Chalk it up to California dreaming: Not even three years ago, Gov. Gavin Newsom promised California’s public universities five years of annual growth in state support totaling more than $2 billion.

But the governor’s updated budget plan for next year instead aims to cut the University of California and California State University by a combined $200 million in response to the state’s project multi-billion-dollar budget deficit.

The five-year compact is at risk of turning into a humbler two-year vow, underscoring the difficulty of projecting multiple years of support for California’s top generators of bachelor’s degree recipients — a state particularly at the mercy of large revenue swings.

The UC would see a $125 million base funding cut in 2024-25, with plans to restore that dip in 2025-26. For Cal State, the governor’s May budget revision includes a $75 million cut that’ll be restored in 2025-26.

The numbers were shared with CalMatters after it sought more detail from the California Department of Finance about its higher-education plans that are part of the annual May Revise process. It’s an update to the governor’s initial January proposal and sets the stage for intense budget negotiations with the Legislature to finalize a state budget by late June. The 2024-25 budget year begins July 1.

The fiscal outlook gets modestly rosier later for the two systems, which combined run 33 universities that enroll around 750,000 students.

Each system would receive a modest bump of 2.05% in 2025-26 — a far cry from the 10% the governor projected in his January budget proposal. That 10% itself was a compromise. Each system was supposed to see a 5% bump in 2024-25 and the same in 2025-26. But in January, Newsom called for no bump in year one and to double-up in year two as a way to manage the state deficit.

That 10% for the two systems would have meant $1 billion combined in 2025-26, according to the Legislative Analyst’s Office. A mere 2% increase would total roughly $200 million.

The analyst’s office basically presaged the change of fortune for the universities. When Newsom unveiled his compact plan in 2022, a promise of increased spending in exchange for improvements in student academics, the office wrote: “We caution the Legislature against putting too much stake in the Governor’s outyear commitments to the universities.” Previous governors have rarely “been able to sustain their compacts over time,” the office noted.

One reason? “In some cases, changing economic and fiscal conditions in the state have led governors to suspend their compacts,” the office wrote then.

Whether lawmakers fight to restore these cuts is an open question. More money for campuses means they can pay to hire more faculty and offer more classes students need to graduate. The additional state support is also a particular lifeline for Cal State, which agreed to 5% raises for its roughly 60,000 unionized workers, including the nearly 30,000 faculty who went on strike late last year and early this year demanding wage and benefits gains.

But a dollar spent one place means it’s not spent elsewhere, and the governor is also proposing to swing his budgetary scythe at student financial aid. Under his May revision, the Middle Class Scholarship would shrink by more than $500 million to $100 million each of  the next two years.

Around 300,000 students received that award this year, with average amounts between $2,000 and $3,000. If the governor’s plan becomes law, those amounts could shrink by 80%, on average.

One higher-education watchdog worries the cuts and limited growth will affect low-income students most.

“With this funding being cut, I think it’s going to require a real concerted effort over multiple years to make sure that those students are brought back into higher education and have the supports that they need over multiple years to actually make it to graduation,” said Joshua Hagen, director of policy and advocacy at the Campaign for College Opportunity, a nonprofit advocacy group.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

Nathan Reyes lives with his family five minutes from Cal State Los Angeles, where he’s paying close to nothing to earn a bachelor’s degree that typically lands graduates a salary of $62,000 within five years of completing college.

He’s one of hundreds of thousands of California low-income students who attend colleges that, because they’re affordable enough, cost the equivalent of a few months of a typical salary that students earn within a few years of graduation. 

A new report compares California’s colleges by analyzing how long it would take low- and moderate-income students to recoup the money they spent to earn a college credential. It shows that many community colleges, Cal States and University of California campuses — all public campuses — have better returns on investment than most nonprofit private colleges and for-profit institutions.

Reyes’ only expenses are car upkeep, gas, a few books and helping his family with some housing costs. The third-year student didn’t need to take out loans.

“I feel very lucky,” Reyes, a communications major, said. “In high school, I was always stressing about, ‘Oh, man, I’m gonna have a whole bunch of debt racked up after college’. And now that I’m in my third year, I don’t have to worry about any of that.”

Reyes, who’s 20 years old, receives state grants to cover all his tuition and federal aid for other academic and living expenses. He also works for a state volunteer program that pays students a stipend.

Report Shows Time to Recoup Cost of a Degree

The report was commissioned by College Futures Foundation, a nonprofit that promotes college completion. The report merges several concepts into one number: 

It defines low- and moderate-income households as those earning below $75,000 annually.

The data, all from the federal government, show that the time it takes to recoup the net costs of earning a degree at Cal State San Bernardino is less than three months. That’s because low-income students there incur about $5,000 in out-of-pocket expenses if they finish in four years. Within a few years they earn about $53,000 a year — double what young adults with only a high school diploma make.

At Cal State Los Angeles, the time to recoup the net costs of earning a bachelor’s is also less than three months of a typical post-college annual salary. 

“​​This is really a first-of-its kind look,” said the report’s author, Michael Itzkowitz, who headed the federal government’s first consumer tool for comparing college costs under the Obama administration. The approach is a mathematical way of demonstrating which colleges confer economic value to students beyond what a high school diploma would.

A CalMatters analysis of Iztkowitz’s data found that the average time needed for a student to recoup their net costs is about two years at public institutions and a little over three years at nonprofit private colleges in California.

Some of those private campuses are as affordable as a Cal State, UC or community college after factoring in financial aid. Stanford University costs low-income students nothing. However, only 4% of students who apply are admitted, while all but three Cal States admit more than 70% of the students who apply. Most undergraduates in California attend a public institution.

Pitzer, Pomona and the University of Southern California and several other highly selective nonprofit private colleges cost students less than a year’s worth of the typical salary they’ll earn within a few years of completing their degree.

Return on Investment Varies by College

While some for-profit colleges have strong returns on investment, most do not. 

It takes nearly 13 years for students attending this often-scrutinized segment of higher education to recoup their costs, Itzkowitz’s calculations show. California’s Department of Justice has sued several for-profit colleges, accusing them of deceitful practices, and won large financial judgments and settlements.

And that doesn’t even account for the 22 for-profit institutions that show no return on investment, meaning students from those schools earned no more than what a young adult with just a high school diploma makes. In the report, 24 campuses in total, or 8% of all California colleges, showed no return on investment, including two small nonprofit private colleges. 

“There are for-profit institutions that can offer an affordable education and good employment outcomes and they’re recognized within the data,” Itzkowitz said. “But what we also see is that there are a disproportionate amount that show more worrisome outcomes for students in comparison to other sectors.”

Most California for-profit colleges, however, predominantly issue certificates, which are shorter-term credentials that don’t regularly lead to the economic gains associated with bachelor’s degrees.

At 79% of California institutions in the report, low and moderate-income students typically recoup their costs in five years or less. For nearly a third of campuses, it was less than a year.

