May Budget Revision Largely Protects Higher Education, Underscores Need for Multi-Year Recovery Strategy

Higher Education Remains Largely Protected, Budget Challenges Underscore Need for Multi-Year Recovery Strategy

Governor Gavin Newsom’s 2024-25 May Revision budget proposal puts forth a $22.5 billion investment in higher education, a nearly 2% decrease from the January budget proposal. While fewer details are available than in prior years, it is evident that cuts are deep and universal, with no issue area spared. The level of cuts may be unavoidable, but The Campaign for College Opportunity remains deeply committed to ensuring the final budget agreement does not place a disproportionate burden on Latinx, Black, Asian American and Native Hawaiian/Pacific Islander (NHPI), American Indian/Alaska Native (AIAN), low-income, and first-generation students.

We appreciate that the May Revision would, in 2024-25, largely shield the University of California (UC), California State University (CSU), and California Community Colleges (CCC) from the most severe cuts proposed across other issue areas. However, as details continue to emerge around the projected multi-year funding cuts and deferrals, particularly at the UC and CSU, it becomes increasingly clear that the Governor and Legislature must turn their focus towards forging a multi-year pathway to recovery for higher education funding that meets the needs of historically minoritized students.

This same multi-year approach to funding stability and recovery will be critical to an effective systematic financial aid response, as the California Student Aid Commission (CSAC) faces a proposed 23% cut to their budget distributed across the Middle Class Scholarship and Cal Grant awards while also grappling with a confusing and delayed rollout of the Free Application for Federal Student Aid (FAFSA). Together, these developments signal a troubling reality of fewer students applying to and enrolling in higher education and fewer students being able to afford higher education when they do enroll. This dynamic carries consequences for our state’s economy, our ability to attract and retain talent, and our ability to reduce and close racial equity gaps, as we know that already vulnerable students will likely be the first to opt out of higher education.

It is essential that a comprehensive, multi-year approach to recovery with equity across financial aid programs begin with a commitment to pursue urgent avenues to distribute aid to students and include a modest first step toward implementing a simplified Cal Grant program under the Cal Grant Equity Framework. The Campaign will continue to work with the Governor, Legislature, and our student partners to chart a multi-year pathway to recovery that funds expanded access to a simplified Cal Grant program while ensuring our most vulnerable students know that higher education is an option for them, that they belong, and that they can succeed in California.

"2024 has been a difficult year for students and families pursuing their college dreams. Amid myriad challenges, including the disastrous FAFSA rollout, the SCOTUS ruling to curtail the use of race-conscious college admissions, the lingering effects of COVID, and the strife currently unfolding on campuses, students are in the eye of the storm. We know that the long-term implications of these cuts—with the potential enrollment, persistence, and completion declines—will have lasting impacts on students, their families, and California's economy. Through this turbulence, a college degree remains the most powerful insurance policy we can offer to students to shield them from economic uncertainty. We will continue to work with students to identify their most urgent needs to ensure they are protected in the final budget."

JESSIE RYAN

Executive Vice President

Higher Education Budget Highlights

Though details are forthcoming, the May Revision proposes:

Disparate impacts across the three systems: the UC would sustain a cut of $125 million, the CSU a proposed cut of $75 million, and the CCC would see a 5% increase in base funding.
Increases in the CCC Cost-of-Living Adjustment from .76% in the January budget to 1.07% in May Revision.
A 23% reduction to CSAC, a combination of a $510 million cut to the Middle-Class Scholarship, and a reduction of $61 million in ongoing Cal Grant funds, reflecting the decrease in application rates for the 2024-25 academic year.
Utilization of reserves to backfill the reduced Prop 98 funding available for the Student-Centered Funding Formula.
Reduction in per-pupil Prop 98 K-12 spending but increases in per-pupil K-12 total spending, reflecting the Administration’s decision to backfill reduced Prop 98 funding with reserves.
Reduction in the planned increase for the California College Grant Incentive program of $5 million in January to $2 million in the May Revision.
Reduction in one-time funding for the Golden State Teacher Grant Program by $60.2 million, leaving $50 million in funding.
Elimination of a planned expansion of $10 million for the CCC Cal Grant Reform Act, which would have provided financial assistance to students transferring from community colleges to California private institutions.