Report recommends reforming Cal Grant distribution

The allocation of Cal Grants could become the responsibility of individual college campuses through new legislation recommended by the nonpartisan state Legislative Analyst’s Office, the office announced in a report released Monday.

The recommendation, which aims to “streamline” financial aid, would shift the duty of distributing the grants to the campus level by allowing the state’s higher education institutions to provide Cal Grants directly through their own financial aid offices.

“From the student’s perspective, (the current) process is fragmented and often confusing,” the report states. “In addition, a student’s contact with the local financial aid office is usually face-to-face with an individual counselor.”

The change would replace the current system, which awards each student a grant through the California Student Aid Commission, an organization that offers financial assistance for higher education to Calfornia students.

Sheryl Hayes, director of financial aid at UC Riverside, said in an email that decentralization would increase efficiency in managing students’ Cal Grants.

“As with any change, it will require that we change our systems and our procedures in the first year of implementation,” Hayes said in an email. “I am supportive of the proposed changes.”

The report did not offer a time frame for the decentralization of the system, but would identify one at the request of the state legislature.

A pilot phase for decentralization was approved in 2009, in which each campus would volunteer to set its own requirements and administer Cal Grants to students accordingly. The pilot phase was set to begin once 30 to 35 institutions committed to participate, but no campuses volunteered because of the “specific, unworkable requirements” of the pilot phase, according to the report.

The solution recommended by the office would immediately decentralize the delivery of Cal Grants following a planning period, without a pilot phase. Each campus would be in control of its own grants, but would be required to award grants based on a set of “established eligibility rules” determined by the state, according to Judy Heiman, a principal analyst at the Legislative Analyst’s Office.

“The campus’ job would be to determine which students qualify, based on the state’s eligibility rules, and award the grants to those students,” Heiman said in an email. “By awarding the grants, the campuses would trigger a request for payment from the state.”

The state would wire funds to each campus on a regular basis, according to Heiman. The amount of funds sent to each campus would depend on the number of students eligible for Cal Grants at that university.

The report states that reforming Cal Grants would be more efficient for both students and universities by creating one source for financial aid. According to the commission, 329,300 students received Cal Grants in the 2010-2011 academic year. Decentralization would reduce the duplication of functions between campuses, system offices and the state, the report states.

Craig Yamamoto, director of financial aid at CSU Sacramento, said in an email that he believes decentralizing Cal Grants would greatly benefit students.

“Financial aid offices at colleges and universities are the third parties between (the commission), who administer the Cal Grant programs, and the students,” Yamamoto said in the email. “Unfortunately, we have not been able to gain any traction with (the commission) regarding enhancements to the Cal Grant delivery system.”

Though the report outlined objections made by the commission — which included an argument regarding the minimization of student choice and opportunity under decentralization — commission spokesperson Louise Shroder said the commission members had no comment on the issue.

The commission argued, according to the report, that through decentralization, higher education institutions would only notify students of financial aid eligibility for Cal Grants following admission.

Under the current system, financial aid eligibility for the grants is communicated to students before their acceptance — or rejection — to universities or colleges because they are assigned by a separate body.

Decentralization of Cal Grants would change the responsibilities of the commission to “support and accountability functions,” the report states. The commission would be in charge of receiving and tracking the central appropriation for the awards, collecting and making available “specialized information” and “auditing to monitor delivery practices at campus level,” according to the report.