For many students, the ultimate costs of a degree will be higher than the data in the report. That’s because they need more than two years to earn an associate degree or beyond four years to earn a bachelor’s, assuming they graduate at all. The longer they chase a degree, the less time they spend in the workforce earning the higher salaries that come with a college credential. Also, the federal net price data has limits: It only calculates what full-time freshmen pay. Students attending part time will experience different annual costs.

But the basic trend remains the same: State and federal financial aid at public campuses plus typical salaries that far exceed the wages for those with a high school diploma make college worth the investment.

Itzkowitz plans to produce a follow-up report that measures the return on investment by major. His organization, the HEA Group, produced an analysis of typical wages by major last year. Some majors lead to higher wages than others, which can skew school-wide results.

The data in the report show variation within public universities, too, even in the same city. UCLA’s net price-to-earnings ratio is about seven months and its students tend to earn more than those from Cal State LA after graduating. But the typical cost of a degree after four years for low-income students is roughly $31,000 — far higher than the $5,500 at Cal State LA, which is 20 miles away. 

“I wanted to go to UCLA, but it was too expensive for me,” Reyes said. “I did get accepted.”

Like he did at Cal State LA, he would have probably qualified for the Cal Grant, which waives tuition at public universities. But the distance from home would have forced him to either live in a UCLA dorm or commute about two hours daily between home and the crosstown campus. Housing, not tuition, is usually the largest expense for students at public universities. Borrowing money was out of the question for him. 

So was a long drive to UCLA. “If I ended up missing a class or something, I’d beat myself up over it,” he said. 

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

The faculty union of the California State University is planning a week of strikes across the 23 campuses Jan. 22 – 26 after the system said that it would provide 5% raises to members, far below what the union is seeking.

The California Faculty Association is asking for 12% raises this fiscal year, plus other benefits, like extended parental leave and higher minimum salaries for the lowest-paid workers. But the 5% is an amount other employee unions in the system accepted last year as Cal State fought to stave off an even larger labor walk off.

From Cal State’s perspective, its latest and final offer concludes contract negotiations. For the faculty union, it reaffirms its plans, broadcast in December, to strike in late January.

“Management’s imposition gives us no other option but to continue to move forward with our plan for a systemwide strike,” the faculty union told its members this afternoon. Planning to join the faculty union on the picket lines is the smaller Teamsters Local 2010, a labor group of 1,100 skilled maintenance workers.

The whiplash in messaging — raises on one hand but a vow to strike in pursuit of higher pay and benefits — is yet another flare-up in the months-long standoff between leaders of the nation’s largest public four-year university, home to more than 400,000 students, and the faculty union that represents 29,000 professors, lecturers, librarians, counselors and coaches. The union had already staged strikes at four campuses in December, cutting off instruction a week before the start of students’ final exams.

The university’s decision preceded the unveiling of Gov. Gavin Newsom’s spending plan for 2024-25, which included major budget cuts amid a $37.9 billion deficit.

“Throughout the bargaining process, the CFA never veered from its initial salary demand, which was not financially viable and would have resulted in massive cuts to campuses — including layoffs — that would have jeopardized the CSU’s educational mission,” a Cal State press release stated.

The 12% the union seeks is a response to the soaring inflation the nation experienced since 2021, when prices rose and the purchasing power of paychecks withered. An independent factfinder in December recommended that the two sides agree to a 7% raise, plus other compromises. But an offer of above 5% would have reopened salary negotiations with other unions because of terms agreed to in those contracts — something Cal State has wanted to avoid.

Throughout negotiations, the system was offering faculty 15% raises across three years, but the 10% for the last two years were contingent on the state continuing to grow Cal State’s funding by 5% annually. The union balked at raises predicated on conditions.

Dispute Over Cal State Finances

Cal State since last May has been signaling that its finances are rocky. The system said at that time its revenues fall $1.5 billion short of what it needs to adequately educate its students. That finding prompted the system’s board of trustees last September to approve five years of consecutively escalating tuition hikes — increases totaling 34% over that time.

Those will kick in this fall, but will only affect about 40% of undergraduates. The remaining 60% of students don’t pay any tuition because they receive enough state and institutional financial aid. While those tuition hikes will bring more revenue to the system, it’s not enough to fully fund Cal State’s mission, its senior leaders have maintained.

The faculty union opposed those tuition hikes, arguing instead that Cal State has enough in reserves to afford the raises the union seeks and to spend more money on students without increasing what they’re charged. Cal State has pushed back on that analysis, noting that it needs to build its reserves so it has the equivalent of at least three months of its operating budget as cash on-hand in case of economic emergencies. Currently, it only has about a month’s worth of funds.

Last Monday was supposed to be the start of a week of bargaining between the faculty union and Cal State leadership to come to a deal and avoid the strike. But that ended poorly, union leadership said in a statement. “After 20 minutes, the CSU management bargaining team threatened systemwide layoffs, walked out of bargaining, canceled all remaining negotiations, then imposed a last, best and final offer on CFA members,” wrote Charles Toombs, faculty president and a professor at San Diego State. 

The breakdown in negotiations was consistent with the tenor of relations between the two camps, which has been marked by frustration and a lack of trust.

Professors at Cal State earn on average between $91,000 and $122,000, full-time lecturers make ​​$71,000 on average and the 23 campus presidents have an average base salary of about $417,000, according to 2022 data compiled by CalMatters. Most lecturers are part-time and earned the equivalent of $64,000 on average in 2022.

Faculty groups have inveighed against the higher jumps in salaries top Cal State campus and system officials were awarded in recent years. A CalMatters analysis last month showed that while lecturers saw raises of 22% on average since 2007, presidents in that time saw base pay raises of 43% on average. The system’s new chancellor earns just shy of $800,000 in base pay and about $1 million when adding housing, auto and other perks.

But even if faculty and the system resolve the current labor dispute, a wider set of contract items will be up for negotiation this June.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. 

Barring a breakthrough in negotiations, the California State University faculty will go on one-day strikes at four campuses this coming week as they fight for 12% wage hikes this academic year plus other key concessions — increases that the system of nearly 460,000 students says it cannot afford.

The action would dash hopes of a labor peace between the union of 29,000 professors, lecturers, librarians, counselors, and coaches on one end and management of the nation’s largest public four-year university system on the other. And it would only be the beginning: If Cal State leadership doesn’t meet faculty demands, union leadership is promising more labor unrest in 2024.

“The decision was made to start on the smaller side…to allow us to give some space to escalate,” said Kevin Wehr, bargaining team chair for the California Faculty Association and a professor at Sacramento State. “We don’t feel the need necessarily to go from zero to 60.”

The planned dates and campuses are:

• Dec. 4, Cal Poly Pomona
• Dec. 5, San Francisco State
• Dec. 6, CSU Los Angeles
• Dec. 7, Sacramento State

The four schools are among the largest in the system and combined enroll around 105,000 students. The labor walkouts are meant to signal to Cal State leadership that the union is capable of quickly organizing its members.

