OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 (860) 240-0200
http://www.cga.ct.gov/ofa
sSB-8
AN ACT CONCERNING HIGHER EDUCATION AFFORDABILITY
AND GRADUATE RETENTION.
Primary Analyst: SB 3/20/23
Contributing Analyst(s): EMG, CW
Reviewer: CW
OFA Fiscal Note
State Impact: See Below
Municipal Impact: See Below
Explanation
The bill makes various changes related to higher education
affordability and graduate retention, and has numerous fiscal impacts,
which are identified below.
Section 1 increases the minimum grant awards per semester under
the state's debt-free community college program from $250 to $1,000 for
a full-time student and from $150 to $600 for a part-time student. This
results in an increased annual cost beginning in FY 24 of approximately
$7,401,000 (based on 7,015 minimum grant awards to full-time eligible
students and 4,755 to part-time eligible students).
The section also allows returning students (those who are not a first-
time enrollee at a community college) to qualify for the debt-free
community college program. This results in an additional annual cost of
approximately $4.7 million based on the number of eligible students, the
increased minimum grant awards provided by this section, and the
estimated maximum award they would qualify for.
Section 2 requires that any American Rescue Plan Act (ARPA)
funding under the Roberta B. Willis Scholarship program, for FY 23, for
the community-technical colleges, be reallocated to the Connecticut
State University System (CSUS) for use in FY 24. As of the end of FY 22, 2023SB-00008-R000139-FN.DOCX Page 2 of 3
the community-technical colleges estimated they would be unable to
award approximately $17 million of a $20 million ARPA allocation for
the Roberta B. Willis Scholarship program. This funding was unable to
be awarded due to various timing and eligibility criteria. It is unclear
how much ARPA funding is allocated to the community-technical
colleges for FY 23. This reallocation results in an increase in financial aid
revenue to the CSUS.
Sections 3-5 establish a Student Loan Subsidy Program. Section 5
authorizes $7 million in General Obligation (GO) bonds each fiscal year
starting in FY 24 for the student loan subsidy program established in
this act, to be administered by the Connecticut Higher Education
Supplemental Loan Authority. To the extent the new bonds authorized
are fully allocated and expended, there would be an increase in annual
General Fund debt service costs until such bonds are fully repaid. At
current market rates, total repayment costs over 20 years for $7 million
of GO bond authorizations are estimated to be approximately $10.9
million.
The bill creates an annual new GO bond authorization, which would
continue to add $7 million of new bond authorizations each year until
changed or repealed. Additional years of authorization past the initial
year would increase the potential costs proportionately – for example,
10 years of authorizations would be $70 million of bond authorizations
at a total estimated debt service cost of $109 million.
To the extent the new bonds authorized are certified by the Treasurer,
and are fully allocated and expended, there would be an increase in
annual General Fund debt service costs until such bonds are fully
repaid. However, when portions of an authorization are specified to
become effective in future years, the full authorization amount is
typically known at the time of adoption. The total potential debt service
cost is unknowable, given the lack of finite amount or time frame of the
bond authorization.
Sections 6 and 7 establish a state personal income tax deduction for
student loan interest paid. This does not result in any fiscal impact as 2023SB-00008-R000139-FN.DOCX Page 3 of 3
the deduction is only available if the interest has not been deducted
federally and it is presumed that filers would claim the "above-the-line"
federal deduction in lieu of the state deduction established under the
bill.
1
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to inflation, participation in the debt-
free community college program and to the terms of any bonds issued.
1
In addition to filers' federal tax benefit being greater than the potential state tax
benefit due to higher federal tax rates, the income thresholds that apply at the federal
level are more generous than the limits for the deduction established under the bill.