Gavin Newsom’s budget proposal ditches promise to fund 5 years of growth for UC and Cal State

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 totalling 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.

The UC would see a $125 million cut in 2024-25. For Cal State, the May budget revision includes a $75 million cut.

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.

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