“We’re going to demonstrate to them that we can shut down any campus we want with only a couple of weeks’ notice,” Wehr said, who added the union doesn’t plan to stage any other work stoppages in December.

Last month 95% of faculty members who voted approved a resolution granting union leaders the ability to call for a strike. The union refused to say what percentage of its membership took part in that vote. In response, a Cal State spokesperson told CalMatters then that it “remains committed to the collective bargaining process and reaching a negotiated agreement with the (faculty union) as we have done with five of our other employee unions in recent weeks.”

In the past month, Cal State has come to agreements with five other unions representing around 30,000 non-academic staff. The labor deals ensured that Cal State wouldn’t contend with all its unionized workers striking, which would have been calamitous for the system. A smaller union of about 1,100 workers in the trades went on strike for one day this month.

Cal State Lacks Revenue

Cal State has grappled with what it says are insufficient revenues to properly educate its students. In May, officials said the system needs to generate at least $1.5 billion more annually to provide students the academic, cultural and supportive services they need.

That report triggered a multi-month discussion about upping revenue, culminating with the system’s board of trustees approving tuition hikes of 6% for each of the next five years, starting next fall. But even those hikes aren’t enough to fully fund the system, Cal State officials said. The faculty union and student groups bitterly opposed those hikes. The union also released an accounting study last month that argued Cal State can tap more of its reserves to cover academic expenses, such as faculty pay.

The impasse over finances and tuition played out in the same year Cal State’s new chancellor received a nearly $800,000 base salary — 66% more than what a predecessor earned in 2020. Last year several campus presidents received raises of as much as 29% after a system report said many were underpaid.

In its most recent offer on Monday, Cal State leaders proposed to the faculty union 5% raises this year and two years of subsequent 5% raises between 2024-25 and 2025-26. On paper that adds up to 15% across three years, above the 12% faculty seek in 2023-24.

‘Lack of Trust’

But those future hikes are contingent on the system receiving funding that Gov. Gavin Newsom has promised Cal State for the next three years as part of his five-year compact of 5% annual increases. These are promised, but not guaranteed, jumps in state support in exchange for improvements in graduation rates and other academic advances. Newsom and the Legislature approved the 5% increases in state aid to Cal State — and the University of California — in each of the last two years, despite facing a multi-billion deficit in June. 

Still, the union doesn’t want to take a deal that is at the mercy of a state budget negotiation process between the governor and lawmakers. Labor leaders feel spurned already; in 2022, they expected Cal State to receive enough state support for faculty to get 4% raises. Instead, the system lawmakers and the governor provided the system enough to approve 3% salary bumps.

“There’s a definite lack of trust with any budget contingency language now,” Wehr said.

The union is also hesitant to accept any multi-year deal now because of a technicality in its contract with Cal State. Right now, the two sides are able to negotiate on just the salary portion of the collective bargaining agreement and several benefits provisions. The full contract expires June 30, 2024, meaning that the union cannot negotiate on other details that will only become fair game to discuss next summer.

Agreeing to a multi-year contract now overrides that expiration date and locks into place any matter the two sides haven’t yet discussed. Wehr said the union would in effect need to agree to a whole new contract now to approve a full multi-year deal.

“Management must think that faculty can’t do math,” a faculty union letter to its members said. “Management claims their latest salary offer as ‘15 percent over three years’ (even they acknowledge that is not guaranteed). We are demanding a 12-percent General Salary Increase for just 2023-24 to keep pace with rising costs of living. We will fight for more when the full contract opens next year. The three-year nature of management’s proposal would mean that we cannot bargain over other workplace issues for three years!”

Beyond the wage increases of 12% for all faculty, the union seeks to lift pay for the lowest-paid instructors, expand parental leave, provide lactation rooms for new parents and more.

Cal State would need to give the faculty union a deal that matches, or comes close, to its demands to end the wave of strikes, Wehr said.” If they come at us with seven (percent), I don’t think faculty would accept that,” he said. “It would have to be 12% or very close to it.”

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

In the past several weeks, the White House, California’s governor and the state’s public university chiefs have all condemned the antisemitism and Islamophobia that have besieged college campuses ever since Hamas militants attacked Israel Oct. 7 and Israel’s military responded with a bombing campaign of Gaza. 

On Wednesday, the top leaders at the University of California convened at the planned UC regents meeting and outlined a series of calls to action to fight that onslaught of intolerance, including shifting $7 million to fund three endeavors: 

• $3 million for emergency mental health for students and staff;
• $2 million for programs “focused on better understanding antisemitism and Islamophobia and how to recognize and combat extremism”, said UC President Michael Drake;
• $2 million to “to train our own leadership, staff, and faculty who are seeking guidance on how to navigate their roles as educators in this space,” Drake said. 

The UC president laid out two more broad initiatives. He called on his top deputy on campus security to meet with campus safety chiefs “to ensure that we are responding appropriately to incidents of violence on our campuses.” Next, Drake said that the system will debut a new office of civil rights this spring, work that began last year. This umbrella office will house the staff that work on sexual violence and include two new offices, one to address discrimination and another dedicated to the rights of students with disabilities. 

“Today we are doubling down on who we are: An educational institution that’s guided by facts and data, but also a moral compass that helps us find our way to compassion and understanding in difficult moments,” Drake said.

His comments followed a robust public comment period that featured students and staff who spoke against bigotry at the UC regents meeting, held at UCLA. To enter the meeting space, members of the public had to clear an outdoor metal detector and walk around barricades — a common level of security during regents events at this campus. 

“What makes the antisemitism that’s on the rise a little different is that there’s an acknowledgment and a normalization of a specific form of antisemitism, which attacks our students’ identity,” said Daniel Gold, executive director of the UCLA chapter of the Jewish religious organization Hillel. He was referring to anti-Zionism, a common but highly disputed critique of Israel’s current policies and founding as a country in 1948. He wanted the UC regents and other system leadership to “address this form of anti-Zionism that is open, that is aggressive, and that is attacking every one of our students and making them fearful of walking around campus.”

A student who spoke at the meeting, whom a UC moderator introduced as Peter Ross, said he participated at four pro-Palestine rallies at UCLA. He objected to a letter UCLA Chancellor Gene Block issued last week that said the most recent of those protests featured “extremely hateful behavior and used despicable antisemitic language.”

That rally “was entirely peaceful, and no hateful or antisemitic language was used,” the student told the regents. Block’s letter was “a deliberate falsification of the courageous stand that students are taking.”

Members of the California Legislative Jewish Caucus wrote a letter last week to UC and California State University leaders to “express our outrage and concern regarding the explosion of antisemitism” at the two university systems.

