State Budget Standoff Could Cost Needy College Students

Thousands of California’s neediest college students may become the next casualties of a partisan standoff over a new state budget.

More than $212 million earmarked for 194,000 low-income students who receive Cal Grant scholarships has not gone out because lawmakers have failed to approve a state spending plan, which was due July 1. Students use the money to pay for tuition, and a subset of particularly needy students taps the funds for books, housing and transportation.

University officials said they were taking measures to ensure that students eligible for aid are able to enroll in their fall classes.

The chancellor of the California State University system, Charles B. Reed, sent alerts to the presidents of each of the system’s 23 campuses Wednesday, instructing them to provide financial credit to the 115,000 CSU students who receive state aid. That credit would be used to pay the students’ attendance fees for the fall.

Wally Boeck, executive director of the California Student Aid Commission, said many community college students will probably learn of the funding delay when they start classes next week. He predicted, however, that those schools too will do their best to float a line of credit for students to help with tuition until a budget is approved.

At the Capitol, both Democrats and Republicans seized on news of the Cal Grant situation and tried to use it to bolster their larger arguments in the budget debate.

Assembly Republicans have called for additional spending cuts to eliminate the need for $4 billion in new taxes and revenue sought by Democrats and to begin correcting a structural imbalance between state revenue and expenses.

Republicans pointed to a letter released Wednesday by nonpartisan Legislative Analyst Elizabeth Hill, who estimated that a Democratic plan to raise state cigarette taxes to $3 per pack would still leave California on pace for budget gaps totaling about $45 billion over the next five years--compared with projected shortfalls of about $51 billion under a previous proposal to raise vehicle license fees.

“If the governor would negotiate we could reach a deal and we wouldn’t have to worry about Cal Grants,” Assemblyman John Campbell (R-Irvine) said. “The longer this goes on, the more situations like this will arise.”

Democrats also expressed concern that money for needy college students is being threatened, and they took issue with Republicans’ portrayal of the state’s future fiscal woes.

Assembly Budget Committee Chairwoman Jenny Oropeza (D-Long Beach) said the situation with the Cal Grant money is an example of the negative consequences of “the Republican budget blockade.”

In another budget development, the California Supreme Court has decided to review a lower court ruling that would require state employees to receive only the federal minimum wage as long as California lacks a budget. The decision by the state high court means Controller Kathleen Connell will continue to pay the state’s more than 200,000 employees their regular salaries until the case is resolved, which could take months or years.

Salaries for the governor, lawmakers, their staffs and other state elected officials, including Connell herself, will continue to go unpaid, however, as will bills from vendors who provide goods and services to the state.

Complications in the state’s financial aid process are expected to heighten in coming weeks. Boeck said he is most concerned about a subset of needy students who receive so-called access grants--amounting to $87 million of the total $212 million at risk--to help cover transportation, housing, food and book expenses.

“They’re the ones who are truly at risk,” Boeck said. “Schools generally can’t credit those funds.”

State officials typically send Cal Grant funds out during the first week of August to more than 300 schools that participate in the scholarship program, but with no budget the money is on hold.

Students usually apply for the money around the time classes begin.

“To the extent colleges don’t have funds to lend to students, there are going to be some real barriers to access,” said Scott Lay, director of state budget issues for the Community College League of California.

Nancy Knight, vice president of college services for Glendale Community College, estimated that the delay could mean $250 less that students at her school could use toward books, which average about $75 each. Classes resume there Sept. 3.

Knight warned that it’s nearly impossible for students to catch up on two weeks of reading assignments.

“The state investment [in the Cal Grant program] may be lost if the student can’t pass the class,” Knight said. “The whole thing is nuts. We’re not happy campers.”

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Times staff writers Stuart Silverstein and Maura Dolan contributed to this story.