each State. ranked members with the most experience. The federal National Guard Bureau determines Certain part-time members also can qualify for how many authorized National Guard positions enlistment and reenlistment bonuses. Part-time to allocate to each state. The bureau employs a members activated to full-time status by the formula that measures various aspects of a state federal or state government receive additional pay National Guard’s readiness, such as the percentage comparable to an equivalently ranked member of a state’s National Guard positions filled by a of the United States Army or United States Air deployable or deployed soldier. The bureau then Force. The pay for full-time California National convenes a board consisting of state representatives Guard members ranges from $40,000 to $140,000 to review the results of the formula and make annually, depending on job classification and years recommendations for allocating new positions (or of experience. reducing existing positions) across the states. The National Guard Benefits Vary by Employment federal government allows states to exceed their Status and State. Part-time National Guard authorized positions by up to 10 percent and pays members can receive federally funded benefits, for these excess positions. In 2014-15, California including health insurance, life insurance, and exceeded its authorized allowance by 4 percent. retirement benefits. Depending on their type and State Military Reserve length of service, part-time members also can qualify to receive certain additional federal military State Military Reserve Similar to the and veterans benefits, such as education benefits. California National Guard but Under Exclusive 6 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT State Control. The State Military Reserve’s (grants and scholarships), (2) student loans, (3) tax primary mission is to support the California benefits (credits and deductions), and (4) subsidized National Guard, including by responding to state work-study. The federal government offers all four emergencies when the California National Guard is types of aid through various programs. California’s under federal control or otherwise unavailable. Like main state financial aid program—the Cal Grant the California National Guard, the State Military program—and newest financial aid program— Reserve has both army and air force personnel, Middle Class Scholarships—both provide gift but, unlike the California National Guard, the aid. These and several other state aid programs State Military Reserve does not have separate are administered by the California Student Aid corresponding branches. In total, it currently Commission (CSAC). In addition to federally funded has about 1,400 members. As with the California and state-funded aid, virtually all public and private National Guard, the state Military Department colleges and universities provide institutionally oversees the State Military Reserve’s budget and funded aid to students. operations. Federal and State Governments Typically State Military Reserve Members Normally Award Aid Based on Need. The purpose of Serve Part Time. While in reserve, members need-based financial aid is to help students who must attend one training session per month and otherwise might be unable to afford college. The complete 100 hours of service each year. When federal government defines need as the difference activated for duty, members can serve full time. between the cost for a student to attend a particular Currently, 14 percent of State Military Reserve institution and a family’s available resources to members are on active duty. Unlike National Guard pay these costs. The federal government calculates members, State Military Reserve members do not the amount a family is expected to contribute enlist for a fixed number of years. using a formula that takes into account various State Military Reserve Members Mostly factors, including parental income and assets, Uncompensated. Members receive a $125 travel number of children attending college, and student and uniform allowance each year if they have at income. Most federal and California financial aid least one year of satisfactory service. They receive programs rely on this calculation of financial need no other compensation unless activated for duty. (sometimes in conjunction with additional means Upon being activated for duty, they generally tests). In contrast, a few California programs, such receive the same pay as similarly ranked members as the California Memorial Scholarship program, of the United States Army. The state funds State provide nonneed-based financial aid. Military Reserve compensation costs from the Many Existing Financial Aid Programs. General Fund. Figure 1 (see next page) shows the main federal, state, and institutional aid programs available to Financial Aid Programs California college students. The figure focuses on Federal and State Governments Offer Financial broad-based aid programs, excluding aid programs Aid to Help Students Pay for College. Financial specifically for military members and veterans. aid helps students pay for three types of college California National Guard and State Military costs: tuition and fees, books and supplies, and Reserve members have access to these broad-based certain living expenses (such as housing and food). aid programs if they meet the applicable eligibility The four main types of financial aid are (1) gift aid criteria. Eligibility criteria typically include www.lao.ca.gov Legislative Analyst’s Office 7 AN LAO REPORT financial need, but they also can include other can qualify for the Montgomery G.I. Bill Selected factors, such as grade point average. Reserve program if they serve in the National Some Federal Aid Programs Are Specifically Guard for at least six years. According to the for Members of the Military. In addition to the Military Department, close to 1,000 California federal programs listed in Figure 1, the federal National Guard members currently receive benefits government runs several nonneed-based financial through this program. Figure 2 summarizes the aid programs limited to members of the military eligibility requirements and financial aid benefits and veterans. Members of the California National associated with four federal aid programs for which Guard are not automatically eligible for these National Guard members potentially can qualify. programs based solely on their enlistment in the Members of California’s State Military Reserve are National Guard. They can be eligible, however, not eligible for these programs unless they have if they meet supplemental eligibility criteria. For other qualifying experience in the federal military. example, California National Guard members