SAN FRANCISCO (AP) — A new college scholarship aimed at providing tuition relief to middle-class families in California has emerged as a sticking point in the Legislature’s discussions over higher education spending.
The dispute follows revelations that recipients include nearly 1,100 students with family assets worth more than $1 million.
In addition, the California Student Aid Commission showed that as many as one of eight beneficiaries comes from a family that has assets such as rental property, savings or stocks worth at least $200,000.
The Middle Class Scholarship program was designed for California State University and University of California students with family incomes up to $150,000.
Democrats in the California Senate want to phase out the program, now in its first year, and redirect more than two-thirds of the $152 million Gov. Jerry Brown has earmarked for it next year.
Under the Senate’s plan, the money would go largely to expand enrollment, course offerings and support services at California State University campuses.
Assembly leaders, however, are eager to preserve the popular program that was championed by a former speaker of the chamber. They have proposed placing stricter limits on the scholarship while also giving bigger grants next year to students who still qualify.
The competing proposals will have to be worked out by a budget committee comprised of representatives from both houses. The committee also is debating the Senate’s desire to offer financial incentives to low-income Cal State students who are on track to graduate in four years and is taking a critical look at the University of California’s practice of awarding in-house financial aid to students from outside California.
UC President Janet Napolitano, who has agreed to freeze in-state tuition rates for two more years as part of a budget compromise with the governor, said in an interview she was willing to review the system’s financial aid policy for non-residents.
If the middle-class scholarship for Californians is eliminated or overhauled, she said she hopes some of the savings will go toward enrollment growth at the nine UC undergraduate campuses.
“We all understand and appreciate the squeeze the middle class is in,” Napolitano said. “However, after the first year of the scholarship ... obviously it was going in places it wasn’t originally intended.”
The scholarship program was approved two years ago as part of a budget compromise between Brown and Democratic lawmakers to benefit Cal State and University of California students with family incomes up to $150,000. At least 85,475 students, or 21 percent of applicants, have been awarded amounts averaging $584 for a CSU student and $1,206 for those attending UC.
But the April analysis by the California Student Aid Commission revealed that a number of families had incomes exceeding $150,000 a year. It said 278 had assets worth more than $2 million — even though the value of a homeowner’s primary residence was not factored into the calculations.
The vast majority of scholarship recipients did not report having significant family resources beyond earnings, and 59 percent had household incomes below $100,000,
Still, the number with assets that could be deemed considerable even in pricey California has raised questions about whether the money could be better spent elsewhere.
“The Senate position is that because there has been no asset test, there are those with significant assets who are receiving this assistance though they were not originally intended to be beneficiaries,” said Sen. Mark Leno, D-San Francisco, chairman of the Senate Budget Committee and of the bipartisan budget conference committee.
Senate President Kevin De Leon, D-Los Angeles, and Assembly Speaker Toni Atkins, D-San Diego, are trying to reach a compromise on the future of the program, Leno said.
Former Assembly Speaker John Perez, who created the scholarship and now serves on the University of California’s governing board, supports creating an assets test but still thinks the program is helping families that earn too much for other forms of aid to afford college and avoid debt.
“I’m hopeful that through the thoughtful deliberations of the conferees California continues to expand funding for higher education but also continues to make it affordable for people at all income levels,” Perez said.