Core to the dispute over allegations of antisemitic rhetoric is a lack of agreement over what common pro-Palestinian phrases mean. A Jewish student at Wednesday’s meeting described the slogan “from the river to the sea” as a call for Israel’s destruction — a view held by major Jewish groups. Others, including scholars, say the phrase is a demand for equal rights for Palestinians. 

The wide interpretation of what defines Zionism — the founding force behind Israel’s creation —  is one reason why historian Michael Stanislawski called it “one of the most controversial ideologies in the world” in a 2016 book on the subject.   

But undoubtedly Islamophobia and antisemitism are on the rise in the U.S. since the latest explosion of violence between Israelis and Palestinians, as media and advocacy reports have shown.

“I have met with both Muslim and Jewish students to hear firsthand what our students are experiencing,” said Richard Leib, chair of the UC regents. “Jewish, Arab, and Muslim students on our campuses have expressed to me that they do not feel safe, many of them.”

Leib gave voice to the trauma students are enduring. “I’m appalled at the rise of hate speech directed at Arab and Muslim students,” he said. “And I’m alarmed at the reports of threats and assaults and discrimination in the classroom experienced by our Jewish students.”

But Leib also singled out what he said were instances of some faculty violating university codes and policies. Jewish students shared with him “specific instances in which they believe their rights have been violated by episodes of academic abuse by isolated members of our faculty,” Leib said.

He didn’t give specific examples of what he meant at Wednesday’s meeting. However, Leib was particularly aggrieved by a letter from UC ethnic studies faculty a few weeks ago that slammed UC leadership for describing Hamas’ Oct. 7 attack as terrorism. The letter prompted a stern public rebuke from one UC regent who spoke for himself, Jay Sures.

Leib, in an email to CalMatters nine days ago, wrote that the “assertion by the Ethnic Studies Council that this was not a terrorist attack by Hamas is both repugnant and offensive.”

During Wednesday’s meeting, Leib pressed the 10 campuses of the UC system to commit to three sets of priorities. This move wasn’t formal policy but an expression of what the UC regents’ top officer seeks.

First, he said campuses should ensure student safety. “This is your highest imperative and all necessary resources must be employed to ensure the safety of our campus communities,” he said.

Next, he urged the campus chancellors to enforce existing policies against violence and intimidation. “When there are violations, we need swift condemnation and enforcement,” he said. “We have policies for faculty conduct; if there are credible allegations of violations, they might be investigated.”

He encouraged students to report these incidents.

Finally, he expounded on the obligations of campuses to respond to hateful speech, even if it’s protected by the First Amendment.

“If faculty or students engage in hate speech, it is incumbent on the university and campus leadership to call it out,” he said. “It is not OK for our students to fear for their safety on our campuses and hear no response from campus leaders.” 

He also reiterated that threats of physical violence cross a legal line.

Most faculty follow the “the rights versus responsibilities model,” said James Steintrager, the chair of the UC Academic Senate. “Yes, one may have the right to say much, but we must also strive to speak reasonably to challenge bias.”

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

The nation’s largest public four-year university is presently incapable of affording itself.

A 70-page report nearly a year in the making by leaders of the California State University details the massive gulf between the money the system currently generates from tuition and receives in state support and the actual costs of educating its nearly 500,000 students and employing 60,000 workers.

All told, CSU’s revenues account for only 86% of the system’s overall costs — a gap of nearly $1.5 billion in 2021-22. Support for student services is the least funded relative to costs, at just 68%.

The analysis is based on a highly technical set of assumptions and system data. That gap doesn’t even include Cal State’s roughly $6 billion backlog in construction maintenance projects.

A central premise of the report is that the CSU cannot afford to do the things it should be doing to help students succeed. 

“The model explains why there never seems to be enough money to pay for what the universities think they need,” the report states.

As a consequence, ongoing tuition hikes are likely forthcoming. Likely more system tumult awaits, as unions are threatening to strike.

The report’s findings were presented to the Cal State Board of Trustees on Wednesday.

“This is a lot like climate change,” said Julia Lopez, a CSU trustee and co-chairperson of the working group that wrote this report. “If we don’t heed the warning signs right now, we’re going to find ourselves in a world of hurt down the line. So that’s what we’re trying to do, to get ahead of that.”

The Cal State’s revenues from tuition and state support will be 29% to 41% less than what the system needs by 2030 unless the system finds new sources of money, warn the report’s authors, a mix of CSU trustees, provosts, campus presidents, senior system staff, a leading professor, outside consultants and the president of the student association. And that’s “even with aggressive assumptions about increases in state General Fund and tuition.”

These cost gaps don’t necessarily mean cuts to key services are imminent. “It’s not really about what cuts we’re going to make, it’s … opportunities that we do not have to invest in additional things that we should be investing in,” said Jeni Kitchell, executive budget director for the CSU.

A major cost driver for the CSU is its status as a national engine of social mobility. Its students are often low-income or the first in their families to attend college, and require more academic support to graduate, as well as added money to afford food, housing, mental health and other basic needs, Lopez said.

Part of the report’s analysis included how much it would cost to improve the graduation rates of low-income students and students of color by examining the few campuses that have made the most progress in closing equity gaps. The analysis also introduced new data that’ll be closely watched, like the cost of providing each major.

This sobering analysis echoes what the state’s nonpartisan bean counters, the Legislative Analyst’s Office, said in January: Cal State’s tuition and state support will fall $100 million short of its likely costs in 2023-24.

But the solutions the report describes will be bitter pills to swallow. Annual tuition hikes are necessary to increase revenue for the CSU, the report argues, reversing course for a system that has raised tuition only once in the last 12 years.

Even steep tuition hikes, however, won’t be enough to stabilize CSU’s finances. 

CSU’s trustees should adopt a tuition-hike plan by September, the report said. 

The CSU Chancellor’s office is doing just that. It will present a tuition hike to the board in July after consulting with the Cal State Student Association, a system requirement. The plan is to have the board approve a tuition-hike policy in September that would kick in fall 2024, said Steve Relyea, CSU’s chief financial officer.

“From the student perspective, I don’t think we’re ever going to be fine with tuition increases,” the association president, Krishan Malhotra, said in an interview Tuesday. 

But a predictable model that students can budget for and that sends more financial aid back to students, “there’s definitely benefit there.”  

Tuition Hikes Under Consideration

How much more revenue the CSU would generate from tuition hikes depends on whether the system continues its enrollment slide or begins attracting additional students. Another factor is whether tuition goes up 3% for every student annually, or increases once by 5% for every new incoming class of students, similar to the policy the University of California adopted in 2021. The Legislative Analyst’s Office credits those tuition hikes for UC’s stable finances.

Under either model, revenue soars by as much as $765 million annually compared to no tuition increase at all by 2030 — assuming the trustees approve tuition hikes for 2025, the report said.

