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F I S C A L I M P A C T R E P O R T

SPONSOR Sanchez, M.

ORIGINAL DATE

LAST UPDATED

1/30/06

2/13/06

HB

SHORT TITLE College Affordability Grant Eligibility

SB 158/aSFl#1

ANALYST Williams

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

Indeterminate Recurring

College Affordability

Scholarship Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Senate Bill 43, House Bill 207, House Bill 105, Senate Bill 274

Relates to Appropriation in the General Appropriation Act for $49 million in non-recurring funds

to the college affordability endowment fund (Section 5); included in LFC and Executive budget

recommendations at $50 million.

SOURCES OF INFORMATION

LFC Files

New Mexico Association of Community Colleges (NMACC)

Responses Received From

Public Education Department (PED)

Higher Education Department (HED)

SUMMARY

Synopsis of SFl#1 Amendment

Senate Floor Amendment #1 provides for a new section of statute which provides eligibility cri-

teria for students with disabilities under the College Affordability program. For these student,

HED may consult with the student and institutional office for students with disabilities to review

and adjust consecutive semesters of eligibility as appropriate for each student. Under this sec-

tion, total eligibility would be capped at fourteen consecutive semesters.

Synopsis of Original Bill

Senate Bill 158 makes several changes to the College Affordability Act:

•

Changes the awards from scholarships to grants;

Senate Bill 158/aSFl#1 – Page

2

•

Expands certain eligibility criteria from at least half-time student status to three credit

hours;

•

Would no longer restrict eligibility to eight consecutive semesters, but would permit stu-

dents to come in and out of the program; however, eligibility would be capped at eight

semesters or until graduation, whichever is first;

•

Specifies that students receiving lottery tuition scholarships are not eligible for this new

form of student financial aid; and

o

Makes technical changes to update references from Commission on Higher Edu-

cation to Higher Education Department and also to the Secretary of the HED.

FISCAL IMPLICATIONS

The fiscal impact of this legislation is indeterminate. The change in eligibility from at least half-

time to three credit hours may have two impacts: 1) the change broadens the base of eligible

students who could increase demands on the fund for awards (although distributions would be

capped by availability of funding) and 2) the change could reduce total funding awarded under

the program for each student who drops from at least half-time to only three credit hour status.

Further, the bill also proposes to broaden the semester eligibility demands on the fund, which

would also increase funding pressures.

SIGNIFICANT ISSUES

Note grants from the College Affordability Act could be used to address expenses, such as room,

board, books and supplies as well as tuition.

HED notes “the word “scholarship” which connotes merit-based awards is changed to “grant” to

signify need-based funding.”

PERFORMANCE IMPLICATIONS

HED notes the program will demonstrate “increased college participation and completion, espe-

cially among low-income and first-generation college students and students in Adult Basic Edu-

cation.”

However, a recent report by the United States General Accounting Office found part-time, adult

students tend to exhibit weaker persistence and graduation rates.

OTHER SUBSTANTIVE ISSUES

PED notes the bill could increase the adult literacy rate because more New Mexicans may enroll

in post-secondary education.

PED notes “given that SB 158 increases the number of potential students seeking a grant, some

system for prioritizing or providing for a “first come-first serve” may need to be addressed.”

Currently, the state’s two largest need-based student financial aid programs are the student incen-

tive grant and work study program with total amounts awarded in 2004-2005 of $11.8 million

and $6.5 million, respectively.

Senate Bill 158/aSFl#1 – Page

3

HED notes:

“According to Student Success: Statewide P-16 Systems by State Higher Education Executive

Officers (SHEEO), "Financial barriers are generally much more prevalent for low-income, un-

derrepresented, and first-generation students than for others, and the amount of tuition and the

availability of financial aid are more important factors for these groups than for students in other

income levels in deciding not only where to go to college but if they can go to college." As stated

in The Student Debt Dilemma: Debt Aversion as a Barrier to College Access (Oregon Center for

Studies in Higher Education 2005), students from low-income backgrounds often fear borrowing

money and may not seriously consider the benefits of higher education. If they do enroll, they

may pursue money-saving strategies such as attending part-time, working more than 20 hours a

week, or attending two-year rather than four-year institutions.”

New Mexico Association of Community Colleges notes 40 percent of community college stu-

dents carry less than a six credit hour load per semester, and 50 percent of community college

students work 20 hours or more.

POSSIBLE QUESTIONS

1.

Given the wide range of student eligibility and expense eligibility under the College

Affordability program, is there a plan to prioritize needs.

2.

How many students would receive scholarships/grants in the first year of the program if

the $50 million appropriation to the endowment fund recommendation of the LFC and

the Executive is enacted.

3.

How will additional funds for the endowment fund be obtained. What is the target

amount of funding for the endowment fund.

4.

How will performance outcomes of the new program be measured.

5.

Who would evaluate student eligibility to determine awards ---- HED or the institutions.

6.

How would HED and institutions administer the provisions of the bill.

7.

Would students who are not degree seeking be eligible for awards under the College Af-

fordability program. If yes, would this conflict with criteria to apply for Pell awards and

thus impact the eligibility base.

AW/mt:yr