Figure 1 Major Financial Aid Programs for California Students 2015-16 Eligible Maximum Main Eligibility Program Type Source College Costs Annual Value Criteria Pell Grants Gift aid Federal Any $5,775 Financial need SEOG Gift aid Federal Any $4,000 Financial need Cal Grants Gift aid State Mainly tuitiona —a Financial need, GPA FTSSG Gift aid State Books/living expenses $600 Financial need, GPAb Middle Class Scholarships Gift aid State Tuition —c Income and assets Institutional aid Gift aid Colleges Any Cost of attendance Financial need Scholarships Gift aid Colleges Any Cost of attendance Typically merit Fee waivers Gift aid Colleges Tuition Tuition Varies Subsidized student loans Loan Federal Any $5,500 Financial need Unsubsidized student loans Loan Federal Any $20,500 Units enrolled Unsubsidized parent loans Loan Federal Any Cost of attendance Credit history Institutional loans Loan Colleges Any Cost of attendance Financial need Other loans Loan Private entities Any Cost of attendance Varies American opportunity credit Tax benefit Federal Tuition/course materials $2,500 Income Lifetime learning credit Tax benefit Federal Tuition/course materials $2,000 Income Tuition and fees deduction Tax benefit Federal Tuition $4,000 Income Coverdell ESA Tax benefit Federal/state Any —d Income Scholarshare savings plan Tax benefit Federal/state Any —d None Work study Work study Federal Any Variese Financial need a Cal Grants generally provide full tuition coverage at public institutions; $9,084 at private, nonprofit institutions; and $4,000 at private, for-profit institutions. In some cases, they also include a stipend of $1,656 for books and supplies and living expenses. b For full-time California Community College students only. c Provides up to 20 percent of tuition costs at UC and CSU. Awards scheduled to increase to up to 40 percent in 2017-18. d Contribution limit per student is $2,000 per year for Coverdell accounts and $475,000 in total for Scholarshare plans. Contributions are not tax deductible but earnings on contributions are exempt from taxes. e Student earns at least the federal minimum wage ($7.25 per hour). Students typically are assigned less than 20 hours per week. SEOG = Supplemental Education Opportunity Grant; GPA = grade point average; FTSSG = Full-Time Student Success Grants; and ESA = Education Savings Account. 8 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT Figure 2 Major Federal Educational Assistance Programs for Military Members and Veteransa 2015-16 Program Eligibilityb Benefitc Durationd Post-9/11 G.I. Bill Military members and veterans, Covers full tuition and fees at Up to 36 monthse including National Guard public schools. Provides $21,971 members, who served on active toward tuition and fees at private duty for at least 90 days anytime schools. Also includes a monthly after September 10, 2001. housing allowance that varies based on location and a $1,000 stipend for books and supplies. Montgomery G.I. Bill Military members and veterans, Provides up to $21,468 per year Up to 36 monthse (Active Duty) including National Guard for tuition and fees. members, who served on active duty for at least two years after June 30, 1985. Montgomery G.I. Bill Military members who serve Provides up to $4,416 per year for Up to 36 monthse (Selected Reserve) in reserve, including National tuition and fees. Guard members who have a six- year enlistment. In some cases, member must commit to reenlist. Military Tuition Assistance Varies by military branch. Some Varies by military branch but Lifetime limit of 130 units of Program branches include reserve generally provides up to $4,500 undergraduate credit and members, including National per year for tuition and fees. 39 units of graduate credit. Guard members. In some cases, Must remain in service during member must fulfill a service coursework. obligation after course completion. a Excludes the federal Reserve Educational Assistance Program, which the federal government closed to new applicants effective November 2015. Also excludes educational assistance programs for family members of military members and veterans. b Reflects main eligibility criteria, though some programs have additional criteria. Some military members and veterans may qualify for more than one program, but only some programs can be combined or used sequentially. c Reflects benefits for full-time students. Benefits can be reduced for students taking less than a full course load. d Programs allowing a fixed number of months of study typically are prorated based on attendance status. For example, a student attending half time could receive 72 months of eligibility. Additionally, these programs do not require continuous enrollment but typically limit the overall time during which benefits can be accessed (for example, 15 years). e Equivalent to four nine-month academic years. OVERVIEW OF NATIONAL GUARD AWARD PROGRAM In this section, we provide information on loan assumption pilot program for California the National Guard Award program’s (1) history, National Guard and State Military Reserve (2) goals, (3) eligibility requirements and selection members from 2004-05 through 2006-07. The process, (4) award amounts, and (5) funding. intent of the program was to improve recruitment and retention by providing up to $11,000 in Historical Context student loan repayments (over four years) for Predecessor Loan Assumption Pilot Program participating members. CSAC was responsible for Existed for Three Years During the Mid-2000s. selecting applicants and making payments, while Chapter 345 of 2003 (AB 547, Liu) created a student the Military Department certified the applicant www.lao.ca.gov Legislative Analyst’s Office 9 AN LAO REPORT was a member of the California National Guard or 2007-08 and 2008-09 budget requests to the State Military Reserve. The state did not authorize Legislature, the Schwarzenegger administration any loan repayment agreements in the 2004-05 proposed creating a program that would provide or 2005-06 state budgets. (The state was facing a financial aid for members of the California National fiscal shortfall in each of those years.) The state Guard while they were enrolled in college. The authorized 100 agreements in the 2006-07 budget, stated purpose of the new program was slightly for which CSAC received 132 applications. CSAC different from the predecessor program in that it prioritized applications using a ranking system focused primarily on improving recruitment. To that took into account an applicant’s financial justify the program, the administration pointed to need and whether the applicant had performed two surveys of California National Guard members’ full-time active military duty. CSAC paid out a preferences for state benefits. (The