The 2020-21 Budget: California Student Aid Commission

The 2020-21 Budget: California Student Aid Commission Summary Governor Proposes $2.7 Billion for the California Student Aid Commission (CSAC) in 2020-21. The most notable changes include current- and budget-year adjustments to Cal Grant spending, $5 million one time for a student loan outreach initiative, and $7.9 million ($6.2 million one time and $1.7 million ongoing) for various state operations proposals. Cal Grant Adjustments Reflect Updated Caseload Data. The Governor’s budget adjusts Cal Grant spending downward in 2019-20 by $139 million to reflect more recent data on award offers and payments. From this revised current-year level, the budget provides a $97 million augmentation for 2020-21 to reflect a projected 4 percent increase in recipients. Based on recent caseload trends, the administration’s projections are reasonable. We anticipate the administration will provide updated cost estimates at the May Revision. Student Loan Work Group Is Promising, but Specific Outreach Proposals Are Premature. The Governor’s budget provides (1) $500,000 for CSAC to establish a work group that would research strategies to increase access to beneficial student loan and repayment programs, (2) $375,000 for CSAC to provide information on student loans through a website and other means, and (3) $4.1 million for grants to public colleges and universities to notify students about repayment options. With many existing sources of information on student loans and repayment options, it is unclear which information gaps or other barriers are preventing students from accessing beneficial programs. We recommend the Legislature approve $500,000 for a work group to improve the state’s understanding of these barriers and identify targeted strategies to overcome them. We recommend waiting until the work group issues its findings and recommendations in September 2021 before allocating funds for specific outreach activities. Other State Operations Proposals Have Merit. The Governor’s budget includes three sets of state operations proposals. First, it provides $5.3 million one time for CSAC to continue the replacement of its Grant Delivery System. As this information technology project is generally on track, we recommend the Legislature approve the proposal. Second, the Governor’s budget includes $773,000 ongoing and 15 positions for CSAC to implement three new programs created in the 2019-20 budget package and comply with federal voter registration law. Because this proposal directly responds to recent, notable increases in CSAC’s workload, we believe it is reasonable and recommend the Legislature approve it. Finally, the Governor’s budget includes $1.8 million ($943,000 one time and $903,000 ongoing) for CSAC to relocate to a larger office space. Though we believe the request for additional space is warranted, we recommend the Legislature withhold action on this proposal until it receives an updated relocation time line, as this will affect the associated costs in 2020-21. GABRIEL PETEK LEGISLATIVE ANALYST FEBRUARY 27, 2020 analysis full gutter 2020-21 BUDGET INTRODUCTION In this brief, we provide an overview of the (2) analyze the Governor’s proposal to fund a Governor’s proposed budget for the California student loan outreach initiative, and (3) analyze the Student Aid Commission (CSAC). We then Governor’s state operations proposals for CSAC. (1) assess the Governor’s Cal Grant cost estimates, OVERVIEW Governor Proposes $2.7 Billion for CSAC in Responsibility to Kids (CalWORKs) program and 2020-21. As Figure 1 shows, the two main fund backfills CSAC with General Fund. sources for CSAC are state General Fund and Cal Grants Account for Majority of New federal Temporary Assistance for Needy Families Ongoing Spending. As Figure 2 shows, the (TANF). State General Fund comprises about Governor’s budget increases Cal Grant spending 60 percent of CSAC funding, with federal TANF by $97 million over the revised 2019-20 level. Other comprising about 40 percent. The Governor’s notable CSAC augmentations include $5 million budget for 2020-21 decreases TANF support for one time for a student loan outreach initiative and CSAC by $60 million (6 percent). It redirects those $7.9 million (including $6.2 million one time) for funds to the California Work Opportunity and other state operations. These spending increases Figure 1 California Student Aid Commission Budget (Dollars in Millions) Change From 2019-20 2018-19 2019-20 2020-21 Actual Revised Proposed Amount Percent Spending Local assistance Cal Grants $2,122 $2,416 $2,513 $97 4% Middle Class Scholarships 104 110 110 — — Chafee Foster Youth Program 17 18 18 — — Student Opportunity and Access Program 8 18 8 -10 -56 Other ongoing programsa 5 4 3 -1 -13 One-time initiativesb 3 113 — -113 -100 Subtotals $2,259 $2,678 $2,652 -$26 -1% State operations 20 27 30 3 11% Totals $2,280 $2,705 $2,682 -$23 -1% Funding General Fund $1,189 $1,619 $1,656 $38 2% Federal TANF 1,066 1,060 1,000 -60 -6 Other federal funds and reimbursements 19 21 21 — — College Access Tax Credit Fund 5 6 5 -1 -12 a Includes Assumption Program of Loans for Education, California Military Department GI Bill Awards, Cash for College, John R. Justice Program, Law Enforcement Personnel Dependents Scholarships, and State Nursing Assumption Program of Loans for Education For Nursing Faculty. b Includes Child Savings Account Grant Program, Every Kid Counts, and Golden State Teacher Grant Program. TANF = Temporary Assistance for Needy Families. 