Credit: José Luis Villegas / AP Photo
Gov. Gavin Newsom speaks during his inauguration in the Plaza de California in Sacramento on Jan. 6, 2023.

Despite California’s $22 billion budget shortfall, the state’s four-year university systems would get another year of funding increases in 2023-24 under Gov. Gavin Newsom’s budget proposal unveiled Tuesday.

Newsom proposed base funding increases of 5% for the University of California and California State University, meaning he plans to fully fund the second year of the multiyear compacts he introduced last year. Under the agreements, Newsom has pledged annual budget increases of 5% to the university systems as long as they show improvement in graduation rates, making college more affordable and increasing the enrollment of California residents. In 2023-24, the 5% bump equates to an increase of $215.5 million in ongoing funding for UC and $227.3 million for CSU.

“We are fulfilling that commitment. We are not backing away from that,” Newsom said during a news conference Tuesday.

The state’s system of 115 campus-based community colleges would also see funding increases under the proposed budget, including an additional $652.6 million cost-of-living adjustment in Proposition 98 dollars for its general fund. Newsom also offered new funding for the colleges to retain students amid declining enrollment across the system. Despite losing hundreds of thousands of students during the pandemic, community colleges have not lost funding because the state has a “hold harmless” protection in effect until 2025.

However, California’s higher education systems were not entirely spared on Tuesday. Under Newsom’s proposal, overall funding for higher education would decrease slightly by 2.1% to $40 billion. That’s the result of Newsom delaying some funding for capital projects, including the building of affordable housing across the college systems. Newsom offered no new capital project funding proposals.

But UC and CSU leaders said Tuesday that they are grateful Newsom is maintaining the 5% base funding increases.

“This proposal, despite uncertainty surrounding the state’s economic circumstances, reinforces the administration’s commitment to the CSU, its belief in our mission and appreciation of our successes in transforming the lives of Californians,” CSU interim Chancellor Jolene Koester said in a statement.

Michael Drake, president of the UC system, said Newsom’s support of UC is “truly extraordinary” amid declining state revenues.

Newsom could have decided against giving the funding increases to UC and CSU because of the expected revenue shortfalls, said H.D. Palmer, spokesman for the governor’s Department of Finance. That he opted to keep his promise, Palmer said, “speaks to his belief in the importance of moving forward not only on the predictability of funding for UC and CSU, but also for the reforms that the institutions are in the process of implementing that are tied to that guaranteed additional funding.”

Newsom did propose delaying $250 million of anticipated funding to support the construction and renovation of affordable housing projects. The funding was part of the Higher Education Student Housing Grant program, which provides money to the community college, CSU and UC systems to construct student housing or renovate commercial properties into affordable housing for low-income students.

Newsom also proposed delaying the creation of a student housing revolving loan program to the three higher education systems. That program would have seen $1.8 billion in one-time funding over two years starting this year. Instead, Newsom would give the program $650 million in 2024 and $1.15 billion in 2025 under this latest proposal.

Assemblymember Mike Fong, D-Alhambra, the new chair of the Assembly’s Higher Education Committee, was disappointed by the proposals to delay funding for housing projects.

“It is disappointing to see some of the progress we have made in addressing housing for college students delayed. Student housing is critical for addressing housing insecurity and enrollment decline,” Fong said in a statement. He added, though, that he was pleased to see the base funding increases for UC and CSU as well as the cost-of-living adjustment for the community colleges.

Funding would also be delayed for capital projects at UC under Newsom’s proposal, including $200 million for the construction of an Institute for Immunology and Immunotherapy at UCLA; $83 million to support a clean energy project at UC Berkeley; and $83 million for campus expansion projects at UC Riverside and UC Merced.

Newsom’s budget would also shift how the state pays for construction projects at CSU. The state initially wanted to pay cash for the $404.8 million in capital projects approved by the Legislature last year, but with the revenue decline, he decided to have CSU borrow the funds through CSU-issued bonds. The governor’s budget gives CSU $27 million to service debt on the bonds.

For community colleges, in addition to the $652.6 million increase in general funding, the budget includes an additional $28.8 million in Proposition 98 funds to cover expected enrollment growth at some campuses and another $92.5 million to support a cost-of-living adjustment for different programs across the college system, including its adult education program.

Newsom is also seeking to help community colleges deal with enrollment declines. The colleges have lost about 18% of their enrollment since the onset of the Covid-19 pandemic. Newsom proposed giving the system another $200 million toward enrolling new students and retaining existing ones.

The governor’s budget also includes a request that the state’s community colleges establish dual-enrollment agreements with the K-12 districts in their areas. It also requests that all the colleges develop at least one volunteering-type course that all high school students have access to through dual enrollment to help encourage local volunteering and civic engagement.

“The governor’s proposed budget protects education in a time of economic uncertainty,” Daisy Gonzales, interim chancellor of the community college system, said in a statement. “The proposal builds on California community colleges’ strengths with added resources for career training, building out partnerships that connect traditionally underrepresented high school students to college opportunities by concurrently attending community colleges and a continued commitment to help colleges attract and retain students.”

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