nearby box total of $669,000 to support the 100 agreements contains additional information on the two surveys.) from 2007-08 through 2010-11. The program The Legislature rejected the Governor’s proposal sunset on July 1, 2007, with the state issuing no new in both 2007-08 and 2008-09. Legislative budget agreements after that date. subcommittee analyses cited several reasons to reject Governor Proposed a New Education Benefit the proposals, including concerns that the program Program After Earlier Program Sunset. In its would award financial aid regardless of need. National Guard Recruitment and Retention Surveys Military Department Conducted Recruitment and Retention Surveys in 2006 and 2007. The purpose of the two surveys was to collect information on what benefits would most likely help the department recruit and retain California National Guard members. The surveys had different questions, but together they gathered information on members’ attitudes toward the following benefits: (1) health insurance, (2) enlistment and reenlistment bonuses, (3) college tuition assistance, (4) hunting or fishing licenses, (5) state parks passes, (6) a vehicle license fee exemption, and (7) a state tax credit. The surveys also collected information on what benefits members currently receive through civilian jobs or other sources, such as federal education benefits. The department distributed the surveys to California National Guard members but not members of the State Military Reserve. Surveys Included Extensive List of Questions but Had Relatively Low Response Rates. The 2006 survey contained 36 questions while the 2007 survey contained 43 questions. Aside from a handful of background questions on the respondents’ demographic characteristics, the questions focused entirely on benefits and their effect on recruitment and retention. The department received responses from only 10 percent of California National Guard members in 2006 and 13 percent in 2007. As a result, the responses likely are not representative of all California National Guard members. Nonetheless, the survey data is the only readily available data on (1) members’ preferences for state-funded benefits for serving in the California National Guard, and (2) what benefits members currently receive from employment in the civilian sector. Respondents Reported Certain Benefits More Likely to Boost Recruitment and Retention. The 2006 survey asked members to choose the one benefit most likely to improve recruitment and 10 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT Legislature Adopts Governor’s Proposal for Program Goals New Education Benefit Program in 2009-10. In Primary Goal of Program Is to Improve its 2009-10 budget request, the Schwarzenegger Retention. The main goal of the National Guard administration proposed an education benefit Award program cited in state law is to improve program somewhat similar to its earlier proposals. retention within the California National Guard and This time, the Legislature approved the request as State Military Reserve. State law primarily refers part of the 2009-10 budget package, authorizing the to retention in general terms, implying overall California National Guard Education Assistance retention, but also references retention of the “most Award Program. The program is administered competent and capable members.” State law does jointly by the Military Department and CSAC, with not reference improving recruitment even though the Military Department responsible for selecting the justification for the budget proposals leading up award recipients from among eligible applicants to the program’s creation focused on this area. and CSAC responsible for making award payments. Other Expressed Program Goals. Another We describe the main features of the program program goal cited in state law is to enhance the below. skills, competencies, and abilities of California National Guard and State Military Reserve members. Better skills were envisioned to benefit retention. For recruitment, the highest share of respondents chose tuition assistance (32 percent), followed closely by enlistment bonuses (28 percent) and health insurance (24 percent). For retention, the highest share of respondents chose reenlistment bonuses (27 percent), followed closely by health insurance (24 percent), a state tax credit (19 percent), and tuition assistance (17 percent). By contrast, only a small share of respondents selected hunting or fishing licenses, state parks passes, or vehicle license fee exemptions as the benefit most likely to improve either recruitment or retention. The 2007 survey only asked whether one particular benefit—health insurance—would improve retention. About 82 percent of respondents replied that they believed it would. Respondents Reported Widespread Interest in Attending College. The 2006 survey found that a majority of respondents either wanted to enroll in postsecondary education (58 percent) or were already enrolled (20 percent). Most respondents who expressed an interest in a state tuition assistance benefit said they would use it either to pursue a bachelor’s degree (43 percent) or a master’s degree (33 percent). The 2007 survey had similar findings. In addition, both surveys asked whether members would remain in the California National Guard if they were required to reenlist in order to access an education benefit. Nearly three-quarters of respondents replied yes in both surveys. Many Respondents Reported Already Receiving Federal Education Benefits and Employer Health Benefits. Among respondents who were enrolled in college, the 2007 survey found widespread use of federal G.I. Bill benefits (49 percent) and the federal Military Tuition Assistance Program (40 percent). The survey did not identify the share receiving benefits from both aid programs. The 2007 survey also found that more than half (54 percent) of respondents received health insurance from their civilian employers. www.lao.ca.gov Legislative Analyst’s Office 11 AN LAO REPORT both the military and the state’s civilian workforce They are (1) the applicant’s occupational specialty, and overall economy (given so many California (2) the applicant’s recent performance evaluation, National Guard and State Military Reserve (3) a letter of recommendation for the program members serve part time while employed in civilian from the applicant’s commander, and (4) any jobs). State law also suggests the program could commendations received by the applicant. The augment federal revenue coming into California. fifth suggested consideration is an essay from the That is, if the program improved retention, then applicant explaining why education is important to California might improve on the measurements him or her. of strength