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Subcommittee presses CSAC and segments after $103 million Middle Class Scholarship shortfall and late institutional reporting
Summary
CSAC told lawmakers that late campus reporting and an unusual number of eligible students pushed the 2024–25 Middle Class Scholarship caseload above initial projections; the commission extended the MCS reporting window and proposed regulation changes to avoid future uncertainty.
Members of the Assembly Budget Subcommittee No. 3 were briefed on a current‑year shortfall in the Middle Class Scholarship (MCS) program and on steps CSAC proposes to stabilize the program.
CSAC officials said they initially estimated roughly 327,000 MCS‑eligible recipients during the budget process but later received additional institutional records that pushed the eligible count higher. “There were approximately 33,000 students that applied for the Middle Class Scholarship between May 2 and July 1,” CSAC staff said, and the commission reported a current‑year program deficit of about $103 million.
CSAC explained two contributing factors: (1) the commission receives staggered student records from campuses and many eligible records arrived after the October forecast used for the governor’s budget; and (2) last year’s delayed federal FAFSA rollout and related complications changed filing patterns and led CSAC to use a 35% “phase‑in factor” when projecting awards. CSAC said that many late records nevertheless reflected students who had applied before the May 2 priority deadline, complicating forecasting.
Action taken and proposed fixes: CSAC said it extended the MCS-specific reporting window in the current cycle — the commission separately extended the MCS deadline to July 1 in 2024 — and that it will pursue regulatory changes to impose firm deadlines for institutional reporting of eligibility and payment records. CSAC also recommended statutory changes to allow carryforward of unused MCS funds and the option to set a defined phase‑in factor in the annual budget act so students are not left with revised awards after they enroll.
Why it matters: MCS award uncertainty affects students’ enrollment decisions; campuses said they need earlier, stable phase‑in information so financial aid offer letters to incoming students are accurate and do not require late revisions. UC and CSU campuses told the subcommittee that uncertainty about the final phase‑in factor hampers campuses’ ability to reliably estimate awards for incoming students.
Next steps: CSAC said it will provide updated caseload projections for the May revision and requested that the subcommittee consider statutory and regulatory changes to fix reporting deadlines and create mechanisms to prevent retroactive reductions in student awards.
