Final California Budget Spares Higher Education, Underscores the Need for Equitable Recovery

The 2024-25 budget presents a sobering multi-year fiscal reality. Through a mixture of delays and deferrals, higher education investments were largely protected in the final budget agreement, including funding for a 5% base increase to the University of California (UC) and California State University (CSU) through the Compacts in 2024-25 and funding stability for California Community Colleges (CCC). A full recovery for higher education funding may be several budget cycles away, and the next few years will be critical to laying the foundation for student-centered priorities that require ongoing funding commitments, including commitments tied to real improvements in access and equity, as well as Cal Grant expansion. 

State financial aid is often the most important factor in whether a low-income student can attend college, and while the 2024-25 budget preserves a significant share of higher education funding, the absence of a meaningful down payment to expand access to and simplify the Cal Grant program is disappointing. The Campaign remains committed to establishing a simplified and expanded financial aid system that ensures our lowest-income students can access critical financial aid in future budget years. We realize the necessity of – and will work with policymakers to plan for – a longer on-ramp to build toward this vision.  

Simultaneously, California is contending with a nearly 12% decline in FAFSA applications compared to last year, with students at the epicenter of the fallout from the Better Free Applications for Federal Student Aid (FAFSA) rollout. Though we remain hopeful that in its final form, the FAFSA will work as intended to expand critical access to student aid, the reality is that the new rollout continues to threaten a new cohort of students who will need to begin applying for financial aid this fall. We applaud the $20 million investment to expand the capacity of California’s community colleges to respond to the additional financial aid assistance workload from the FAFSA rollout. Thousands of students will inevitably be forced to delay plans to attend a four-year institution due to the lack of award letters, which is expected to swell the numbers of students applying to community college before the September 2nd deadline. Community college financial aid offices will need the extra resources to meet the expected increase in demand, and we see this as a timely response to prevent further financial uncertainty for students, especially Latinx, Black, Asian American and Native Hawaiian/Pacific Islander, American Indian/Alaska Native, and low-income students, who will be disproportionately impacted.

We also commend policymakers and the Administration for requiring the CSU to use $35 million of its Graduation Initiative 2025 funding to make additional investments in reducing equity gaps and to provide additional reporting on its efforts. We hope to see the CSU commit to providing racially disaggregated data as part of the additional reporting, a recommendation we call for in our 2023 report on the progress of CSU’s Graduation Initiative 2025. Finally, the investments made at the California Community Colleges to develop visual transfer pathway guides that are aligned to the Associate Degree for Transfer, and to develop and scale student success strategies across the 116 campuses are smart investments that will pay dividends for students. 

The fiscal reality underlying the 2024-25 budget is severe, but it is not permanent. California will regain its fiscal footing, and we urge that as it does, the Governor and Legislature turn their focus toward forging a multi-year pathway to recovery. The Campaign stands ready to offer its expertise to policymakers to co-create a multi-year roadmap for strengthened transfer pathways and equitable, expanded access to financial aid awards as key drivers of an equitable recovery.

Higher Education Budget Highlights

• Honors the UC & CSU Compacts’ base funding increases to the UC ($227.8 million) and the CSU ($240.2 million) in 2024-25, which are offset by one-time decreases to the UC ($125 million) and the CSU ($75 million); 
• Includes legislative intent language that leaves future commitments to the Compacts uncertain; 
• Reduces ongoing base funding by 7.95% in 2025-26 for the UC and CSU; reduces ongoing base funding in 2024-25 for the CCC and the California Student Aid Commission;
• Includes a 1.07% cost-of-living-adjustment to the CCC; 
• Provides $12 million in reappropriated funds to support e-Transcript, a critical tool to support seamless transfer pathways; 
• Maintains Administration proposal to direct a portion of education reserves to keep Student-Centered Funding Formula funding whole; 
• Continues to provide investments to backfill the costs of transitioning non-resident to resident spots at UC Berkeley, UC San Diego, and UCLA; 
• Invests $20 million at the CCC to develop and utilize software that clearly maps out transfer pathways for community college students, with an expectation that the pathways are aligned with the ADT; and 
• Invests $20 million to provide workshops and trainings for community college personnel to promote statewide understanding and awareness of strategies for improving student achievement as articulated in the CCC Vision for Success.