readiness used by the National Guard Military Department Gives Highest Priority Bureau and receive additional National Guard to Renewal Awards. The Military Department positions in the future. Moreover, the salaries gives highest priority to current recipients who associated with any increase in federally funded apply for a renewal award. Within this group, the positions would be subject to state income tax, department prioritizes applicants based on length thereby increasing state General Fund revenue too. of time in the program, with the greatest priority going to applicants in the program the longest. Eligibility Requirements and Selection Process Military Department Next Prioritizes New State Law Requires Applicants to Meet Four Applicants Applying Early, Uses Ranking System. Minimum Eligibility Criteria. Specifically, state The department then prioritizes awards for new law requires each award recipient to (1) have applicants (or renewal applicants who have had California residency for at least one year, (2) have at a break in program participation) who apply by least two years of service in the California National April 30. The department delegates award selection Guard or State Military Reserve, (3) submit a for these new applicants to the three branches, Free Application for Federal Student Aid, and which, in turn, use ranking systems that they (4) enroll at a Cal Grant-eligible postsecondary update each year. Figure 3 displays a recent version institution for at least three units per term in of these ranking systems. All three branches use pursuit of a certificate or degree that the recipient a 30-point system, as new applicants compete does not already hold. The Military Department across the branches. Each branch, however, selects also requires applicants to be in active status with which factors and preferences to include in its “good standing”—meaning they are not facing point system. For example, the California Army disciplinary action. National Guard prioritizes new applicants with State Law Requires Military Department to more educational experience whereas the State Prioritize Applicants Based on Skills and Ability. Military Reserve prioritizes new applicants with State law requires the department to prioritize less educational experience. among eligible applicants based on the skills it Military Department Awards Any Remaining most needs. It further requires the department to Funding on a First-Come, First-Served Basis. select applicants with “outstanding ability.” State After making renewal awards and new awards law suggests, but does not require, the department for applicants applying prior to April 30, the use five considerations when judging an applicant’s department accepts applications on a first-come, ability. Four relate to an applicant’s California first-served basis, subject to the availability of National Guard or State Military Reserve service. funding. 12 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT Award Amounts Figure 3 Maximum Award National Guard Award Applicant Ranking System Varies by Brancha Amount Depends on Army Air State Institution and Grade National Guard National Guard Military Reserveb Level. The maximum Years of service Fewer years Fewer years Fewer years award amounts for Hours of service per year — — More hours Gradec Varies Lower grade Lower grade National Guard awards Educational experience More education — Less education are modeled after the Military specialty skill level — More skilled/critical — skill areas maximum award amounts a Each branch uses a point system to rank applicants, with a maximum of 30 points possible. Figure shows the general method for Cal Grants. As with each branch uses to assign more points within each category. b maximum awards under Unlike the California National Guard, the State Military Reserve does not have separate branches for army and air personnel. c A member’s grade is his or her position within a hierarchical job classification system used by the military. The Army National the Cal Grant program, Guard first prioritizes officers (managers) without college degrees, followed by enlisted members (nonmanagers), followed by officers with college degrees. National Guard maximum awards vary by institution. is $500 higher than the maximum undergraduate For example, the maximum National Guard award. The $500 supplement is designed to help award is higher for University of California (UC) cover the cost of books and supplies. For both students than California State University (CSU) undergraduate and graduate students, another students. As shown in Figure 4, some differences, notable distinction between the two aid programs however, exist between maximum National Guard is that National Guard awards can pay for tuition awards and maximum Cal Grant awards. Most and fees, books and supplies, or living expenses, notably, the National Guard Award program offers whereas most types of Cal Grant awards only pay substantially higher awards for students attending for tuition. private colleges and universities than the Cal Actual Award Amount Depends on Two Grant program. Unlike the Cal Grant program, the Factors. Actual National Guard awards cannot National Guard Award program also offers awards exceed the difference between (1) the student’s to graduate students. National Guard awards for cost of attendance (tuition and fees, books and graduate students also vary by institution. At all supplies, and living expenses) and (2) the amount types of institutions, the maximum graduate award of financial aid the student receives through the Figure 4 Comparison of Maximum Cal Grant and National Guard Awardsa 2015-16 Undergraduate Students Graduate Students Cal Grant National Guard Cal Grant National Guard University of California $12,240 $12,240 — $12,740 Private, nonprofit institutions 9,084 12,240 — 12,740 California State University 5,472 5,472 — 5,972 Private, for-profit institutionsb 4,000 12,240 — 12,740 California Community Colleges 1,656 1,656 — — a For full-time students. b Except for-profit institutions accredited by the Western Association of Schools and Colleges. Award amounts for these institutions are the same as those listed for private, nonprofit institutions. www.lao.ca.gov Legislative Analyst’s Office 13 AN LAO REPORT federal G.I. Bill or other federal veterans education awards (equating to about a half year of funding). benefits. Additionally, state law prohibits students Over the next few years, the state provided from receiving both a National Guard award and a between $2.3 million and $3.3 million annually. Cal Grant. Students eligible for both awards must Since 2013-14, state funding has remained level choose one. at $2.6 million. In recent years, the Military Awards Generally