Still, tuition hikes alone may not be enough to plug CSU’s operating hole. The system’s revenues were $1.5 billion below total costs in 2021-22, according to the report. A tuition hike would only generate between $150 million and $200 million in its first year. 

For new undergraduates, the hikes proposed by the report would equate to a tuition increase of $5,000 or $8,000 over a five-year period by 2030. 

Any tuition hikes would primarily affect middle class students: 60% of Cal State’s undergraduates don’t pay tuition because they receive state and campus grants due to their low family incomes. 

The middle class families most affected are getting more financial aid through the state’s new expanded Middle Class Scholarship.

CSU’s California students are charged an average of $7,550 for tuition and fees, among the lowest in the country; the national average for public universities is nearly $11,000. The CSU already routes one third of tuition-increase revenue to student aid.

At least one lawmaker who has pushed aggressively for more student financial aid told CSU officials to increase tuition rather than coming to the state for more money, especially as the state faces a $31.5 billion budget hole. 

“There’s something you can do which is moderate and predictable,” Assemblymember Kevin McCarty, a Democrat from Sacramento who is chairperson of the budget subcommittee on education, said during a March hearing. “You can do what the UC did.”

University Workers Frustrated

The CSU needs money now, in no small part due to workers signaling they’re ready to go on strike if they don’t get raises soon. 

Scores of educators and other staff assembled outside the CSU headquarters Tuesday in Long Beach to kick off a “summer of solidarity” among CSU unions. Several dozen poured into the public gallery during the trustees meeting Tuesday. For most of the nearly two-hour public comment period, union members inveighed against unfair pay and stalled labor contract negotiations with CSU officials.

“We’re here to sound the alarm, trustees, because we are on a collision course with a labor dispute of historic proportions,” Jason Rabinovitz, top officer for Teamsters Local 2010, told CSU trustees Tuesday. “And the reason is that you’ve been paying workers too little for too long and the situation is coming to a head.”

The faculty union, the largest within the system representing about 30,000 workers, wants 12% raises across the board for this fall.

That would cost the CSU $318 million more annually, a system spokesperson wrote.

But the faculty union argues the CSU has the money. Its research team points to the $472 million in excess revenue above costs that the system generated in 2021-22.

“Any surplus is considered one-time reserves,” CSU spokesperson Amy Bentley-Smith wrote in an email. “Salary increases are ongoing, and using one-time reserves to pay ongoing costs is not fiscally prudent.”

The union leadership also flags at least $2 billion that the CSU has placed into its investment accounts since 2022, wondering where that money came from and why it can’t be used for wages and educational expenses instead. 

Bentley-Smith pointed CalMatters to a CSU explainer on its investment and reserve strategies. “Designated balances and reserves accumulate annually primarily from tuition, fees, and other revenues in excess of annual expenses,” the explainer reads. The money is meant to support campuses in times of economic downturns and natural disasters, as well help cover “student housing, campus parking, student unions, health facilities, university and educational operating activities, among others.”

Could the faculty union strike by this fall? 

“It’s not off the table,” said Kevin Wehr, vice president of the union and a professor of sociology at Sacramento State.

Staff unions demand the CSU adopt the findings of an independent report — funded by lawmakers — that would place staff on salary steps consistent with their skill and experience. Doing so would come with a series of 5% raises. The so-called Mercer report found that Cal State staff earn about 12% less than workers in their fields at other job sites and campuses. 

Such an overhaul would cost the CSU $287 million in its first year and nearly $900 million annually after a decade. Staff unions say the CSU is only offering 2% raises.

“I’m living off of credit cards at this point,” said Dennis Sotomayor, 52, a member of Teamsters Local 2010 union who works as a maintenance mechanic at Cal State Los Angeles. He earns about $60,000 a year, he said.

State Support Already High

Cal State’s fiscal shortfall comes even despite a recent pledge by Gov. Gavin Newsom to provide it with five years of 5% growth in state support for the system’s operations, totaling more than $1 billion. Newsom has made identical promises to the UC.

Despite the massive state budget deficit, Newsom is still promising the second installment of those raises for the 2023-24 fiscal year, which he and lawmakers must approve by the end of June.

Newsom could have won himself more political points with unions by specifying that his 5% raises should go to employee pay and benefits, a senior aide told CalMatters. But Newsom didn’t do that, giving CSU leadership the task of figuring out where the money should go.

The faculty union has written to Newsom asking that a fixed amount of any state support go directly to student instruction, which would benefit faculty. 

“We have to set the (university) systems up for success to serve all aspects of each of their respective ecosystems,” said Ben Chida, chief deputy cabinet secretary for the governor and who oversees education policies. “And that can’t be a decision that gets nickeled and dimed out of the governor’s office.”

Enrollment Uncertainty

Further crimping the system’s finances is a sudden drop in enrollment: The state gives money to Cal State for every California undergraduate it enrolls.

Enrollment is also tied to tuition. At current rates, tuition revenue will drop 9% by 2030 if the CSU loses about 2% of its students annually — the same rate of projected enrollment loss at California’s high schools.

The system chancellor’s office has already devised a plan to pull some state funding from under-enrolled campuses to instead flow to campuses that are meeting their enrollment targets. If that incentive prompts campuses to recruit more students, then an annual 1% growth in enrollment boosts tuition revenue by 5% by 2030, the report said. 

But with a national slowdown in students heading to college, there may not be enough students to go around. Plus, educating students is more expensive than in previous years, as today’s college learners are typically lower-income and require more financial aid and money for sudden homelessness, chronic hunger and mental health support.

“There’s been a historical shift in services provided by the county and state that are now the presumed obligation of higher education,” the report said. “While the kinds of services provided to our students are fundamental and necessary, they have come at a cost not fully reimbursed by the state or federal government.” 

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

“Frustrating.” 

One word, uttered under breath by a California lawmaker, captured a sentiment, at times boiling over into anger, among legislators struggling to get more California students into the University of California.

What Assemblymember Kevin McCarty, a Democrat from Sacramento, found frustrating Tuesday was the UC’s seeming refusal to adopt the same systemwide guaranteed admissions policy for transfer students that the California State University has.

But it was one of several expressions of legislative aggravation over the UC’s — and to a lesser degree, the Cal State’s — struggles to educate more Californians during an Assembly budget subcommittee on education hearing.

There’s an emotional and fiscal component to lawmakers’ disappointment. As chairperson of the subcommittee, McCarty frequently references parents telling him about their children who graduate high school with GPAs above 4.0 but aren’t accepted to a UC of their choice. To try and get more Californians into the vaunted public university system, the Legislature has recently given or promised the UC:

• $51.5 million last summer to enroll the equivalent of 4,700 more full-time California students by 2023-24 — up from about 196,000 in 2021-22;
• $30 million to UC Berkeley, UCLA and UC San Diego — UC campuses with the most out-of-state students and among the lowest admissions rates — so that they collectively enroll 900 fewer nonresident students, who pay three times more tuition, and replace them with in-state students;
• And agreed with the governor to grow the UC’s state funding — by about $215 million more in 2023-24 if things work out — part of which is supposed to cover the UC’s raising its undergraduate California enrollment by 1%.

