1. State Financial Aid Program FY2010 (7070-0065) Board of Higher Education Meeting | October 6, 2009

2. Background

3.  State resources for Financial Aid Programs appropriated under three line accounts:  7070-0065 General Scholarship Account $87,875,218  7066-0016 Foster Child Grant $1,150,000  7066-0021 Foster & Adopted Fee Waiver $1,000,000 Appropriation Summary

4. Background  $87m in FY2010 reflects a 10% reduction compared to FY2009  This 10% overall reduction in appropriation for State Financial Aid is much less than the average reduction for other higher education accounts  Represents the Governor’s recognition of the importance of financial aid and efforts to minimize the impact of budget cuts on students Budget Overview

5. Background  “Earmarks” eliminated from the appropriation language  DHE given authority to establish programs’ funding levels  Underlying mandate that the DHE would continue to fund programs in prior year budget, but not at same levels Budget Overview

6. FY2010 Program Allocations

7.  Overarching principles guiding program allocations  Prioritization of MASSGrant, the Commonwealth’s primary need-based financial aid program  Consideration of average annual demand and expenditure of each program over past three years  Continued commitment to the Commonwealth’s workforce development needs  Recognizing national and local trends that can help predict levels of need and demand for certain programs (i.e., Pell Grant, MASSGrant) Guiding Principles

8. FY2010 Program Allocation  Impact of changes in Federal Methodology— Automatic Zero Expected Family Contribution (EFC )  Increase in annual Pell Grant awards—Stimulus Funds  Increase in financial aid applications (eligible) Additional Factors

9. FY2010 Program Allocations  Review and discussion of funding scenarios included the following groups and organizations:  Executive Office of Education  Department of Early Education and Care  Association of Independent Colleges and Universities of Massachusetts (AICUM)  Statewide Financial Aid Advisory Committee  Various constituent groups (Boston Access, Strategies for Children) Vetting Process with Stakeholders

10. FY 2010 Program Allocations  All programs funded in FY2009 continue to be funded in FY2010  MASSGrant funding increased by 18%  20% average reduction for need-based programs  20% average reduction for workforce development programs  Slightly higher reduction to programs with history of being under-utilized Impact of Guiding Principles & Factors

11. FY2010 Program Allocations FY09 and FY10 Program Allocations Program FY2009 Appropriation FY2010 Appropriation MASSGrant$28,824,582$34,511,046 Community College Cash Grant14,395,29511,516,236 State College Cash Grant9,896,5507,917,240 University of Massachusetts Cash Grant8,697,2206,967,776 Gilbert Grant20,773,50816,618,807 Part-Time Grant3,148,9022,109,789 Paraprofessional Grant2,249,2161,679,373 Early Childhood Educators Scholarship4,000,0003,200,000 One Family, Inc., Scholars Program850,000600,000 Herter Scholarship960,000950,000 Public Service Grant40,00030,000 Washington Center350,000154,000 Math and Science Scholarship1,000,000100,000

12. FY2010 Program Allocations  12.5% increase in “on-time” applicants  60% increase in the number of “on-time” applicants with an EFC=O (36,715 in FY2009; 56,237 in FY2010)  30% change in number of students who are expected to receive MASSGrant  Given the projected “eligible” population, $43 million would be required to fund MASSGrant at the 2008-09 level ($28.8m available in FY2009)  Awards for MASSGrant required reduction to meet demand MASSGrant Highlights

13. Questions