Reality check is a Bee series that holds officials and organizations accountable and sheds light on their decisions. Do you have a tip? Email realitycheck@sacbee.com.
Thousands of California students from middle-class families may find it harder to attend four-year schools if Governor Gavin Newsom and state lawmakers cannot reach an agreement soon on how to manage a $45 billion budget deficit.
That’s because their separate budget proposals are $826 million apart on the amount of money to be allocated to the Middle Class Scholarship program: Newsom’s plan calls for $100 million in the scholarship pot after his proposed cuts. The Legislature is targeting $926 million, with the goal of continuing what was previously planned, including a one-time addition of $289 million over the next two years.
The scholarship is open to undergraduate and graduate students seeking teaching credentials at state universities with a household income of less than $217,000.
Nearly 300,000 students from middle-class families received a scholarship in the 2022-2023 academic year. The number of students served was a big jump from previous years due to a $515 million injection into the program, bringing it to $632 million for the budget year. Previously, fewer than 60,000 students received scholarships annually from the decade-long program.
According to the California Student Aid Commission, scholarship funds are still being disbursed for the 2023-2024 academic year, with 272,651 students having received funds to date.
Sen. John Laird, D-Santa Cruz, chairman of the Senate Education Subcommittee, said not restoring full funding would postpone the dreams of many who want to attend a four-year college.
“California’s scholarship system really favors those with lower incomes and families in the middle struggling with the enormous costs of college and tuition, and the Middle Class Scholarship helps those families,” Laird said. “These cuts would come at a time of FAFSA delays and at the precise moment students are making college decisions, and would likely deter many students from transferring to four-year institutions.”
After a failed rollout of this year’s revamped Free Application for Federal Student Aid form (FAFSA), lawmakers approved it and Newsom signed a bill to extend the application deadline.
The governor’s plan
Newsom’s budget revisions in May reduced current funds for the Middle Class Scholarship program by $510 million, leaving $100 million for the next fiscal year. And it’s forgoing the one-time $289 million boost.
The creation of the program was something he “enthusiastically” supported as lieutenant governor, Newsom said during his review presentation and news conference in May. “We worked with Governor Brown to launch the program with $117 million in its first year,” Newsom said.
“We’re basically back to where we were at a stable level,” the governor continued. “But that is the essence of the improvements we have made in recent years. Not because we want to do it with enthusiasm. On the contrary. So those who express their disappointment about that, let me add my voice.”
HD Palmer, a spokesperson for the Treasury Department, added this week that the governor’s budget maintains the state’s primary student financial aid program. A broad goal of the May budget review was to close the deficit while avoiding cuts to core programs, he said.
The governor’s budget “continues to propose funding for the $2.5 billion Cal Grant program for fiscal year 2024-2025, which will fund more than 400,000 awards,” Palmer said.
Cal Grants are intended for middle- and low-income students. The 2022-2023 policy changes to the Middle Class Scholarship program created an important connection with the Cal Grant program to serve students, said Shelveen Ratnam, a spokesperson for the California Student Aid Commission.
“Because the majority of MCS recipients are also Cal Grant recipients, Cal Grant awards often first cover tuition for many of these winners, after which MCS collects the ‘last dollar,’” Ratnam said. “This means that as more students become eligible for Cal Grant, the goals of the MCS program will also be furthered by not having MCS have to cover tuition costs for those students.”
Dreaming of college
The Cal State Student Association said in a statement that it was grateful to the Legislature “for the adjustments to the mid-level grant, the inclusion of Cal Grant Reform in recent budget discussions, and their continued investments in student success. We hope that these adjustments will be included in the final budget.”
The bill calls for keeping last year’s budget agreement intact, with the state providing a total of $926 million for the grant program, including $637 million in current funds and $289 million in one-time increases over the next two fiscal years.
Laird said he is hopeful there will be an agreement with the governor to keep the full $926 million available for the Middle Class Scholarship.
“We want to restore the cuts and not cut the program … so families know it’s there. And the governor’s cut is very deep. The underlying problem here is that we have enough income to do what we want. In the proposed legislation, we have given the governor the revenue path to do this,” the senator said, adding that adjustments could be made in other parts of the budget “so we can make this happen.”
“For many, a four-year college is the dream,” Laird said.