2 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET are offset by the removal of $133 million in one-time Figure 2 2019-20 funds previously provided for various California Student Aid Commission initiatives, including teacher scholarships and Spending Changes college savings accounts. Under the Governor’s budget, total CSAC spending decreases by (In Millions) $23 million (0.9 percent) from the revised 2019-20 Revised Spending $2,705.3 2019-20 level. Local Assistance Cal Grants $97.2 Other financial aid programs -0.5 CAL GRANTS Subtotal ($96.7) State Operations Grant Delivery Systema $5.3 In this section, we provide background on the Student loan outreacha 5.0 Cal Grant program and assess the Governor’s cost New leased spaceb 1.8 estimates for that program. New positionsc 0.8 Subtotal ($12.9) Background Removal of one-time 2019-20 funds -$132.8 Total Changes -$23.2 State Offers Multiple Types of Cal Grant 2020-21 Proposed Spending $2,682.1 Awards. In the late 1970s, the state consolidated a One time. its various student financial aid programs into the b Consists of $903,000 ongoing and $943,000 one time. c Cal Grant program. As Figure 3 shows, there are Includes six positions for National Voter Registration Act compliance and three positions to administer California Dreamer Service three main types of Cal Grant awards—Cal Grant Incentive Grant. Governor’s budget also provides authority for six A, B, and C. The award types vary in the amount positions previously funded in 2019-20 Budget Act. of tuition and nontuition coverage they provide. Cal Grant A covers full systemwide tuition and fees Figure 3 at the public universities and a fixed amount of Cal Grant Award Amounts tuition at private universities. Cal Grant B provides Maximum Annual Award Amount, 2019‑20 the same amount of tuition coverage as Cal Grant Tuition Coverage Amount A, with the exception that it provides no tuition coverage in the first year of college. Cal Grant B Cal Grant A and B also provides aid for nontuition expenses such as UC $12,570 food, housing, and transportation. Cal Grant C, Nonprofit schools 9,084 which is only available to students enrolled in career WASC-accredited for-profit schools 8,056 CSU 5,742 technical education programs, provides a lower Other for-profit schools 4,000 amount of aid for tuition and nontuition expenses. Cal Grant C A student may receive a Cal Grant A or B award for Private schools $2,462 up to the equivalent of four years of full-time study, Nontuition Coveragea Amount whereas a Cal Grant C award is available for up to Cal Grant B two years. All segments $1,648b Entitlement and Competitive Programs Have Cal Grant C Certain Eligibility Criteria. In 2000, the Legislature CCC $1,094 restructured the Cal Grant program into two main Private schools 547 programs—a relatively large entitlement program a Award amounts apply to students without dependent children. Students with and a smaller competitive program. To qualify dependent children qualify for a supplemental award that brings nontuition coverage to a maximum of $6,000 for Cal Grant A and B recipients and $4,000 for Cal Grant C for these programs, students must meet certain recipients. b income and asset criteria, which vary by family size. All Cal Grant B recipients also receive a supplemental award (up to $24) funded by the College Access Tax Credit. Up to 2,500 Cal Grant B recipients who are For example, a student from a family of four must undocumented may also receive the California Dreamer Service Incentive Grant (up to $3,000) if they fulfill a community service requirement. have a household income of under $102,500 to WASC = Western Association of Schools and Colleges. qualify for Cal Grant A or C and under $53,900 to www.lao.ca.gov 3 analysis full gutter 2020-21 BUDGET qualify for Cal Grant B. The entitlement program Cost Estimates also has age requirements that limit participation Governor’s Budget Adjusts 2019-20 to recent high school graduates and transfer Spending Downward by Net of $139 Million. students under age 28. The competitive program The administration has updated its Cal Grant cost is designed for those students ineligible for the estimates for the current year to account for two entitlement program—typically older students who notable factors. First, the administration adjusts have been out of school for at a least a few years. baseline Cal Grant costs downward by $161 million Both programs require students to have a minimum due to recent data on award offers and payments. grade point average (GPA), which ranges from This data suggests that growth in the number 2.0 to 3.0 depending on award type. of entitlement recipients is slowing, following a In 2019-20, the State Enacted Several Major period of heightened growth due to previous policy Cal Grant Expansions. Most notably, the state changes (including improvements to the financial provided $97 million ongoing to fund supplemental aid application process). Second, the administration nontuition awards for student parents at the public makes a $22 million upward adjustment in the cost segments. When combined with the base nontuition of supplemental nontuition coverage