Budget plan threatens aid for students.

Byline: Greg Bolt The Register-Guard

More than 3,000 Oregon college students will lose a portion of their financial aid next year if the Legislature follows through on a plan to spend the last of its rainy day education fund to patch up the 2001-03 budget.

Senators voted unanimously Monday to use the $112 million remaining in the fund, which was created just last fall, to help bolster the K-12 education budget in the face on continuing declines in state income tax revenue. The bill now goes to the House.

If it passes there and is signed by the governor as expected, it means a loss next biennium of $1.1 million in funding for the Oregon Opportunity Grant, the state's need-based financial aid program. Interest from the rainy day account helps fund the grant program, along with a direct appropriation from the general fund. But the general fund appropriation also will decline under the governor's proposed 2003-05 budget, taking another $2.2 million.

On top of that, the reduced funding means the state won't be able to meet the local matching requirement for some federal grants, so it will lose another $1.2 million in aid for college students, said Kathleen Hynes, director of grants and scholarships for the Oregon Student Assistance Commission.

All told, the tuition grant program stands to lose $4.5 million in the next biennium, assuming current budget forecasts hold up.

Without that money, the commission won't be able to offer grants to some 3,350 students who otherwise would receive them.

The commission had expected to award almost 59,000 grants in the 2003-05 biennium, based on the governor's original budget plan.

The commission expects to have issued 66,224 grants in the current biennium, which ends June 30.

To deal with the reduced funding, Hynes said the student assistance commission has voted not to reduce the size of grants, which are set at 11 percent of the recipient's total education costs, but instead fewer students will receive them.

To be eligible for a state tuition grant in 2003-05, dependent students - those still supported by their parents - will have to be at 50 percent or less of the state's median family income. The standard has been 75 percent of the median income.

"That is a shift from 25 years of practice of funding at the 75 percent level," Hynes said.

The eligibility standards for independent students remain the same: 50 percent of median family income for married students and those with children and 30 percent for single students.

The only bright news on the financial aid front is a bill that would pump an additional $290,000 into the grant program this year to prevent further cuts in financial aid packages for spring term. That bill made it out of the Joint Ways and Means Committee with a do-pass recommendation.

Before voters created the rainy day fund last fall, it was an endowment fund that received a portion of state lottery revenues and whose interest generated income for K-12 schools and college aid. Measure 19 converted it into the rainy day fund and tapped more than half of it to help counter the rising tax shortfall.

The current legislation would take the account down to zero to help meet revenue predictions that continue to fall. But that means the only interest generated will come from new lottery revenues deposited during the 2003-05 budget cycle.

Melissa Unger, legislative director for the Oregon Student Association, said the cuts to the financial aid program this year alone total more than 14 percent, the deepest cuts of any education-related program in the state budget.

And she noted that the Oregon Student Assistance Commission already reduced grants once this year because of state budget cuts.

That came at the same time colleges and universities were raising tuition or adding surcharges to balance their budgets.

She said that combination already has left some students unable to afford college, and the new cuts will only send more students to join them.

"This is limiting access to the most needy," she said. "This is a crisis. I think students in the higher education community need to make the case that the Oregon Opportunity Grant needs to be a priority."