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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
AMENDED
Arizona promise scholarship program; appropriation
Purpose
Establishes the Arizona Promise Scholarship Program (Scholarship) to be administered by the Arizona Board of Regents (ABOR) for Arizona high school graduates. Establishes the Arizona Promise Scholarship Fund (Fund) and appropriates $20,000,000 from the state General Fund (GF) in FY 2021.
Background
The Arizona Constitution establishes ABOR as the governing entity for Arizona's university system which consists of Arizona State University, Northern Arizona University and the University of Arizona (Ariz. Const. art. 11 § 5).
Statute provides and defines ABOR’s general authority related to the universities, including fixing tuition rates and fees, establishing curricula, designating courses and prescribing student admissions qualifications to the universities (A.R.S. § 15-1626). ABOR authorizes public universities to award all financial aid which includes regents' waivers and scholarships.
ABOR may establish the Arizona Financial Aid Trust Fund (AFAT Fund) to provide immediate aid to students with verifiable financial need and create an endowment for future financial aid. Additionally, ABOR may assess a student registration fee surcharge to deposit in the AFAT Fund. Current law requires ABOR to adopt rules governing the AFAT Fund that: 1) dedicate 25 percent of monies received as a permanent endowment; 2) distribute monies the universities on a pro rata basis; and 3) prohibit the student surcharge from exceeding 1 percent of the registration fee (A.R.S. § 15-1642).
S.B. 1572 appropriates $20,000,000 from the state GF to the Fund in FY 2021.
Provisions
Scholarship
1. Requires each eligible postsecondary institution (institution) to implement the Scholarship to increase college access and affordability for Arizona high school graduates.
2. Requires ABOR, in collaboration with each institution, to develop and implement centralized administrative processes for the Scholarship, including:
a) application policies and procedures;
b) a marketing and promotion plan to build public awareness for the Scholarship aimed at Arizona high school teachers, school counselors, students and parents;
c) data collection and reporting; and
d) distributing Scholarship monies between institutions.
3. Establishes Scholarship eligibility criteria that require a student applicant to:
a) be a U.S. citizen or permanent resident;
b) be an Arizona resident for at least the past 12 months;
c) complete an education and career action plan;
d) complete a Free Application for Federal Student Aid (FAFSA);
e) be eligible for the Federal Pell Grant; and
f) submit a high school transcript that proves the student graduated from an Arizona public or private high school with a minimum grade point average (GPA) of 3.5 on a 4.0 scale.
4. Allows a student, with high school records that are lost or no longer exist, to submit either of the following instead of a high school transcript:
a) a letter certified by the high school that states the student graduated from that high school and their GPA; or
b) the student's original high school diploma, if it provides evidence of GPA.
5. Requires each institution to award each eligible full-time undergraduate student applicant an annual Scholarship amount that covers the balance of tuition and fees for a maximum of four academic years or eight semesters, after all other financial gifts, aids or grants.
6. Excludes graduate students from Scholarship eligibility.
Scholarship Funding
7. Directs ABOR to use monies in the AFAT Fund and endowment to fund the scholarship.
8. Removes ABOR's ability to assess a student registration surcharge fee to deposit in the AFAT Fund.
9. Maintains the requirement that ABOR adopt rules that govern the AFAT Fund and deposit monies generated from individual licensure agreements, royalty agreements or agreements for the sale or transfer of intellectual property developed a university into the AFAT Fund.
10. Establishes the Fund consisting of legislative appropriations and earnings from interest income of monies in the AFAT Fund for the purpose of administering the Scholarship.
11. Appropriates $20,000,000 in FY 2021 from the state GF to the Fund.
12. Requires ABOR to administer the Fund and establish criteria for distributing monies to each institution each fiscal year for the costs of the Scholarship.
13. Requires monies in the Fund be used for:
a) reimbursing Scholarships that cover the balance of tuition and fees for undergraduate students after gifts and aid are received; and
b) implementing a marketing and promotion plan to build public awareness for the Scholarship that is aimed at Arizona high school teachers, school counselors, students and parents.
14. Limits the annual expenditures for marketing, promoting and administering the Scholarship to three percent of the monies in the Fund each fiscal year.
15. Allows institutions to use remaining monies in Fund at the end of each fiscal year to award Scholarships to eligible students in the next fiscal year.
16. Requires, by August 1 of each fiscal year, the state GF appropriation to the Fund to be reduced by the amount of remaining monies in the Fund at the end of the prior fiscal year.
17. Specifies monies in the Fund are exempt from lapsing and continuously appropriated.
Reporting Requirements
18. Requires ABOR to report, by March 1, 2021 and each year thereafter, to the Joint Legislative Budget Committee and the Governor's Office of Strategic Planning and Budgeting the following information:
a) the total number of Scholarships awarded in the current academic year; and
b) the estimated amount of monies committed from the Fund in the current fiscal year.
19. Requires ABOR to report, by September 1, 2021 and each year thereafter, to the Governor, the President of the Senate and the Speaker of the House of Representatives the following information:
a) the total number of Scholarships awarded at each institution by year of college enrollment;
b) the percentage of students who completed each academic year and plan to continue to the subsequent year by institution;
c) the number of students who completed an undergraduate degree by institution;
d) the methodology for distributing monies appropriated for the Scholarship to each institution and the amount distributed to each institution; and
e) the amount of unused monies in the Fund from the prior fiscal year.
20. Requires ABOR to submit a copy of the report to the Secretary of State by September 1, 2021, and each year thereafter.
Miscellaneous
21. Defines education and career action plan as a plan that is required by the State Board of Education for all students in grades nine through twelve and that allows a student to enter, track and update their annual academic, career, postsecondary and extracurricular goals.
22. Defines eligible postsecondary institutions as universities under the jurisdiction of ABOR.
23. Defines tuition and fees as tuition, mandatory fees and program fees that are charged by an institution.
24. Repeals the Scholarship and the Fund on July 1, 2030.
25. Becomes effective on the general effective date.
Amendments adopted by the Appropriations Committee
1. Appropriates $20,000,000 in FY 2021 from the state GF to the Fund.
2. Directs ABOR to use monies in the AFAT Fund to support the Scholarship and removes student surcharge, endowment dedication and distribution requirements related to the AFAT Fund.
Amendments adopted by the Committee of the Whole
1. Reinstates the requirement that monies generated from individual licensure agreements, loyalty agreements or agreements for the sale or transfer of intellectual property developed by a university be deposited into the AFAT Fund.
2. Clarifies that interest income generated from the AFAT Fund endowment will fund the Scholarship.
Senate Action
HEWD 2/10/20 DP 7-0-0
APPROP 2/25/20 DPA 7-2-0
Prepared by Senate Research
March 10, 2020
JO/JP/gs