Larry Gordon\EdSource
Cal State Northridge

Calling the investments a “game-changer” for California’s public universities, Gov. Gavin Newsom on Friday reaffirmed his pledge to give annual budget increases of 5% to the University of California and California State University systems over the next five years. In exchange, the systems will be expected to make progress and report annually on goals including improved graduation rates, growing enrollment, making college more affordable and preparing more students for high-demand careers.

Newsom originally proposed those funding agreements in his January budget proposal, dubbing them “multi-year compacts,” and revealed additional details Friday as part of his May budget revision. He also finalized what he is calling a “multi-year roadmap” with the state’s system of 116 community colleges. The community college system is expected to make progress toward similar goals as UC and CSU, though Newsom didn’t tie specific funding increases to progress on those goals since the community colleges receive base funding via Proposition 98.

In a move described by officials as unprecedented, the governor is also expecting UC, CSU and the community college system to submit annual reports detailing their progress on each of the goals by Aug. 30 for the community colleges and Nov. 30 for the universities, beginning in 2023, to Newsom and the Legislature. Those progress reports mark the first time the systems will have to report to state lawmakers on those specific metrics, according to Newsom administration officials.

Absent from Newsom’s higher education proposals on Friday was funding to reform the Cal Grant program, the state’s main system for awarding financial aid. Key lawmakers and other advocates for financial aid reform had hoped Newsom would include funding for AB 1746, legislation that would make about 150,000 students newly eligible for financial aid while also simplifying what critics say is an overly complex financial aid program.

Reactions to the five-year compacts were mixed. Cal State interim Chancellor Jolene Koester said it was disappointing to see the system’s 2022-23 base funding in the May revision remain the same as the January proposal. CSU would receive an additional $211 million in base funding in 2022-23 over its 2021-22 funding, while UC would get about $200.5 million more.

“With many economic challenges such as inflation impacting every dollar earned by our talented and dedicated faculty and staff, it is imperative that we receive additional funding to better support them and their families by providing appropriate compensation while they work to fulfill the university mission,” Koester said.

Koester said the CSU system will “intensify efforts” to make sure legislators are aware of the university’s needs.

Michael Drake, president of the 10-campus UC system, said the promise of annual budget increases “will allow the University of California to make important investments that will expand access to the University for more California undergraduates.”

In remarks Friday morning about the budget, Newsom said the promise of 5% funding increases would help UC and CSU plan for the future, unlike in the past when they haven’t been guaranteed any specific amount of funding from year to year.

“We think this will be a game-changer,” Newsom said.

What’s unclear is whether the systems could lose funding if they fail to make progress on key goals. So far, the only enforcement mechanism unveiled by Newsom is the annual reports that each system will need to provide.

Cal State

In the agreement between the Newsom administration and the 23-campus CSU system, the campuses will add 14,000 more undergraduate students over four years through the 2026-27 academic year. That’s equivalent to annual enrollment growth of 1%. The system enrolled 477,446 students in fall 2021.

At least 12 CSU campuses have to make progress to maintaining a six-year graduation rate that is above 58%. The system also agreed to increase the four-year, freshman graduation rate to 40% by 2025. The agreement is in line with CSU’s Graduation Initiative 2025, which also aims to improve the four-year rate to 40% and the six-year graduation rate to 70% for first-time students.

In 2021, the four-year, first-time graduation rate was 33% and the six-year rate was 63%.

CSU also agreed to eliminate equity gaps in graduation between low-income freshmen and transfer students and their higher-income peers, as well as gaps between underrepresented minorities, including Black and Latino students and their white peers, by 2025.

The university system agreed it would also lower the costs of textbooks and other instructional material by 50% to save $150 million a year for students. CSU also agreed to increase online courses by 15% so every student who wants to take an online course will be able to do so.

The May revision also includes one-time funding to some CSU campuses, including $80 million for a new science, technology, engineering and math facility for the San Diego State University Imperial Valley campus and $67.5 million to CSU Fullerton’s engineering and computer science innovation hub.

“We are dealing with the workforce in a way that I am really excited about by working with San Diego State University,” Newsom said. The campus will build a new 65,000-square-foot site that will house new nursing programs, and expand public and environmental health programs.

