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2019-20 Governor’s Budget Proposal: Higher Education Highlights
January 2019

California State University

Governor Newsom’s first budget proposal calls for the CSU to receive a total increase of $562 million over this current year. This includes a base (ongoing) increase of $300 million as well as $247 million in one-time money. This is an unprecedented 8% increase to the state general fund allocation to the CSU. This brings the total CSU budget to more than $7.8 billion. In contrast, Governor Brown in his January 2018 budget proposal for 2019-20 called for $92.1 million in new ongoing money for the CSU, a 3% increase to the state general fund allocation.

  Ongoing:
Operational Costs* $193 million
Enrollment Growth** $62 million
Graduation Initiative $45 million
Total Ongoing $300 million
   
  One-Time:
Deferred Maintenance $247 million
Basic Needs Initiative $15 million
Total One-Time $262 million
   
Total Ongoing + One-Time $562 million
*Includes Mandatory Costs and Compensation
**$62 million provides 2% enrollment grown

Governor Newsom’s proposal is among the largest the CSU has seen in a Governor’s January Budget. As shown in the figure below, his 8% budget augmentation exceeds any the CSU has seen in recent memory.

The budget proposal also includes $2 million to assess a potential new campus in the Stockton area as well as $7 million for legal services for undocumented students, faculty, and staff through the Health and Human Services budget. In this budget, the CSU is receiving a larger base augmentation than the UC, $300 million as opposed to $240 million. Figure HED-01 from the Governor’s Budget document (below) summarizes the proposed budget augmentations to higher education. Here, the CSU ongoing general fund change is shown as $318.6 million (as opposed to $300 million, summarized above); the difference reflects “pass-through” money the CSU receives to cover mandatory costs related to CalPERS retirement rate adjustments.

This budget proposal meets much of what Chancellor White included in the budget request approved at the November 2018 Board of Trustees. The CSU Trustees request totaled $554 million in ongoing money, including $193 million for operational costs (to cover both compensation and mandatory costs), $206.1 million for 5% enrollment growth, $75 million for the Graduation Initiative, and $80 million for facilities and infrastructure. The Governor provided for most of the Trustees request, fully funding CSU operational costs, 2% enrollment growth, and $45 million for the Graduation Initiative. Both requests for one-time money were met, with the CSU asking for $250 million for deferred maintenance and $15 million for their Basic Needs Initiative.

 

CSU Tuition

As a CSU Trustee, Lt. Gov. Newsom consistently voted against tuition increases and was a critic of a management strategy that balanced the budget on the backs of students. As Governor, Newsom’s budget proposal calls for a tuition freeze at the CSU and states explicitly that the proposed augmentation comes with the expectation that tuition will remain flat in 2019-20.

University of California

The January budget proposes an increase in $240 million ongoing to the UC as well as $138 million in one-time money for deferred maintenance and $15 million one-time to support UC extension centers. $10 million of the ongoing money to convert funding for enrollment allocated in the 2018-19 budget as one-time money into ongoing funding. The budget proposal also includes $5.3 million ongoing for improved Mental Health services and improving Counselor-to-Student ratios and $15 million in ongoing funds to support initiatives to address student hunger and housing. The UC Regents requested the funding to increase mental health and counseling services in the support budget proposal they submitted to the Governor.

Community Colleges and Free Higher Ed

The Community Colleges would receive $402 million in ongoing funding, this includes a 3.46% cost-of-living adjustment, $26 million for enrollment, and like the UC and CSU money for legal services for undocumented students. The budget provides $40 million in Proposition 98 money for the implementation of a second year of free community college. This would extend the program created by AB 19 (the California College Promise) and funded in the 2018-19 budget for Community Colleges to receive funding to waive the first year of tuition for first-time, full-time students. AB 19 did not require that Community Colleges use the money for a free first-year, but rather they could use the money to support improved access for low-income students if they so choose. The budget projects 28,000 students would be eligible for the free second-year of community college, assuming the community college they attend is participating in the program.

Financial Aid: California Student Aid Commission (CSAC)

The budget proposal includes an increase of $121.6 million for CSAC. This money would be used to increase financial aid for Cal Grant recipients (all segments) with dependent children. The access award for these Cal Grant B recipients would increase from $1,648 to $6,000 and an access award of up to $6,000 would be provided to eligible Cal Grant A recipients.

There is also funding to increase the number of Competitive Cal Grants (those for nontraditional students – generally those who do not enter college directly from high school but are otherwise eligible for a Cal Grant) from 25,750 to 30,000. The demand for Competitive Cal Grants far exceeds the number of grants available each year. The budget says that these changes are a “down payment” and that the Administration will continue to focus on how the state can make college more affordable when considering the total cost of attendance.

K-12 Education

For 2019-20, Proposition 98 funding, which is dedicated to K-14 education, totals $80.7 billion, including a $2 billion increase in the Local Control Funding Formula. In addition, the Governor’s budget proposes to allocate Non-Proposition 98 general fund money for K-12 in several areas, including for a one-time payment of $3 billion to CalSTRS and $750 million for improving access to full-day kindergarten. The budget also calls for the creation of a new longitudinal data system that will include student data from pre-K to Career and link it with Health and Human Services agency data.

The pie chart above shows the current amounts of spending for K-14 (through Proposition 98) compared to spending for the segments of higher education, the UC and CSU.

Retirement

The budget includes $6.8 billion ($3.9 billion general fund) for required contributions to CalPERS to cover pension costs. Of this, $727.5 million supports CSU retirement costs. In addition, the budget calls for the general fund to cover the state contribution required for CSU Retiree Health benefits, which is projected at $331 million.

Overall State Budget

Gavin Newsom’s first budget proposal as Governor includes more than $209 billion in total spending. His budget allocates $13.6 billion for reserves, to be used for debt reduction, or for paying down unfunded liabilities. The state’s Rainy Day Fund would increase by $1.8 billion (to $15.3 billion) and he forecasts an additional $4.1 billion could be added by 2022-23.

Many of the issues Newsom focused on during his campaign are receiving significant funding. He includes proposals for increasing paid parental leaves from 6 weeks to 6 months, the phasing in of universal preschool for income-eligible families (with a plan for fully universal preschool being developed), doubling the size of the California Earned Income Tax Credit, and provides significant one-time money to local governments for low-income housing.

Resources:

Governor’s Budget: www.ebudget.ca.gov/budget/2019-20/#/Home

Legislative Analyst Office, Overview of the Governor’s Budget: lao.ca.gov/Publications/Report/3916

California Budget and Policy Center, First Look at the 2019-20 Governor’s Budget: calbudgetcenter.org/resources/first-look-governors-proposed-2019-2020-state-budget/

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