Do Student “Fees” Support Financial Aid? Depends on How You Divide the Pie Says LAO

The Legislative Analyst’s Office put out a “policy brief” on that question Aug. 6. You can find it at http://www.lao.ca.gov/sections/higher_ed/FAQs/Higher_Education_Issue_19.pdf

Essentially, LAO says that since student costs are partly paid by the state’s general fund and partly from student fees, when you divert some of the total (state support + student fees) into aid, it is impossible to say from which part the aid comes. In short, LAO seems to say that you can divide the pie any way you like to get any answer you like.

However, there is a potential problem with that approach. UC in particular has policies about the percentage of fee revenues collected from students that are diverted. So automatically if fees go up, an increase in aid occurs. You could say that UC could always change its policy to justify any amount of aid (more or less than the current percentage) and, hence, the formula is meaningless. In effect, the Regents just pick the percentage that accomplishes the dollar amount of aid they want to distribute. That is the implicit message of the LAO’s verdict which is certainly correct as a legal matter. As a political matter, the meaningless interpretation seems to be a stretch.