for student award, student parents receiving Cal Grant A parents. The higher cost stems from an increase in and B awards are now eligible for up to $6,000 in the estimated number of student parents receiving nontuition coverage, while student parents receiving Cal Grants, largely due to the additional competitive Cal Grant C awards are eligible for up to $4,000 in awards the state authorized in 2019-20. Despite nontuition coverage. (For comparison, the maximum the net downward adjustment, the revised annual nontuition award is $1,648 for other Cal 2019-20 level of Cal Grant spending is $294 million Grant B recipients and $1,094 for other Cal Grant (14 percent) higher than the 2018-19 level, partly C recipients.) State law caps annual spending on due to the significant policy changes described these supplemental awards for student parents above. at $125 million and requires CSAC to prorate the Governor’s Budget Increases Cal Grant award amount downward if funding is insufficient. Spending by $97 Million in 2020-21. This reflects In addition to increasing aid for student parents, the a 4 percent increase over the revised 2019-20 level. state provided $42 million to increase the number Virtually all of the increase in spending is due of new competitive awards authorized annually from to projected growth in the number of Cal Grant 25,750 to 41,000. The state also introduced efforts recipients. For comparison, the 4 percent projected to more comprehensively reform the state’s financial growth in Cal Grant recipients is slightly lower than aid system, as the box below describes. the average annual growth rate of 4.6 percent Cal Grant Work Group Cal Grant Work Group Scheduled to Release Report Soon. In 2019, two bills seeking to reform the state’s financial aid system were introduced in the Legislature—AB 1314 (Medina) and SB 291 (Leyva). Both of these bills would significantly expand eligibility for financial aid and increase coverage for nontuition expenses. In September 2019, several legislators requested that the California Student Aid Commission convene a work group to review the two legislative proposals and provide recommendations on key components. For example, the work group is to consider how to address nontuition expenses, how to prioritize among students, and how to phase in program changes. The work group has 22 members, with representatives from CSAC, the Legislature, the administration, the higher education segments, and relevant research organizations. The work group presented its recommendations at a commission meeting in February 2020 and is expected to issue its final report in March 2020. 4 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET over the past five years. The administration Governor Proposes to Increase Spending projects a minimal change in the average award Cap on Student Parent Awards. The Governor’s amount, which is consistent with its assumptions budget assumes the total cost of supplemental that (1) tuition will not increase at UC and CSU awards for student parents in 2020-21 will remain and (2) the maximum award will not decrease at at $118 million, the revised 2019-20 level. Despite the private nonprofit sector, as the box below the estimated cost remaining below the existing discusses. spending cap of $125 million, the Governor Administration’s Cal Grant Estimates Are proposes trailer bill language increasing the annual Reasonable. The Cal Grant cost estimates cap to $150 million. This proposal is intended to underlying the Governor’s budget are somewhat reduce the likelihood that spending reaches the higher than ours (see California’s Fiscal Outlook: cap, which would trigger a pro rata reduction in the “Cal Grant Cost Estimates”). The difference in award amount. The administration plans to update estimated costs stems primarily from the differing its cost estimates for these supplemental awards in methodologies that the administration and our the May Revision—by which time more recent data office use for projecting the number of entitlement will be available on the percentage of competitive recipients. The administration bases its estimates award recipients who are student parents. These on past caseload trends, whereas we base ours updated estimates will allow the Legislature to on projections of high school graduates. Our better assess if the existing cap would be exceeded methodology is intended to capture future college in 2020-21. If the cap looks like it might be enrollment levels—a key factor driving future Cal exceeded, the Legislature would need to consider Grant costs. Though we think considering future whether increasing the cap and spending more for enrollment is preferable to looking only at historical these awards is among its highest budget priorities. trends, we believe the administration’s Cal Grant cost estimates still are reasonable. Cal Grants at the Private Nonprofit Sector Private Nonprofit Sector Has Annual Transfer Target. As part of the 2018-19 budget package, the state enacted a new Cal Grant requirement for the private nonprofit sector. Specifically, this sector is to begin admitting a certain number of students with an associate degree for transfer (ADT) each year. If the sector does not meet or exceed its annual targets, then the maximum award for all Cal Grant recipients at the sector is to be reduced from $9,084 