Newsom’s budget keeps promised funding bumps for UC and CSU

Cal State Los Angeles students return to campus after summer break in 2022. CREDIT: ERIK ADAMS, EDSOURCE

Even with California facing a $31 billion budget shortfall, the state’s public university systems would get another year of funding increases under Gov. Gavin Newsom’s revised budget.

Newsom proposed 5% base funding increases for the University of California and California State University, staying true to the agreements he made last year to give the systems that level of increase annually over the next five years.

“These are conveyor belts for talent,” Newsom said while presenting his budget. “This is what separates our game from the game played everywhere else in the world, not just in the United States — the quality of education, the UC, the CSU.”

To save costs in other areas, Newsom did propose shifting state funding for several projects, including student housing, to UC- and CSU-issued bonds. The state would cover the debt payment for those bonds.

Funding for the state’s 116 community colleges would also be less than Newsom had initially proposed five months ago. The community college system’s base funding is tied to Proposition 98, a formula that determines the portion of the state’s general fund that goes to education. The community colleges would get some one-time funding allocations, including $100 million on programs aimed at keeping current students and enrolling new ones.

The details of the budget are likely to change in the coming weeks, as Newsom and his staff will now enter a period of intense negotiations with state lawmakers until the budget is finalized in June.

But higher education leaders in California mostly considered Newsom’s latest proposal a win, particularly given the shortfall the state is facing.

“This budget reflects our strong partnership with the governor and his recognition of the university’s role in maintaining the state’s economic competitiveness and solving California’s most urgent issues. This level of funding is particularly extraordinary given the many competing priorities the governor must balance this year,” Michael Drake, UC’s systemwide president, said in a statement.

Students on campus at the University of California, Davis in Davis on Feb. 2, 2022. Miguel Gutierrez Jr., CalMatters

CSU’s interim systemwide chancellor, Jolene Koester, similarly said in a statement that the governor had “demonstrated its belief in the CSU’s mission and the transformative power of higher education for Californians from all backgrounds.”

Newsom last year proposed what he called multiyear compacts with UC and CSU. Under the five-year agreements, the systems would get annual bumps of 5% to their base funding and would simultaneously be expected to work on increasing graduation rates, growing the enrollment of California residents and narrowing equity gaps in student achievement, among other goals. The systems will be required this fall to report to lawmakers on their progress toward those goals.

If not for those agreements, it’s possible that the university systems would be facing budget cuts amid the state’s current revenue shortfall.

“I think the compacts are saving the day for the systems, but also for the students,” said Joshua Hagen, the director of policy and advocacy for the Campaign for College Opportunity, a nonprofit that advocates for increased college access.

“The systems continue to see stable, ongoing funding increases,” Hagen added. “That is by itself incredible. But I think it’s also really putting into focus for students where the state is focused and where those systems are promising to improve.”

Not everyone was completely satisfied with the proposals. The chair of the state Assembly’s Higher Education Committee, Mike Fong, D-Alhambra, said in a statement Friday that he’s concerned about the “delay of funds for student housing at a time when students are returning to the classroom.”

Newsom’s revised budget does include some changes to how the colleges will get funding for affordable student housing.

Under a $2.2 billion student housing grant program originally unveiled in 2021, Newsom previously planned to give UC and CSU dollars from the state’s general fund to construct affordable housing. But he now wants the two systems to borrow a combined $1.1 billion to do so. Under Newsom’s plan, the state would annually send $33.3 million to UC and $45 million to CSU to pay for debt from the bonds they use.

In the 2022 and 2021 state budgets, UC and CSU received a total of about $877 million from the grant program. Under Newsom’s latest proposal, they’ll need to pay that money back to the state’s general fund since they will be expected to instead borrow money for those projects, a Department of Finance official said.

The official added that there hasn’t been any pushback from the systems on the proposal, which will allow for the same amount of construction.

University of California Santa Cruz Camper Park on Sunday, Jan. 30, 2022 in Santa Cruz, Calif. While the university houses more students than any other University of California school, UCSC guarantees housing for just half of its undergraduate students.(Natasha Jessen-Petersen/Bay City News)

Other projects at CSU and UC would be similarly impacted. Newsom proposed, for example, shifting $498 million from the general fund to UC-issued bonds to pay for a clean energy project at UC Berkeley and campus expansion projects at UC’s Merced and Riverside campuses.

The community colleges, however, would still get money from the state’s general fund for affordable housing projects. The community colleges were originally due to get about $545 million this year, about the same it received from the program in last year’s budget. But the system will now get $450 million this year and the remaining $95 million will be allocated to the colleges in 2024-25..

“We appreciate the governor’s proposed $450 million for this year and another $95.4 million next year for student housing, and we encourage lawmakers to make this a high priority moving forward,” said Andra Hoffman, president of a statewide board that represents local community college trustees.

Newsom’s proposal for the state’s other student housing fund, a $1.8 billion loan program, remains unchanged since his January budget proposal. He still wants to delay the implementation of that program until next year, with $650 million available in 2024-25 and $1.1 billion available in 2025-26.

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