Renewable for Up to Four Department has spent 92 percent or more of the Years of Study. This limit is modeled closely budgeted appropriation for the program. A small after the limit for Cal Grant awards. Recipients amount goes unspent because some awards do not can renew their National Guard awards for up to get paid in certain circumstances, such as when a four (or, in certain cases, five) years of full-time student drops out of school prior to the end of the equivalent study if they maintain a 2.0 grade “add/drop” period for courses at that school. point average and continue to meet the program’s Program Costs About $300,000 to Administer. minimum eligibility requirements. Full-time Though the annual budget act does not earmark study is defined as 12 or more units per semester. a specified amount for National Guard Award Students who enroll full time during the regular program administration, the Military Department academic year and also enroll in summer term currently designates two administrative positions use up their eligibility in less than four years. and an associated $192,000 for the program. The Conversely, part-time students have their eligibility Military Department also passes through $115,000 extended over more than four academic years. For to CSAC to reimburse that agency for its program instance, a student taking six units each semester administration costs. This funding supports could use their award over eight academic years. staffing and information technology costs for CSAC to administer the program. CSAC does not dedicate Funding any positions wholly to the National Guard Award State Budget Historically Has Provided program but keeps track of time spent on the a Few Million Dollars Annually for National program by CSAC staff who also work on other Guard Awards. In the initial year of the program financial aid programs. This staff time equates to (2009-10), the state provided $1.7 million for half a position. FINDINGS In this section, we review available data on the year. This is 3 percent to 4 percent of all California National Guard Award program’s applications, National Guard and State Military Reserve acceptances, payments, enrollment, and retention. members. The department was unable to explain the The data we review generally covers the period reason for the low application rate, though it noted from 2009-10 through 2014-15, which was the last that it has not heavily publicized the program in complete year of data available at the time this the past because it is not able to fund all applicants report was prepared. within its budget. Chapter 254 of 2015 (AB 1401, Very Few Members Apply to the Program Each Baker), however, now requests the department to Year. Excluding its initial year, between 600 and annually provide each member who does not have a 900 members have applied to the program each baccalaureate degree with a brochure describing the 14 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT National Guard Award program as well as certain varies by these categories. For undergraduates, other financial aid programs. awards averaged $10,100 at private, nonprofit All Renewal Applications and All New institutions; $10,000 at UC; $7,600 at private, Applications Submitted by Priority Deadline Are for-profit institutions; $4,200 at CSU; and $1,300 Accepted. Every year since the program’s inception, at California Community Colleges (CCC). For the department has been able to accept all renewal graduate students, awards averaged $12,700 at applicants and all new applicants who apply by the private, for-profit institutions; $12,100 at UC; priority April 30 deadline. This means the only $11,100 at private, nonprofit institutions; and applicants not accepted into the program are new $5,000 at CSU. applicants who apply after April 30. These late Most Participants Receive Maximum Award. applicants are accepted on a first-come, first-served Among all participants, about three-fourths basis. Generally, about 200 to 300 applications receive the maximum award for each of the terms are not accepted during the first-come, first- they enroll. Among the remaining one-quarter of served application period, which equates to about participants, some receive less than the maximum one-third to one-half of all applicants. In 2014-15, award because they are taking only a few units about three-quarters of all the applicants accepted and their colleges’ associated cost of attendance is into the program actually ended up getting paid, relatively low. Other participants receive less than the while about 12 percent withdrew from the program maximum National Guard award because they also prior to receiving payment and another 12 percent are receiving federal veterans educational benefits took a leave of absence. (For the remainder of this and combined the two benefits would exceed the report, we refer to applicants who were accepted cost of attendance. In these latter cases, the National into the program and received a payment as Guard award is capped so participants’ combined participants in the program.) benefits do not exceed the cost of attendance. Participants Split Almost Evenly Between Notable Variation in Number of Units Taken. California Army and Air National Guard In 2014-15, 40 percent of award payments were Members. Since the program’s inception, 51 percent made for terms in which participants enrolled of participants have served in the California Army in 12 or more units, 38 percent for participants National Guard, 45 percent in the California enrolled between 6 and 12 units, and 22 percent Air National Guard, and 4 percent in the State for participants enrolled between three and six Military Reserve. California Air National Guard units. Just over half of participants enrolled for a members are overrepresented in the program, full academic year—meaning, for example, two as they make up only about one-quarter of all semesters at an institution on a semester schedule. California National Guard members. Participation A little over one-third enrolled for less than a full from the State Military Reserve is somewhat academic year, while 10 percent enrolled for a full underrepresented, as State Military Reserve academic year plus a summer term. members constitute 7 percent of the combined total Nearly Half of Participants Attend Private, of all members. The department does not track Nonprofit Institutions. In 2014-15, 48 percent of whether participants serve part time or full time. participants attended a private, nonprofit institution; Average Award Totals $7,200. This is the 26 percent attended CSU; and 22 percent attended average award across all institution types and CCC. By contrast, less than 5 percent of participants student grade levels, but the average