to $8,056. The first target was tied to the maximum award amount for 2019-20. Governor’s Budget Assumes No Reduction in Award Amount at Nonprofit Sector. The 2019-20 budget package gave the sector one additional year to meet its first target. Under the new time line, the sector must admit 2,000 students with an ADT in 2019-20 if it is to maintain the maximum Cal Grant award amount in 2020-21. State law requires the association representing the sector to report on its progress in meeting this requirement by April. Accordingly, by the time of the May Revision, the Legislature will likely have better information to assess whether the sector met its target this year. www.lao.ca.gov 5 analysis full gutter 2020-21 BUDGET STUDENT LOAN OUTREACH In this section, we provide background on income-driven repayment plans for federal student student loans, describe the Governor’s proposal loans. Under these plans, a borrower’s monthly to fund a new student loan outreach initiative, payment is capped at a certain percentage assess that proposal, and offer an associated (between 10 and 20 percent) of their discretionary recommendation. income, and any loan balance that remains after a set repayment period (between 20 and 25 years) Background is forgiven. In addition to these repayment plans, Some Students Take Out Loans to Pay the federal government has a program that forgives College Costs. Most student loans are issued loan balances after ten years for borrowers who by the federal government, while a small work for a public or nonprofit employer. portion are issued by private lenders (including Borrowers Unable to Repay Loans Risk Going financial institutions). Nationally, 34 percent of Into Default. If a borrower does not make loan undergraduates took out federal student loans in payments for a certain time period (typically nine 2017-18, with an average annual loan amount of months for federal student loans), the loan goes $6,688. At California colleges and universities, a into default. Borrowers who default on their loans considerably smaller share of students (17 percent) can face various consequences, including collection took out loans, but the average loan amount for fees, wage garnishing, reduced credit scores, and those students ($6,781) was slightly higher than the loss of access to additional student financial aid. In national average. As Figure 4 shows, borrowing California, 8.7 percent of borrowers who entered practices vary by segment. Students at the public repayment on their federal student loans in federal segments are less likely to take out federal student fiscal year 2015-16 defaulted within three years. loans and borrow somewhat smaller amounts than This is slightly lower than the national default rate of students at private colleges and universities. 10.1 percent. As Figure 5 shows, the default rate Federal Government Offers Several varies by segment. Repayment Options. Traditionally, student loan Students Receive Information on Borrowing borrowers have made fixed monthly payments and Repayment From Various Sources. The based on the amount of their loan (similar to fixed U.S. Department of Education provides mandatory mortgage payments). In more recent years, the entry and exit counseling to all federal student federal government has expanded its repayment loan borrowers. These online sessions provide offerings to include plans based on a borrower’s information on student budgets, loan terms, ability to pay. There are currently four of these repayment, and default. Colleges and universities Figure 4 Figure 5 Students at Private Segments Are Default Rate Varies by Segment More Likely to Borrow Three-Year Default Rate for 2016 Cohorta Share of California Undergraduates Default Rate With Federal Student Loans, 2017-18 Percent of Average Annual CCC 14.8% Students Borrowing Loan Amount Private for-profit 11.2 CSU 4.1 Private for-profit 56% $7,784 Private nonprofit 3.7 Private nonprofit 46 7,631 UC 2.1 UC 35 5,589 State Total 8.7% CSU 33 6,274 a Estimated percent of borrowers entering repayment on federal loans CCC 2 6,022 during federal fiscal year 2015-16 who defaulted by September 30, State Totals 17% $6,781 2018. 6 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET also offer broader financial literacy services that is primarily to give students more information cover student loans, among other topics. For intended to help them make better borrowing and example, as part of CCC’s systemwide efforts to repayment decisions. However, it is unclear what lower loan default rates, many community colleges gaps in information on student loans remain after provide students with access to an online financial accounting for mandatory federal loan counseling, literacy program and in-person resources. In college and university initiatives, and other existing addition, the state provides funding to the Bureau resources. Moreover, barriers other than information for Private Postsecondary Education (through the could be preventing students from accessing Office of Student Assistance and Relief) to offer beneficial loans and fulfilling their repayment outreach on student loans and other topics to obligations. For example, students may face prospective, current, and former students of private administrative problems or academic hurdles that colleges and universities. result in them not