The Higher Education Services Corporation administers the State's Tuition Assistance Program (TAP), the Federal Family Education Loan Program and other State and Federal aid programs.

The Higher Education Services Corporation is located in the Education, Labor and Family Assistance appropriation bill.

State Operations

The Executive recommends a total State Operations appropriation of $101,479,000 for the Corporation. This represents a net decrease of $17,821,000, or 15 percent below State Fiscal Year (SFY) 2002-03 levels. This reflects an increase of $808,000 in federal support for State Operations, and a $18,629,000 decrease in support through Special Revenue Funds. This decrease is due to the elimination of a non-recurring appropriation of $10,000,000 for the implementation of a new student financial aid computer system and a reduction of $8,629,000 to reflect a reduction of 15 FTE positions resulting from retirement incentives and attrition.

Aid To Localities

The Executive provides an All Funds Aid to Localities appropriation of $619,914,000 reflecting a net decrease of $159,450,000 below SFY 2002-03 levels. This includes an appropriation of $567,500,000 in support of the TAP Program which represents a $161,100,000 reduction from Academic Year 2002-03 funding levels and a $279,000,000 reduction from estimated TAP expenditures in the 2003-04 Academic Year. In addition, the Executive proposes to fund $225,000,000 of total TAP expenditures through a transfer of funds from the Temporary Assistance for Needy Families (TANF) Program.

The Executive's proposal would alter the TAP Program by creating two components of the TAP Award. First, students would be eligible to receive a TAP base award which is equivalent to only two thirds of what current law would provide. Students would then be required to self-finance the remaining one-third of their TAP award through Federal and State student loan programs. Upon the completion of an approved college degree program, students then would become eligible to receive a TAP Performance Award equal to the one-third up front reduction of their TAP award inclusive of accrued interest that resulted from the need to enter into additional student loans.

In addition, the Executive proposes to create a new TAP Loan Program of $11,500,000 to ensure that students that have exhausted their Federal student loan eligibility will have the ability to access necessary student loans through this newly created State loan program.

The Executive maintains funding for the Aid To Part-Time Study Program at the SFY 2002-03 level of $14,630,000.

The Executive recommends $21,068,000 for various scholarship and fellowship programs administered by the Corporation, which represents a reduction of $2,850,000 from SFY 2002-03 levels. This consists of a $2,000,000 increase in the funding level for the Volunteer Recruitment Incentive Scholarship Program offset by a $2,850,000 reduction in State support resulting from the Executive proposal to suspend the granting of awards for the Health Care Opportunity Scholarships Program, the Regents Professional Opportunity Scholarship Program and the Scholarships for Academic Excellence Program.

The adjusted appropriation includes a recommended deficiency appropriation of $35,200,000 for the Corporation to accommodate a larger than projected enrollment in the TAP Program and an increase in award levels due to changes in the economy.

Article VII Proposals

The Executive proposal includes language providing for the implementation of the one-third reduction of all TAP Awards, the creation of a new TAP Performance Award, and the creation of a new TAP Loan Program.