Newsom also proposed $100 million in one-time funding to support deferred maintenance across the system’s campuses and energy efficiency projects and $81 million in ongoing dollars for increasing undergraduate enrollment by 9,434 in the 2022-23 academic year.

University of California

As part of its five-year compact, UC will be expected to increase undergraduate enrollment by 1% each year following 2022-23 — for a total of 8,000 students over the final four years of the compact. In fall 2021, UC enrolled 230,529 undergraduates. Lawmakers and Newsom are pushing UC to enroll an additional 7,000 students in fall 2022, though the system has so far balked at that suggestion.

UC will also strive as part of the compact to increase its four-year graduation rate to 76% and its two-year transfer graduation rate to 70%. Currently, 72.6% of incoming freshmen earn a degree within four years while 62.8% of transfers get their degree within two years. Like CSU, UC will also be expected to eliminate equity gaps between its overall graduation rates and graduation rates among low-income and racially and ethnically underrepresented students.

Other goals for UC include offering 60% of undergraduates the path to a debt-free degree by 2026 and increasing the number of students who get a degree in high-demand areas such as STEM fields by 25%. For incoming California residents in 2022-23, tuition at UC will cost $13,104, and that number will increase for each incoming class over at least the next five years. Many students get their tuition fully covered through the state’s generous financial aid programs but often take on debt to pay for housing and other living expenses, which are especially pricey in California.

In addition to the annual base budget increases that will be coming to UC, Newsom also proposed a number of one-time funding initiatives for the 10-campus system. They include $185 million for climate research across the system and $300 million for a new Institute for Immunology and Immunotherapy at UCLA.

California Community Colleges

Newsom’s proposals for California’s 116 community colleges were praised Friday as “historic” by Eloy Ortiz Oakley, the systemwide chancellor for the colleges. The budget includes $375 million above what Newsom proposed in January to increase the base of the Student Centered Funding Formula, the formula that determines how the colleges are funded.

In one-time funding, the system would get $750 million that will be allocated to districts as block grants that they can use to address pandemic-related issues or reduce long-term obligations and $1.5 billion for deferred maintenance and energy projects. The colleges would also get one-time funds for initiatives including student retention and enrollment, the implementation of common course numbering and technology upgrades.

Newsom’s budget would also support community college part-time faculty, also known as adjuncts, with an increase of $200 million in annually recurring dollars to expand their health care coverage.

“The Governor’s revised budget proposal provides unprecedented levels of support for California community colleges, strengthening our ability to advance educational equity and economic mobility for students and their families,” Oakley said in a statement.

Oakley also praised the five-year roadmap that Newsom proposed, saying it sets a “bold shared vision.” The goals outlined in the roadmap for the community college system include increasing the number of students earning degrees, certificates or job skills by 20% by 2026; decreasing the average number of units taken by students earning associate degrees; and increasing the number of students who transfer to UC or CSU.

Cal Grants

Student leaders and college access advocates expressed disappointment Friday that Newsom’s budget proposal doesn’t include funding required to implement AB 1746.

The bill would make about 109,000 additional community college students eligible for financial aid by eliminating GPA requirements and guaranteeing the awards to students with a household income low enough to make them eligible for a federal Pell Grant. About 40,000 students attending four-year universities would also become newly eligible for awards.

The bill would also simplify Cal Grants by consolidating the program into just two awards, one for community college students and one for students attending a four-year university.

“Today’s college students need affordable access to higher education pathways, especially as our student communities grow and our state continues to weather the workforce challenges brought on by the pandemic,” the Fix Financial Aid Coalition said in a statement voicing displeasure that funding for AB 1746 wasn’t included. That coalition includes the statewide student governments for each of California’s three public college systems as well as the California Student Aid Commission and college access groups such as the Campaign for College Opportunity.

A spokesperson for Newsom’s Department of Finance said that while there could be negotiations with the Legislature on Cal Grant reform this summer, the cost of AB 1746 runs counter to the administration’s goal of being “fiscally prudent.” Implementing the legislation would cost about $315 million in its first year and about $375 million in subsequent years.

The spokesperson said the administration focused on funding one-time projects with its budget proposal rather than initiatives that would require annual spending. Supporters of Cal Grant reform, though, have said California should be able to afford AB 1746’s price tag given the state’s budget surplus.

EdSource reporter Thomas Peele contributed to this story.

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