award attended either UC or a private, for-profit institution. www.lao.ca.gov Legislative Analyst’s Office 15 AN LAO REPORT Majority of Participants Enroll as example, a member might have participated in the Undergraduates, Virtually All Seek Degrees. program from 2010 through 2014 but remains in For 2014-15, nearly two-thirds of participants the National Guard in 2015 simply because his or enrolled as undergraduates while just over her enlistment has not yet ended. one-third enrolled as graduate students. Virtually Retention Rates for Army Members Not all participants report pursuing an associate’s or Participating in Award Program Slightly Higher higher-level degree. Only 4 percent of participants Than for Army Award Recipients. According to indicate they are pursuing a certificate. the Military Department, between 2009-10 and Participants Enroll in a Wide Variety of 2014-15, the average annual reenlistment rate for Programs. In 2014-15, undergraduate participants Army members not participating in the program enrolled in programs in fields spanning the who were up for reenlistment was 62 percent. This humanities (such as English), the social sciences rate is somewhat higher than the reported retention (such as psychology and sociology), the natural rate of 59 percent for Army members participating sciences (such as biology), the applied sciences in the National Guard Award program. Given (such as computer science), the health sciences the department’s methodology very likely (such as nursing), and professional programs overstates retention for program participants, (such as real estate). The most common types of the actual difference is likely greater than cited programs undergraduate participants attended here. Various differences might exist, however, were (1) business, leadership, and management between participants and nonparticipants that also (28 percent); (2) engineering and computer affect their likelihood of staying in the California science (13 percent); and (3) nursing and other National Guard. health sciences (13 percent). Similar to their Retention Data for Air Members Not undergraduate counterparts, graduate participants Participating in Award Program Had to Be attended programs in a diverse array of fields. The Extrapolated. Unlike for Army members, most common types of programs they attended the department does not track the number of were (1) business, leadership, and management Air members up for reenlistment each year. (30 percent); (2) nursing and other health sciences The department therefore had to extrapolate (9 percent); and (3) education or teaching (8 percent). retention rates for these nonparticipants. Its Majority of Participants Remain Enlisted. retention estimate assumes an even number of Air Specifically, the department reports that 59 percent members come up for reenlistment each year. This of California Army National Guard participants, assumption, however, does not match the patterns 70 percent of California Air National Guard of Army members eligible for reenlistment, which participants, and 95 percent of State Military tend to fluctuate, with year-to-year changes as Reserve participants who benefitted from the great as 20 percent. Based on the department’s program at some point between July 2009 and assumption, the department found that the June 2015 remained enlisted in the California retention rate for Air nonparticipants (51 percent) National Guard as of June 2015. This almost was lower than for Air participants (70 percent). certainly overstates retention because the Military Because the department had to estimate the rate for Department only tracks data on the number of nonparticipants, however, the comparison for Air program participants remaining enlisted regardless participants and nonparticipants is not as reliable of whether they ever were up for reenlistment. For as the one for Army members. 16 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT Retention Rate Not Available for State participants are enrolling in programs that would Military Reserve Members Not Participating in provide them with the skills most needed by the Award Program. The department indicated to us department. it was unable to calculate a retention rate for these Recruitment Data Also Not Available. Though members. Therefore, no data is available to compare recruitment is not one of the goals of the program to the retention rate for State Military Reserve listed in statute, the program could be beneficial program participants. for attracting members to join. The department Some Key Data on Participants’ Education indicates, however, that it does not have any data and Skills Not Available. The department does available to suggest whether the program is having not track participants’ prior level of postsecondary an effect on recruitment. The department indicates education or whether participants complete that in the future it might survey new members to a degree or credential through the program. see if the program was a factor in their decision to Data also is not available to determine whether enlist. ASSESSMENT In this section, we first evaluate the program’s two compatible, measurable goals would bring goals and the program’s effectiveness at meeting needed focus to the program. its goals. Next, we discuss specific features of Program Likely Not Improving Retention. the program that could be improved to help the Though Military Department officials indicate program better meet its objectives. Lastly, we assess they believe the program is an important tool whether differences in participants’ award amounts for retention, the best available data (for Army are serving a compelling purpose. members) suggests that retention rates for program participants are slightly lower than for Too Many Program Goals, Too Little nonparticipants. Moreover, the relatively small Evidence of Effectiveness share of members applying to the program each Too Many Goals. The program’s goals run year suggests the program might not be particularly the gamut from increasing overall retention of valuable to most members. California National Guard members to increasing Program’s Effect on Members’ Skills and the retention of outstanding members to increasing Education Unknown. Because the department members’ skills. Because the program’s design is has not created a list of the skills it most needs, modeled closely after the Cal Grant program, it also evaluating whether program participants are appears designed to meet secondary goals, such as acquiring critical skills is not possible. Additionally, improving access to college and degree completion. without data on program participants’ Given the plethora of program goals, some seem to postsecondary enrollment status prior to