Dive Brief:

• California’s two public university systems decried potential state funding cuts to their institutions after Gov. Gavin Newsom unveiled his latest budget proposal for the 2025-26 fiscal year. 
• The University of California faces a $271 million funding reduction under Newsom’s budget, according to President Michael Drake. “I am concerned about the impact” on the system’s students and services, Drake said in a statement Friday, pointing to growing enrollment throughout the system. 
• The funding reduction at California State University would be even steeper at $375 million, according to the system. “A funding shortfall of this magnitude will negatively impact academic programming, student services, course offerings and the CSU workforce,” the system said in a Friday news release.

Dive Insight:

For months, California’s public colleges have been bracing for state budget cuts as Newsom began releasing versions of next year’s budget plan. Many campuses already in the throes of budgetary deficits have been wrestling with how they would manage any reductions in state funds.

The University of California, Santa Cruz, to take one example, already signaled in August that layoffs were coming as the campus tried to plug a $107 million budget hole.

Last summer, Cal State projected a $1 billion projected deficit that it said would have ripple effects throughout the system. At the time, the state funding cut was projected to be a bit higher, at $397 million.

“Additional cuts and deferrals intended for the CSU budget in the following two years would exacerbate our significant fiscal challenges and further complicate the already difficult cost-savings measures our 23 universities are currently undertaking,” Cal State Chancellor Mildred García said in a July statement. 

In September, Cal State San Bernardino President Tomás Morales described the expected cuts to the system as “equally devastating” for his institution, which last year began reviewing programs as well as staff and management roles as it tries to manage its deficits.

The latest budget from the governor’s office — touted as balanced by Newsom — would not reverse reductions for its state university systems in the state’s 2024 Budget Act. Cal State and the UC system would each be left with about $5.1 billion in state funds. Newsom’s proposal would require passage by the California’s legislature.

“We recognize the governor has a difficult task trying to balance the state’s budget to meet the needs of all Californians, but we are disappointed to see that he has not reversed the planned 7.95% cut given the state’s increased revenues,” García said in a Friday statement. 

García also said funding hits would bring “significant real-world consequences,” warning of larger class sizes, fewer course offerings and a reduced workforce.

Both UC and Cal State saw enrollment grow during the current academic year. Preliminary data showed a 2% year-over-year increase in the Cal State system for fall 2024, to 461,000 students. UC said it hit a record enrollment, with headcount up 1.3% to 295,573 students. 

In a preview for the higher ed budget, Newsom’s office said his administration “remains committed to the shared goals of increasing access to the UC and CSU, improving student success while advancing equity, increasing the affordability of higher education, increasing intersegmental collaboration, and supporting workforce preparedness and high-demand career pipelines.”

While the state's universities would take a hit, California’s community colleges would receive a $230.4 million funding boost in 2025-26 to their education general fund for a cost-of-living adjustment, as well as $30.4 million to account for 0.5% enrollment growth in the system, which saw a nearly 10% spike in headcount in the 2023-24 year.