completing their studies (thus placing them at higher risk of default). Governor’s Proposal Proposed Work Group Could Improve Governor Proposes $5 Million One-Time Understanding of Barriers. A research-oriented General Fund to Improve Information on work group could help identify the barriers to Student Loans. Of this amount, $500,000 is accessing beneficial loan and repayment programs. for CSAC to establish a work group tasked with These findings could in turn allow the work group researching strategies designed to help students to design strategies targeted toward overcoming access the most beneficial loan, repayment, and those barriers. For example, if the work group finds debt forgiveness programs. The work group would that incoming students forgo loans because they have nine members, consisting of a lead, two are unaware of the option, it might recommend members of the public, and one representative sending information on loans to financial aid each from CSAC, the Department of Finance, the applicants. On the other hand, if the work group Department of Social Services, the Employment finds that incoming students forgo loans because Development Department, the Franchise Tax they receive misinformation on borrowing terms, Board, and the Scholarshare Investment Board. it might instead recommend additional training for The work group would be required to report its high school counselors and college financial aid findings to the Department of Finance and the administrators. Legislature by September 1, 2021. The Governor’s Premature to Fund Specified Outreach proposal also includes $375,000 for CSAC to Activities. Beyond funding the work group’s provide more information on student loans through research, the Governor proposes to fund a new several means, including an informational website, website, informational materials, and borrower materials for financial aid applicants, and materials notification efforts. All these other endeavors for high school counselors and financial aid would be funded in 2020-21—at the same time administrators. The remaining $4.1 million would the work group is researching strategies to help fund grants to public colleges and universities students access beneficial loan and repayment to notify current and former students of loan programs. We believe funding these other activities repayment options and direct them to the proposed is premature. Under the Governor’s approach, informational website. all the funding dedicated for the initiative would be allocated to specific activities prior to having Assessment identified the most helpful activities to provide. Barriers to Accessing Beneficial Loan We believe waiting to build an expenditure plan Programs Remain Unclear. The administration until after the work group submits its report in has indicated that some students are forgoing September 2021 is a more effective budgetary loans that could increase college affordability, while approach. other students are enrolling in repayment plans One-Time Grants Are Not Well-Suited with unfavorable terms. The Governor’s response for Ongoing Activities. Under the Governor’s www.lao.ca.gov 7 analysis full gutter 2020-21 BUDGET proposal, over 80 percent of the funds would go address repayment issues at private colleges and toward grants to colleges to notify current and universities, which in California account for over half former borrowers of available repayment options. of student loan borrowers who default within three For these activities to have a sustained impact, years of entering repayment. colleges would likely need to repeat them annually Recommendation as a new cohort of students takes out loans and a new cohort of students enters repayment. Fund Work Group Only in 2020-21. Given Because informing successive cohorts of students our above assessment, we recommend providing about their loan options entails ongoing costs $500,000 for a student loan work group but (such as staff time and materials), a one-time rejecting the $4.5 million proposed for concurrent grant is not a suitable budgetary tool. One-time outreach activities. We encourage the Legislature grants would likely have a short-lived impact while to consider the work group’s membership carefully, creating pressure for the state to sustain funding in with the goal of including entities closely involved 2021-22. with student loans and outreach (such as the Proposed Grants Do Not Target Highest-Need higher education segments). After the work group Segments. The proposed budget bill language issues its report in September 2021, the Legislature specifies that grants would only be available to could consider a 2022-23 budget proposal that public colleges and universities, with priority to incorporates the work group’s findings on outreach. those with a high number or percentage of students We believe waiting to fund outreach activities taking out federal loans. Based on these criteria, until the work group completes its research is the UC and CSU campuses would receive priority for most prudent course of action—helping to ensure these grants. These segments have relatively low state dollars are spent to address clearly identified default rates (2 percent systemwide at UC and barriers. Should the Legislature nonetheless 4 percent systemwide at CSU), suggesting their choose to fund outreach activities in 2020-21, we