Governor’s Budget Partially Funds Revamped Program. In accordance with the 2021?22 budget agreement, the Governor’s budget provides an augmentation of $515 million ongoing General Fund for the revamped Middle Class Scholarship program. This is enough to cover an estimated 24 percent of total program costs (with each student’s award adjusted accordingly). Our Middle Class Scholarship Program table compares projected recipients, spending, and award amounts under the revamped program in 2022?23, compared to under the original program in 2020?21 and 2021?22.

New Positions

Below, we provide background on CSAC staffing, describe the Governor’s proposal to add new positions to implement program expansions, assess that proposal, and provide an associated recommendation.

Background

CSAC Has About 140 Authorized Positions Across Several Divisions. In 2021?22, CSAC has 137.5 authorized ongoing positions, as well as 2.2 temporary positions. These positions span seven divisions, the largest of which are program administration and services, information technology (IT), fiscal and administrative services, and the executive division. As of January, CSAC reports that 22.5 positions (16 percent) were vacant, with the IT division accounting for 40 percent of the vacancies. CSAC indicates the majority of its vacant positions have been unfilled for less than three months and it is actively recruiting to fill them.

2021?22 Budget Did Not Increase Staffing to Implement Program Expansions. Although the 2021?22 budget enacted major expansions to the Cal Grant and Middle Class Scholarship programs (described in the Overview section of this brief), the budget did not provide any additional funding or positions for CSAC to administer these programs. CSAC also has not yet received any funding or positions associated with the new financial aid application requirement for high school seniors, which is scheduled to take effect in 2022?23.

CSAC Has Received Funding to Administer One?Time Initiatives. Trailer legislation to the 2021?22 budget authorized CSAC to use between 0.5 percent to 1.5 percent of the funds allocated for its various one?time initiatives to undertake associated administrative activities. These one?time carve?outs total $7.5 million for the Golden State Teacher Grant Program, with funds available through ; $5 million for the Golden State Education and Training Grant Program, with the bulk of these funds available through ; and $1 million for the Learning?Aligned Employment Program, with funds available through June 30, 2031. Under the Governor’s budget, CSAC would receive an additional $1.5 million in 2022?23 for administration of the Learning?Aligned Employment Program, with these funds also available through June 30, 2031. Regarding position authority, CSAC previously received four positions to administer the Golden State Teacher Grant Program when the initiative first launched in 2020?21. To date, CSAC has not received additional position authority to administer the other two initiatives. (Without additional position authority, CSAC would likely need to rely on limited?term positions or redirect some of its existing positions for these purposes until the initiatives expire.)

Proposals

Governor Proposes Five Positions to Implement Program Expansions. The Governor’s budget provides $479,000 ongoing General Fund and five positions for CSAC to implement the program expansions enacted last year. The five proposed positions consist of:

Pell Grants, designed to help lower-income students, haven’t kept pace with the growth of tuition, and so over time, their purchasing power has declined, notes Perna.

An expanded income-based repayment system should be the standard for students, said Webber, with low payments or none at all for those making little money. It should be a little kinder to people at the lower end of the distribution but for people who are making more, it should be maybe not as generous as they are being right now. But we also want to provide a safety net for the people who didn’t get the same, whether it’s luck or whatever.

If you are getting the benefit of a college education and get a job that pays you a lot of money, you took out the loans, you should be paying for it

Right now there is, frankly, very little accountability that schools have; they practically have no skin in the game.

The other big policy change Webber would like to see is substantially increased accountability for one of the major players in the student loan system: schools

A risk-sharing system that penalizes schools turning out students with higher default rates – by charging schools, say, 5% of the defaulted amount – would nudge the system in the right direction. If [schools] are doing a lot of damage to students and also the taxpayer – because when students can’t pay their loans it’s the taxpayer who pays – then those schools should be weeded out of the system, said Webber.

Other larger economic trends could alleviate pressure on student-debt holders over time, depending on who they are. Keys points out that younger student-debt holders who may be delaying milestones like marriage and a first home purchase might get extra help later. The other piece of this is generational, he said. It’s the baby boomers and older cohorts who have the vast majority of wealth, and eventually millennials will inherit some of those resources. Whether they will be behind their parents and grandparents in terms of improved standards of living is an open question.

Right now there is, frankly, very little accountability that schools have; they practically have no skin in the game. Douglas Webber

Whether or not to avoid incurring debt, students today are focused even more on the job market in choosing college majors, said Wharton management professor Peter Cappelli, director of the school’s Center for Human Resources. That’s not a great thing because it is very hard to predict which jobs will be hot, and using college just as the basis for getting your first job makes it a poor investment over the lifetime.

The hope on rising student debt was that the economic upturn would start to take care of the problem, said Cappelli. It certainly helped, as there are more jobs and fewer graduates whose loan debt keeps growing while they have no ability to even make payments. The lack of income growth, though, especially for those at the bottom of the ladder – as many students are when they start out – is the main problem now. For many students, they can make their payments but do little else: They can’t buy houses or start families.

Why worry about any of this? What is the larger public benefit to promoting a more advanced level of education in the populace generally?

That value has only risen in recent years. In 2002, a bachelor’s degree holder could expect to make 75% more than someone with just a high school diploma, and nearly a decade later that premium had risen to 84%, according to the Georgetown University 2011 study The College Payoff: Education, Occupations, Lifetime Earnings.

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