From all that, the Legislative Analyst’s Office calculated UC should enroll the equivalent of 203,500 California students in 2023-24. But UC’s projections show it’ll only educate 199,800 — about 4,000 short. 

And for 2022-23, the UC estimates it’ll enroll the equivalent of about 300 fewer California residents than it did in 2021-22.

Now, lawmakers are asking why the UC can publish press releases about the large volume of students who apply each year and yet cannot find enough slots for all those applicants — especially at the most selective campuses, UC Berkeley and UCLA.

“You just sound out of touch with, you know, the dreams and aspirations of kids who are trying to go to a dream school,” said Assemblymember Al Muratsuchi, a Democrat from Torrance, to the UC official taking the heat at Tuesday’s hearing, Seija Virtanen, associate director of state budget relations.

Grow and Trust

The UC wants to enroll more students — and technically has. Complicating the debate over enrollment is that the state’s funding formula looks at full-time equivalent California residents. That’s different from what the lay person thinks of enrollment: headcount, or the actual number of people taking classes.

The UC’s headcount of California undergraduates grew this year, but because those students are taking slightly fewer class units per term, the full-time equivalent enrollment dropped.

UC has a plan it shared with the committee: encourage more students to take summer school and add more than 4,000 new full-time equivalent California undergraduates a year through 2026-27. That would add 17,300 full-time equivalent California undergrads, about 4,000 more than what lawmakers and Gov. Gavin Newsom wanted from UC.

The analyst’s office recommended that the 2023-24 state budget — due in late June — cut between roughly $9 million and $60 million from UC for projecting it’ll miss its enrollment targets this year and next. Lawmakers Tuesday didn’t seem ready to do so, but they put the UC on notice.

“We would be super, super disappointed…if we came back a year from now, and we had the same (problem),” said McCarty. “And then at the same time, tens of thousands of Californians from all of our districts with 4.3 GPAs didn’t get into the UC, even though their parents pay taxes.”

That the UC and California State University — which expects to be about 5.6% short of its state enrollment target this year, better than the 7% deficit it projected in January — are struggling to add more students is an inversion of recent trends.

For the past few years, both systems enrolled more Californians than what the state paid them to educate. Now, it’s lawmakers putting pressure on the state public universities to use the extra money they’ve already gotten.

McCarty’s message to the UC and Cal State Tuesday was to grow as much as they can and trust that the state would reimburse the universities for exceeding their enrollment targets.

UC’s Virtanen asked for that assurance in legislative writing. 

“Campuses would feel far more comfortable making some additional offers of admittance knowing that if they’re over by 50 or 100 students, they would get those funds the next year, and we wouldn’t start building up unfunded enrollment,” she told the subcommittee. The state pays the UC about $10,900 for every California undergraduate it enrolls.

Adding to the enrollment uncertainty at both the UC and Cal State is the hemorrhaging of students at California’s community colleges, whose transfer students make up a large portion of undergraduates at the public universities. Though community college enrollment inched up this fall, it’s still down 280,000 students compared to fall 2019 — a collapse blamed on the COVID-19 pandemic.

At the Tuesday hearing, the UC debuted what it thought could be a solution: A senior UC official outlined a plan to guarantee admissions to California community college students who complete the right set of courses and meet GPA requirements. 

It’s the first time the UC proposed a systemwide admissions guarantee; now such guarantees exist campus by campus and only at six UCs. Under the UC guaranteed admissions proposal, if a student isn’t admitted to a campus of their choice, they would be redirected to UC Santa Cruz, UC Riverside or UC Merced.

But McCarty was unimpressed, faulting the plan because it wasn’t identical to the transfer admissions guarantee at Cal State. Lawmakers and advocates have been urging all three public higher-education systems to create a single set of requirements across academic majors, such as an associate degree that guarantees admission, so that community college students could enter either a UC or Cal State.

“We should be using proven pathways rather than adding new pathways and creating additional confusion for students,” said Molly Maguire, a policy director for the advocacy and research group Campaign for College Opportunity, during public comment at Tuesday’s hearing.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

The new top executive of California’s 116 community colleges will be a familiar face: Sonya Christian, current chancellor of Kern Community College District and a longtime campus administrator in the Central Valley region.

She will be the first woman appointed as permanent chancellor and the first person of South Asian heritage to lead the nation’s largest system of public higher education. The California Community Colleges Board of Governors formally hired her Thursday at a public hearing after conducting a half-year search following the resignation of its previous chancellor, Eloy Ortiz Oakley, last summer. Nineteen candidates applied and four were finalists.

“I do feel a sense of urgency and moral obligation to the job at hand,” Christian said at the meeting. She cited the system’s enrollment woes, partisan politics, artificial intelligence and other huge shifts to the workplace that pressure community colleges to prepare students in new ways. “We have no choice but to succeed. Our time is now.”  

Christian, 56, will receive a starting salary of roughly $411,000 and merit pay of up to 7%. Her first contract lasts four years and she’ll receive pay increases of $15,000, $20,000 and $25,000, respectively, between years two and four of her tenure. 

She earned her bachelor’s degree at University of Kerala in Kerala, India, according to a biography the system provided to reporters. She also earned a master’s degree in applied math from USC and a doctorate in education from UCLA, CalMatters confirmed with both institutions.

The new chancellor will begin her tenure June 1. Interim Chancellor Daisy Gonzales will continue to lead the system until then.

“Dr. Sonya Christian is one of our nation’s most dynamic college leaders, with a demonstrated record of collaboration and results in the Central Valley,” Gov. Gavin Newsom said in a written statement.

As a multi-school executive, Christian is relatively new. She has led the three-campus Kern district since 2021, but she was president of its largest institution, Bakersfield College, from 2013 to 2021 and previously taught math at the college.

While she was president, the campus’ graduation rates rose, the percentage of students completing required math and English courses to transfer to four-year universities increased and, in 2021, the school was, for the first time, identified as one of the 150 most exemplary community colleges in the country by the influential Aspen Institute. 

But the school trailed community colleges in the Central Valley and statewide in graduation and transfer rates, according to a CalMatters review of publicly available data. Nor did the campus make a major dent in narrowing the graduation- and transfer-rate gaps among student racial and ethnic groups. Transfer rates overall also barely budged at Bakersfield College.

Christian will lead a system shaken mightily by the COVID-19 pandemic, one that lost roughly 300,000 students — down from 2.1 million —  since fall 2019 and is only now seeing signs of a modest rebound in enrollment. The loose system of colleges also aspires to narrow pervasive graduation-rate gaps across racial and ethnic groups, outcomes that past community colleges officials admitted won’t likely happen.