their work at cross-purposes with others. For example, acceptance into the program, the state has no way increasing access to education and encouraging of knowing whether the program is increasing degree completion might reduce retention by the number of California National Guard and giving members greater civilian job opportunities. State Military Reserve members enrolled in Narrowing down the policy objectives to one or postsecondary education or increasing the units www.lao.ca.gov Legislative Analyst’s Office 17 AN LAO REPORT they take. The state also lacks data to know whether Selection Process Does Little to Retain Key the program is increasing the number of degrees Members. If one of the goals of the program is and credentials held by members. to retain outstanding members, then its basic Program’s Effect on Recruitment Unknown. selection process is flawed. For new applicants, Although not an explicit statutory goal, previous the department only uses a competitive-based versions of the National Guard award program ranking system for those applicants applying prior intended to help with recruitment. Data, however, to April 30. As sufficient funding always has been is not available to determine if recruitment has available to award every applicant applying prior to improved as a result of the current version of the April 30, this ranking system adds administrative program. burden without effectively prioritizing the most worthy applicants. Moreover, applicants applying Some Features of Program Not after April 30 also are not selected using a Optimal for Fulfilling Goals competitive process, as the department makes these Too Many Goals Makes Assessment of awards on a first-come, first-served basis. Though Program Features Difficult. Below, we identify the competitive-based ranking system to date has various program improvements that could be not actually prioritized among applicants, two of made to fulfill certain goals better. Without its other shortcomings also are worth noting: (1) it narrowing the program’s objectives, even some does not use merit-based application materials of these improvements, however, could work at to rank applicants, and (2) it does not prioritize cross-purposes. applicants enrolling in education programs most Existing Service Requirement Does Little to likely to improve the performance of the California Promote Retention. If overall retention is intended National Guard or State Military Reserve. to be the primary goal of the National Guard Eligibility Criteria Might Promote Retention Award program, then its service requirement but Do Not Maximize Access to Education. Under could be strengthened. The National Guard Award existing eligibility criteria, the program has no program only requires that participants remain in financial need requirement, which might help service while they receive an award. By contrast, promote retention but does not help promote access some federal military education benefit programs to education. That is, a financial need requirement provide a stronger retention incentive by requiring could exclude some members from the program participants to commit to additional service. For whom the department wants to retain. For the instance, the Montgomery G.I. Bill Selected Reserve National Guard Awards program to improve program requires officers (who are akin to senior members’ access to education, however, a financial managers in the civilian sector) to serve six years in need requirement is important. Otherwise, addition to their current obligation. According to the program likely is providing aid to some the Military Department, federally run education participants who would have attended college even benefit programs can require reenlistment because without the program. the federal government sets National Guard Low Minimum-Unit Requirement Could enlistment periods. The department believes that Result in Lengthy Time to Degree. If one of the a state would need to receive permission from the goals of the National Guard Award program is federal government for a state education benefit timely degree completion, then its three-unit program to have such a requirement. minimum enrollment requirement is too low. 18 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT Using this standard, a participant could take as whereas others may seek five- or six-year doctoral long as 20 years to complete a bachelor’s degree. degrees. Further, some members may seek a Virtually all of the state’s other financial aid four-year bachelor’s degree, followed by a two-year programs have higher unit standards. California, master’s degree. for example, recently created a Full-Time Student Award Structure Raises Questions Success Grant for CCC students that requires enrollment in at least 12 units as an incentive Award Structure at Public Segments Creates for students to complete more quickly. The Disparities. Figure 5 shows the out-of-pocket state also recently tasked CSU with creating a costs of a National Guard award recipient under plan to increase its four-year graduation rates. different situations. The first example in the figure Additionally, California’s Cal Grant program and shows National Guard award coverage for students most UC and CSU institutional aid programs have attending one of the public segments who receive had longstanding requirements for students to take no other financial aid. For these students, National a minimum of six units. Guard awards approximate tuition at each of the Four-Year Limit Inconsistent With Lengths of segments, leaving students with a similar out-of- Educational Programs. If the program’s primary pocket cost for living expenses (about $17,000 goal is educational attainment, a four-year limit to $18,000). As shown in the second example, for every participant likely is inappropriate, as disparities emerge if students receive financial some members may seek two-year master’s degrees aid for tuition coverage from another program, Figure 5 National Guard Awards Can Make UC Less Costly to Attend Than CSU or CCCa 2014-15 UC CSU CCC Cost of Attendance Tuition and systemwide fees $12,192 $5,472 $1,380 Living and other expenses 17,100 18,555 17,228 Totals $29,292 $24,027 $18,608 Example 1: Student Receives No Federal Military Education Benefits Federal military education benefit award — — — National Guard award $12,192 $5,472 $1,648 Total Awards $12,192 $5,472 $1,648 Student’s Out-of-Pocket Expenses $17,100 $18,555 $16,460 Example 2: Student Receives a Federal Military Education Benefit Federal military education benefit awardb $15,641 $8,921 $4,829 National Guard award 12,192 5,472 1,648 Total Awards $27,833 $14,393 $6,477 Student’s Out-of-Pocket Expenses $1,459 $9,634 $12,131 a Cost of attendance varies across