students already tend to make beneficial borrowing encourage it to modify the Governor’s proposal and repayment decisions. The selection criteria such that one-time funds are spent on one-time would give lower priority to community colleges, activities and the initiative targets those segments where a small number of students borrow but with high default rates. default rates tend to be high. It also would not STATE OPERATIONS In this section, we assess the Governor’s student financial aid programs. The state provided proposals for CSAC to (1) continue implementation $5.5 million for the first year of the project in of its Grant Delivery System Modernization project, 2018-19 and $6.2 million for the second year of (2) add 15 new positions associated with new the project in 2019-20. The Governor’s budget workload, and (3) relocate to a larger leased space for 2020-21 includes $5.3 million one-time to accommodate the increase in staff. General Fund to (1) complete the project and (2) support the initial costs of the maintenance Grant Delivery System Modernization and operations phase, which will begin upon Governor Funds Continued Implementation project completion. This phase includes testing, of Information Technology (IT) Project. As repairing and upgrading software, and transferring described in The 2019-20 Budget: California knowledge from project contractors to CSAC staff. Student Aid Commission’s Grant Delivery System CSAC anticipates requesting additional one-time Modernization Project, CSAC is in the process funds to complete this phase in 2021-22, with a of replacing the IT platform it uses to administer 8 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET potential future funding request for certain ongoing New Positions operational costs. Governor Proposes $773,000 Ongoing Project Generally on Track, Recommend General Fund and 15 Positions for CSAC. As Approving. The California Department of Figure 6 shows, these positions are associated Technology (CDT), which provides independent with federal compliance and new state programs. oversight for state IT projects, continues to give the Specifically, six positions are associated with Grant Delivery System Modernization project largely CSAC’s recent designation as a national voter positive ratings. As of CDT’s most recent monthly registration agency. Three positions are associated report, the project remains within its original with the California Dreamer Service Incentive scope and budget. In December 2019, the project Grant Program—a new ongoing program the completed its first major release—an interface for state created as part of the 2019-20 budget students to manage their financial aid applications package. This program provides nontuition awards and awards—following a two-month delay to allow to undocumented students who complete a for additional testing. CSAC anticipates completing community service requirement. The remaining the rest of the project by November 2020, as six positions are associated with two one-time originally scheduled. Since this project generally initiatives the state also created in 2019-20. For remains on track and on budget, we recommend these two initiatives, the state designated funding the Legislature approve the Governor’s proposal. for administrative activities in the 2019-20 budget, so the Governor is proposing only the associated Figure 6 Governor Proposes 15 New Positions for California Student Aid Commission (CSAC) Program Positions Funding Key Responsibilities National Voter Registration 6 $479,000 • Offer voter registration assistance to students contacting CSAC’s call center Act compliance about financial aid. • Train staff and volunteers to provide voter registration assistance at financial aid outreach events. • Mail, track, and retain voter registration-related forms sent to students. California Dreamer 3 294,000 • Develop program rules and requirements. Service Incentive Grant • Administer approval process for organizations providing service opportunities to students. • Process volunteer service agreements for students. Track and verify students’ service hours. • Provide call center support to students. Golden State Teacher 4 —a • Develop program rules and requirements. Grant • Process award nominations from campuses. • Track recipients as they complete teaching credential and service requirement. Oversee repayment process from students who do not fulfill requirements. • Provide call center support to students. Child Savings Account 2 —b • Develop request for application. Award grants. Grant • Convene statutorily required program council. • Provide required technical assistance, including a toolkit for developing new child savings account programs. Totals 15 $773,000 a The 2019‑20 Budget Act provided $1.3 million in one-time funds for program administration. The Governor’s proposed trailer bill language would extend the availability of these funds from June 30, 2020 to June 30, 2022. b The 2019‑20 Budget Act provided $500,000 in one-time funds for program administration. The funds are available through June 30, 2022. www.lao.ca.gov 9 analysis full gutter 2020-21 BUDGET position authority at this time. One of the new Proposed Positions Are Justified, programs—the Golden State Teacher Grant Recommend Approving. Although the Governor Program—provides scholarships to teacher is