Legislators press for clarity as Cal Grant reform, data gaps and big Middle Class Scholarship caseload growth strain budget projections

The Subcommittee took up an update on Cal Grant and institutional aid, focusing on projected caseloads, the unfunded Cal Grant reform framework and a large revision to the Middle Class Scholarship (MCS) caseload.

Amin Singh of the Department of Finance said the governor’s budget assumes roughly $3.1 billion for state financial aid in 2025–26, with $2.6 billion allocated to Cal Grant and $527.2 million for the Middle Class Scholarship. Legislative Analyst Office analyst Natalie Gonzales told the subcommittee that projected MCS spending fell after recent adjustments and that CSAC estimated a larger‑than‑expected increase in recipients for 2024–25, producing a current‑year program deficit estimated at about $103 million.

CSAC Deputy Director Jake Bremner explained factors behind the variance. CSAC received an early institutional upload estimating roughly 327,000 eligible MCS students when the governor’s budget was prepared in the fall, but large numbers of additional student records arrived later—more than 68,000 late records to date, more than double the prior year—many of which reflected students who had applied prior to the deadline but whose institutional reporting arrived late. Bremner said that practice and statute timing make it difficult for CSAC to estimate final caseloads until the budget process concluded; he described regulatory changes CSAC will pursue to set firm institutional reporting deadlines and asked legislators to consider statutory fixes such as a predictable annual “phase‑in” factor to reduce the risk that award amounts must be adjusted after offers are communicated to students.

Segments pressed for clarity on how proposed Cal Grant reforms might affect their students. UC’s Dr. Apry Medina thanked the legislature for state support but warned that some reform scenarios could produce net losses for UC students. CSU representatives and the Community College Chancellor’s Office said they supported elements of reform aimed at equity for community college students but cautioned about cost and implementation complexity. Community Colleges Chancellor’s Office Assistant Vice Chancellor Gina Brown emphasized that Cal Grant was designed with different student patterns in mind and that the outdated system limits support for older and working community college students; she urged updating financial aid office administration funding and the administrative funding formula.

Members repeatedly asked the segments about student‑level data; multiple witnesses said CSAC and the segments can publish richer dashboards for high schools and community colleges but that CSAC lacks comprehensive student‑level enrollment and outcome data for all institutions, limiting its ability to measure how aid affects persistence and completion. CSAC said it can safely receive more detailed data and recommended statutory reporting requirements for Cal Grant participants when the data are not available through the Cradle‑to‑Career (C2C) data system.

Bremner and LAO recommended the Legislature consider phasing in parts of the Cal Grant reform to reduce immediate fiscal costs and to adopt reporting deadlines and program modifications that make MCS awards more predictable for students and campuses.

Ending: The subcommittee held the item open for further data follow‑up. Members asked staff to pursue additional reporting from CSAC and the segments about student‑level data availability, the mechanics of the MCS phase‑in approach and the budgetary consequences of differing reform options.