For many years now the CSU has supported the concept of decentralizing the delivery of Cal Grants to the benefit of students and families. This position is based on the principle that the program should serve students first as we do now with all other financial aid including Pell Grants rather than serve an antiquated administrative structure. It was because of this that the CSU joined California’s other higher education segments and the California Postsecondary Education Commission (CPEC) to propose a new approach to administer the Cal Grant Program, and urge its consideration by the legislature during their budget deliberations.

The current distribution system for Cal Grants has seen little change from its inception in the 1950s. Cal Grant is the only major financial aid program that requires extensive interaction on the part of a student with an entity outside the campus financial aid office. The current process prohibits campus financial aid offices from informing students they are eligible for a Cal Grant award even if it is clear that will be the case. Consequently, students experience needless delay in learning their eligibility status.

Under decentralization, the student’s FAFSA and high school data would go to one destination (the campus) and all related processes and communication would be between the student and the campus financial aid office. Students no longer would be required to interact with a state agency (one that is frequently unable to handle student inquiries in an accurate or timely manner). Elimination of this barrier and the provision of a “single point of contact” for all matters related to federal, state and institutional aid are especially critical for low-income, under-served and under-represented students.

California Student Aid Commission (CSAC) opposed the decentralization proposal during budget deliberations this year arguing such an administrative change would cost participating institutions millions of dollars over a two-year period. CSU and other financial aid professionals disagree stating eliminating duplicative processing and communication between campuses and CSAC would more than outweigh the workload involved in new tasks. Thus, rather than increased costs at CSU, the decentralization proposal sponsored by CSU, the University of California, the Association of Independent California College and Universities, the California Community Colleges and CPEC, would result in net administrative efficiencies that would enhance the ability of our financial aid offices to serve students. What is clear is that decentralization would save significant funds at the state level spent on duplicative tasks at CSAC.

When the Legislature sent the Governor their proposed budget, they opted to not have decentralization be part of the final budget package. However, the Governor in his final budget vetoed $6.3 million from CSAC’s operations budget and stated that he would support reinstatement of $4.3 million if the Legislature enacts legislation to decentralize the delivery of Cal Grants to the campuses.

CSU and our other partners remain committed to making it easier for students and families to get their whole financial aid package completed at their campus. Look for legislation this summer to make this change effective in 2010-11.