She’ll oversee a system in the throes of change, including state laws requiring community colleges to enroll more students in math and English courses required to get into a University of California or California State University campus. Another is an overhaul of the courses students are required to take at community colleges to transfer into those two universities. Some faculty groups opposed the various changes to transfer policy. 

And while Oakley’s tenure was marked by ever-increasing state budgets that poured billions more dollars into community colleges, austerity likely lies ahead for Christian as California grapples with a projected $22.5 billion budget deficit.

A Great Pick

Christian as system chancellor “is a great pick,” said Oakley in a phone interview, who added that he wasn’t part of her hiring process. (Oakley leads a group that supports CalMatters financially but has no influence over the newsroom’s coverage.)

His list of reasons is long: Christian’s deep roots in Bakersfield are an asset for a system whose top goals include educating more students in the region and other communities with large populations of low-income students and students who are from Black, Latino and Pacific Islander backgrounds. Bakersfield is in the Central Valley, among the poorest regions in the state and one where fewer adults earn any type of college degree.

Oakley also credited her for emphasizing green-energy jobs and supporting programs to narrow graduation gaps among racial and ethnic groups in a conservative part of the state, where such efforts are often less popular, he suggested. 

“She talked about equity and transitioning to a green economy in a very difficult environment,” Oakley said.

That Chrisian is an immigrant herself taking over a system with a large population of students born abroad makes her particularly suitable for the job, said board of governors member Felicia Escobar Carrillo today. “I think that’s really something special and something to be celebrated.”

Other Challenges

Some colleges may receive less state money once a new funding formula takes full effect in less than three years. Currently, the state is “holding harmless” college districts that would generate less state support based on the new funding formula, which for the first time takes into account not just student enrollment but also how many students are low-income and how many graduate or transfer. That safety net disappears in 2025-26. Though state law would prevent any college district from collecting less state money than they did in 2024-25, several advocates fear that some colleges will generate less revenue through the formula than they need to fully fund their operations.

“We hope that the new chancellor can lead us through this precarious time and ensure that our colleges can, and I hate to be this dire but, stay open,” said Evan Hawkins, executive director of the Faculty Association of California Community Colleges, in a phone interview.

Christian was a member of the task force responsible for implementing the formula, Hawkins noted, suggesting she’s among the best informed about the formula’s nuances.

Oakley, whose tenure sometimes enraged faculty, argued that colleges have had since 2019 to prepare for the funding shift, a change he championed so that campuses had financial incentives to enroll low-income students and improve graduation and transfer rates.

“Colleges are operating with revenue they haven’t necessarily earned,” Oakley said. Still, California is home to many students enrolled in online universities that operate in other states, so “there’s plenty of enrollment,” he said, but it’s up to colleges to “want to adjust themselves to capture that enrollment.”

How to do that will be among the many jobs awaiting Christian.

“We must expand the canopy of community college learners,” she said today. “And this means focusing on communities that have remained in generational poverty.”

And a brand new challenge awaits her: Just hours before Christian’s appointment, the state auditor released a report criticizing the community colleges for employing too few full-time faculty and knocking the chancellor’s office for miscounting how many full-time faculty teach classes — a major impediment to a long-time state goal to have at least 75% of instruction taught by full-time faculty. The report also singled out two districts, including Kern, the district Christian ran the past two years, for being unable to prove it spent new state money to hire additional full-time faculty. 

Many Interest Groups, Limited Power

UC and Cal State systems revolve around centralized offices and top executives who hold huge sway over how campuses operate. Not so at the California Community Colleges. Its Office of the Chancellor shares power with a confederation of 72 locally controlled districts overseeing 115 physical campuses. Each district has its own labor contracts and must contend with local political dynamics that are often far removed from Sacramento.

“There’s a natural tension” between the central office and the local districts, said Larry Galizio, president and CEO of the Community College League of California, an advocacy group for local college executives and trustees.

He views the chancellor’s office and the statewide board as key players in setting goals for colleges but not in telling colleges how to reach them — “tell us the what, but not the how,” he said. But some local college leaders felt “that there was overreach” during Oakley’s tenure, Galizio said. Many labor groups agreed.

Whether that mood will change with Christian is unclear. The systemwide board of governors specified that the next chancellor must follow the accountability framework Oakley created with the board’s input. That document, called Vision for Success, now guides the governor’s oversight of the community college system.

“Make no mistake, this board remains committed to the Vision for Success and a roadmap that is evidenced by our choice in Dr. Christian today,” said board president Amy M. Costa today.

In other words, a source of tension between the Chancellor’s Office and constituent groups isn’t going away.

“I think that it will be just a lot of the same, which of course, from our perspective, is a bit challenging,” Hawkins said.

He hopes that Christian proposes no new big academic and funding overhauls that characterized Oakley’s tenure and instead gives colleges time to put in place those changes..

“We’ve really got a lot on our table,” Hawkins said. 

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

The raises University of California graduate student workers won after last year’s historic work stoppage come with a big caveat: Those same UC workers will have to repay all the money they were paid while on strike.

The UC “may not legally pay our employees or gift them funds if they did not provide a service to the institution,” wrote Ryan King, a spokesperson for The University of California Office of the President, in an email to CalMatters. He cited state and federal rules that forbid the university from paying employees who didn’t work.

The UC system signaled this move was imminent in comments to CalMatters the first week of January.

But unions representing the striking workers allege that how the UC is going about this is all wrong. Rafael Jaime, president of the UAW 2865, the union of 19,000 teaching assistants, tutors and instructors, said the UC is violating state labor law by unilaterally docking pay without first allowing workers to review how much the university plans to claw back.

The UC is “well within their right to recover any money that was incorrectly paid out to workers who are on strike,” Jaime said in an interview Friday. “But there needs to be a fair process to make sure that workers aren’t left with additional hardships.”

Lawyers representing the three unions that struck last year filed an unfair labor practice charge against the UC on Thursday with the state’s Public Employment Relations Board. Core to the complaint is that the UC will deduct pay “without getting employee consent or first notifying employees of the actual deduction amounts before money was withheld from their paychecks,” the complaint read. “No other options were given to employees to ‘correct’ the payroll or otherwise review the University’s calculations before amounts would be withheld.” 

Jaime said the UC previously ignored those requests.

The unfair labor practice charge follows a cease-and-desist demand lawyers for the unions sent to the UC on Jan. 18 that spelled out these grievances. That demand also noted that the UC could have stopped paying workers while they were on strike, rather than waiting a month to begin the process of docking their pay. 

 Any employee who withheld their labor — including faculty members who curtailed their teaching duties in solidarity with the striking workers — had to submit an attestation form to UC managers by Jan. 20, according to UC’s wage deduction policy. The form, a copy of which King provided to CalMatters, asked employees to calculate how many work hours they missed in the months in which the strike occurred.