proposing an unusually large increase in CSAC preparation students who commit to working staff, the staffing proposals are directly linked to in specified subject areas and schools upon increases in CSAC’s workload over the past year. graduating. The other program—the Child Savings Given the direct link to new workload, we think Account Grant Program—provides grants to local the Governor’s staffing proposal is reasonable and entities to support college savings efforts. Next, we recommend the Legislature approve it. discuss the new workload related to the proposed New Leased Space positions. CSAC Was Recently Designated a Voter CSAC Is Requesting to Relocate to Larger Registration Agency. Under the National Voter Leased Space. Since 2013, CSAC has rented Registration Act of 1993, state and local agencies approximately 26,000 square feet of office space that provide public assistance must also provide in Rancho Cordova. Based on standards set by certain voter registration services. In March 2019, the Department of General Services (DGS), CSAC’s the Superior Court in San Francisco ruled in Senior existing office space can accommodate up to and Disability Action et al vs. Alex Padilla that 128 staff. Under the Governor’s budget, CSAC’s the California Secretary of State must designate total authorized positions would increase from CSAC as a voter registration agency because it 126.5 to 141.5. CSAC has requested to relocate its provides public assistance through need-based entire office to a larger space to accommodate new financial aid programs. Under this designation, staff. It has indicated a preference for a location CSAC is required to provide certain services each closer to downtown Sacramento to make meetings time students apply for financial aid, renew their more convenient and reduce travel time. CSAC application, or submit an address change. The indicates that it has initiated the site selection services include asking whether students wish to process with DGS to find a new office space in register to vote, documenting (or asking students West Sacramento. to document) their response on a voter preference Governor Proposes to Cover Cost of CSAC’s form, and distributing voter registration cards to Relocation. The Governor’s budget includes a total those interested, among other activities. CSAC is of $1.8 million General Fund for CSAC to relocate incorporating these services into its financial aid to a larger space (about 35,000 square feet) in application forms, call center support, and student West Sacramento. Of this amount, $943,000 is outreach events. one-time funding to cover moving expenses and Recently Created State Programs new equipment, and $903,000 is ongoing funding Also Require CSAC to Undertake New to cover higher annual lease costs. Under the Responsibilities. The new workload entails some Governor’s proposal, CSAC’s annual lease costs common CSAC activities, such as developing would grow from $572,000 to $1,475,000. The grant applications, making award decisions, and new lease cost is an estimate, as site selection is providing call center support. Some of the new still underway. The notable increase over existing workload, however, involves relatively complex costs likely reflects several factors, including the administrative tasks. Most notably, for the California larger size of the proposed space, the more central Dreamer Service Incentive Grant Program, location, and changes in rental costs since CSAC CSAC will need to begin tracking students’ entered into its existing lease. volunteer hours, and, for the Golden State Recommend Withholding Action Pending Teacher Grant Program, CSAC will need to begin Updated Information. Given the greater workload collecting repayments of previously issued aid and proposed increase in staff, we think CSAC’s for grant recipients who do not satisfy their work request for more space is reasonable. The requirements. Legislature also might be amenable to CSAC’s request for a more central location, despite the 10 LEGISLATIVE ANALYST’S OFFICE analysis full gutter 2020-21 BUDGET associated lease cost potentially being higher this time line, CSAC might not incur costs related compared to lease costs in Rancho Cordova. Even to the proposed relocation until the 2021-22 fiscal if the Legislature is supportive of the proposed year. CSAC expects to have more detail in the relocation, CSAC might not need all—or any—of coming weeks as it continues to work through the the $1.8 million in 2020-21. This is because CSAC leasing process with DGS. We recommend the still needs to navigate the leasing process with Legislature request that CSAC provide an update DGS, with the timing of the move and actual lease on the relocation time line and anticipated lease costs depending on space availability and lease costs during a spring hearing. This information negotiations, among other factors. Based on recent would allow the Legislature to determine how much conversations with us, CSAC currently anticipates is required to support the relocation in 2020-21. moving to a new office in mid-to-late 2021. Under www.lao.ca.gov 11 analysis full gutter 2020-21 BUDGET LAO PUBLICATIONS This report was prepared by Lisa Qing, and reviewed by Jennifer Kuhn Pacella and Anthony Simbol. 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. 12 LEGISLATIVE ANALYST’S OFFICE