campuses and by a student’s living arrangement. Cost of attendance figures shown are for a full-time undergraduate student living off campus not with family attending the Los Angeles campus of each system. Living and other expenses vary across the three campuses shown because (1) they use different survey data to estimate these costs, and (2) they charge different campus- based fees. b Assumes student receives a Post-9/11 G.I. Bill award that provides full tuition coverage at each segment, plus $3,449 for living expenses. www.lao.ca.gov Legislative Analyst’s Office 19 AN LAO REPORT such as the Post-9/11 G.I. Bill. For these students, Award program should more heavily subsidize the National Guard award provides much greater students at certain public segments. assistance if the student attends UC versus CSU or Books and Supplies Supplement for Graduate CCC. This is because the National Guard award Studies Serves No Apparent Purpose. The $500 amount generally is linked to tuition, yet, in this supplement for books and supplies for participants case, is being used to pay for living expenses enrolled in graduate programs serves no apparent (because the Post-9/11 G.I. Bill already has paid purpose because the entire base award for for tuition). As a result, a student attending UC graduate studies can be used to pay for any cost would incur about $1,500 in out-of-pocket costs for of attendance, including books and supplies. living expenses, while the CSU student would incur Moreover, no apparent justification exists for $9,600 and the CCC student $12,100 in out-of- providing a supplement for these costs for graduate pocket costs. State law, however, does not provide students but not undergraduate students. any explanation as to why the National Guard RECOMMENDATIONS Based on our findings and assessment, we solutions. Ideally, a policy solution is tailored to make one recommendation and offer several overcoming a clearly documented problem with considerations for the Legislature regarding the a clearly identified root cause. The Legislature’s potential reauthorization of the National Guard next step, therefore, could be to develop a more Award program. thorough understanding of the root causes of the Recommend Allowing Program to Sunset. Military Department’s most pressing personnel The available data does not show that the program problem and identify a solution to address that is effective at retaining members, increasing their specific problem. For example, if the Military skills, or expanding their access to education. Given Department’s greatest problem is overall retention the program is not meeting its core objectives, we and insufficient compensation is the root cause, recommend allowing it to sunset. then the Legislature could explore reenlistment Better Understanding of Problem, More bonuses as a policy solution. If instead the Targeted Solution Needed. The program’s department’s greatest problem is that many of its ineffectiveness stems in part from its lack of clear members lack educational opportunities due to focus. The program appears primarily intended inadequate outreach and financial aid, then the to address retention, but it is modeled after a Legislature could explore increasing awareness of program intended to expand access to education. and access to aid. If, however, the department’s The program also has various other goals, such as greatest problem is a shortage of specialty skills increasing members’ skills and abilities. Though all and the cost of training is the barrier, then the seemingly laudable policy objectives, they are not Legislature could explore targeted scholarships necessarily compatible, nor are they all necessarily with extended service requirements. problems facing the Military Department. The Modifications Warranted if Award Program program’s ineffectiveness also stems in part from Still Desired. Though in our view the evidence does a poor linkage between policy objectives and not support extension of the existing version of the 20 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT program, the Legislature could consider modifying • Revise Eligibility Requirements. If access the program. Depending upon what the Legislature to education and timely degree completion determines to be the key personnel issue facing the are problems, a new program could require Military Department, the Legislature could clarify applicants to have financial need and the program’s policy objective and then consider increase the minimum-unit requirement. any of the following modifications, as applicable: • Change Four-Year Study Limit. If • Add Reenlistment Requirement. If overall the primary goal of the program is to retention is a problem, the Legislature encourage degree completion within could direct the Military Department to normal unit loads, the Legislature could ask the federal government for permission establish different study limits that match to require members participating in the degree objectives (for example, a four-year program to reenlist after the expiration of limit for students seeking bachelor’s their current enlistment. degrees and a two-year limit for students seeking master’s degrees). • Make Selection Process Competitive. If retaining certain outstanding members • Change Maximum Award Amounts. is a key goal, then a new program could The Legislature could design an award require the Military Department to grant structure that promotes program all new awards on a competitive basis, objectives. For example, if the Legislature eliminating any first-come, first-served wanted an award to cover tuition, it could element. Additionally, it could require the have the award make up the difference department to use merit-based application between an institution’s tuition level and all materials (such as performance evaluations other tuition aid provided to the student. or letters of recommendation). If it also wanted to cover all or a portion of book and supply costs, it could set a • Factor in Relevance of Training. If specific separate award for these costs and provide skill attainment is desired, a new program the award for students receiving a tuition could require the applicant scoring system award, regardless of education level. to consider the relevance of the applicant’s educational program to the department’s operations. www.lao.ca.gov Legislative Analyst’s Office 21 AN LAO REPORT 22 Legislative Analyst’s Office www.lao.ca.gov AN LAO REPORT www.lao.ca.gov Legislative Analyst’s Office 23 AN LAO REPORT LAO Publications This report was prepared by Paul Golaszewski, with assistance from Helen Kerstein, and reviewed by Jennifer Kuhn. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 24 Legislative Analyst’s Office www.lao.ca.gov