The move affects at least the 12,000 postdoctoral and academic research workers who struck until Dec. 9 and the 36,000 graduate student workers who formally went back to work Dec. 23. 

At this time, neither the UC nor the unions know how many workers will actually see their pay docked. “As campuses have just received the attestation notices and are in the process of reviewing them, we do not have a number to provide you at this time,” King wrote.

Jaime said part of the problem is the UC’s inconsistency in who’s receiving the attestation forms, calling the process “haphazard” with unclear instructions on the forms.
Not every union member went on strike. In some cases graduate researchers and teaching assistants feared retribution from their faculty supervisors. Others may have disagreed with the work stoppage itself, though the vast majority of unionized workers voted to approve the strike. The UC attestation letter also advises workers that if they took part in protests but still completed their work for the day, they won’t see their pay deducted.

The pay UC plans to claw back from workers won’t occur in a single paycheck but will instead be spread out through May, King wrote. “Evenly spreading any leave without pay out over three months will help mitigate the impacts on our employees,” he wrote.

So, with the UC going forward with its plans even as the unions are challenging them, what’s next? More limbo.

“We filed our charges and we’re waiting for the university,” Jaime said.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.

The California State University system is putting campuses on notice: Enroll more students or lose money.

It’s a stunning reversal of fortune for the 23 campuses of the country’s largest public university system, which have collectively lost 27,000 students in two years — part of a national wave of declining college enrollment.

In fall 2020, Cal State posted its highest-ever enrollment, a capstone to almost ceaseless growth in its six decades as a unified system. Now, it’s home to 25,000 fewer students than the state says it should educate. 

That’s despite a deal with Gov. Gavin Newsom that the system continue to attract more Californians to its campuses — and graduate them at higher rates — in exchange for increased state funding.

“The California State University is facing an unprecedented moment in its 62-year history,” said Steve Relyea, executive vice chancellor and chief financial officer for the system, at this week’s Board of Trustees meeting.

Formula for Budget Cuts

Seven campuses in particular — CSU Channel Islands, Chico State, Cal State East Bay, Cal Poly Humboldt, Cal Maritime, Sonoma State and San Francisco State — are missing their state enrollment targets by 10% or more. They’re not paying a financial price for that, even as several other campuses are exceeding their enrollment goals by more than 10%. 

So, a new plan: Any campus missing its enrollment target by 10% or more will permanently lose up to 5% of its state enrollment funding, which will then be sent to campuses exceeding their enrollment targets. This won’t go into effect until 2024-25 at the earliest, giving campuses time to plug their enrollment gaps.

In the subsequent two years, any campus missing its targets by 7%, and then 5%, respectively, would lose 5% of its state student enrollment funding each year. 

The plan isn’t set in stone like a traditional funding formula. System leaders said its details can change.

“These actions are really intended to incentivize as much upward movement of campuses to and above their enrollment target,” said Nathan Evans, an associate vice chancellor and chief of staff who helps to oversee the system’s academic mission for students and faculty.

If this plan went into effect today, the seven campuses missing targets would lose a combined $38 million to other campuses — enough to educate 4,500 full-time students — in the first year of the plan. Campuses with deeper enrollment holes would see steeper cuts.

Despite the shuffling of dollars, those seven under-enrolled campuses will “be funded at a higher level than their enrollment would justify” in the first year of the plan, said Jolene Koester, interim chancellor of the Cal State system. She made those remarks in response to concerns from some trustees that the plan deprives money from campuses already hurting for more students.

But unless those campuses staunch their enrollment losses, campuses stand to lose as much as 15% of their enrollment funding for the duration of this three-year plan, explained system spokesperson Michael Uhlenkamp in an email. These “budget reallocations” would be permanent, he added, but campuses could recover their money if their enrollment rebounds.

The penalized campuses would also miss out on additional enrollment growth dollars that are part of Newsom’s compact with the system. That money — part of the more than $200 million in new state funds Newsom is promising annually — would only go to campuses meeting or exceeding their enrollment targets. 

All of this additional money will help campuses meeting their targets hire more educators and add more classes.

The Cal State system has no history of rerouting money like this, Koester said, “but we are in a position where we have to take the risk of acting in order to fund the enrollment where the enrollment can take place.”

Factors Behind Enrollment Slide

Multiple factors explain Cal State’s enrollment slide. Among them is the collapse of enrollment at California’s community colleges, whose transfer students typically account for a third of Cal State’s total student body. As a result, Cal State now enrolls the equivalent of 11,000 fewer new full-time transfer students than it did in fall 2020. 

The biggest loss, though, is among existing students. Between fall 2020 and fall 2022, the equivalent of roughly 24,000 currently enrolled undergraduates disappeared from the Cal State system. 

Part of the reason is that students on average are collectively taking fewer classes. In the last two years, students began taking .4 fewer units a term. That may seem insignificant, but with more than 400,000 students, that fraction of a change means the equivalent of 8,000 fewer full-time students enrolled.

Another enrollment headwind is the number of students coming back for another year of study. Only 81.7% of last year’s starting freshmen came back for a second year, the lowest first-year retention rate at Cal State since 2008, and far below the 85.5% of freshmen who started their education in 2019.

There are bright spots for the system: About 2,000 more new freshmen enrolled in fall 2022 than in fall 2020.

But even recent high school graduates may no longer be a source of continued enrollment growth for Cal State given that the state’s K-12 population is expected to crater by more than 500,000 students between 2020 and 2030.

Workers well past their high school years or adults with some education but no college degree will need to increasingly become a greater source of enrollment — and by extension tuition revenue — for the system, some trustees said.

“The demand for access is no longer just in the (typical) college-age population,” said Julia Lopez, a trustee. “The demand for access is in the older non-traditional student.” 

Efforts to Encourage Re-Enrollment

In late 2021, the system began appealing to students who dropped out during the pandemic to come back to the campus. System leaders said those efforts are ongoing.

They also described a new partnership with Los Angeles Unified School District, the state’s largest K-12 public school system, to work with high schools that send few students to college. This spring Cal State will unveil a dual-admission program for high schoolers who want to attend community college first but still maintain guaranteed admission to the Cal State system. Cal State leaders are also hiring an enrollment marketing firm, Virginia-based SimpsonScarborough, to help with attracting more students. The Cal State Chancellor’s Office hasn’t finalized the contract, so financial details of that deal aren’t available, Uhlenkamp wrote.

Some campus presidents say expanding student housing will also attract more students. San Francisco State, among the seven campuses with the most severe enrollment problems, is adding 750 new beds that will be rented out to low-income students at a discounted rate. The project is part of the state’s planned massive $4 billion infusion to build more affordable homes for college students.

In past years 2,000 students appeared on waitlists for campus housing at the university,” said Lynn Mahoney, president of San Francisco State, at Wednesday’s trustees meeting.

“My enrollment will improve dramatically if I can promise first-year and second-year students campus housing,” she said.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters.