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Cal State Budget Likely to Inflict Major Cuts to Classes, Staffing
In short
Two major forces are at play: Gov. Gavin Newsom has scaled back his pledge to increase financial support for Cal State, while university employees agreed to 5% pay raises earlier this year.
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Half a billion dollars. This is how much more California State University’s budget gap will grow in two years under Gov. Gavin Newsom proposed spending plan next year, a fiscal cliff that could trigger hiring freezes, plunder precious reserves and bring larger classes and fewer courses.
“We have to do less with less,” said Cal State board member Christopher J. Steinhauser. “We will have fewer programs, fewer positions. And anyone listening to this meeting, if they think we can do this without doing that, they are really fooling themselves.”
Top financial officials in the Cal State chancellor’s office released the troubling numbers at last week’s board of trustees meeting. The predicted deficit could change — legislators and Newsom We have until the end of June to finalize a State’s budget this could include more money for the university.
Protecting continued Cal State, community college, and University of California funding from cuts “whenever possible” is a priorityhe said David Álvareza Democratic member from Chula Vista and chairman of the Assembly education budget subcommittee last week.
“We must fulfill the commitments we made to California students in the budget,” added Greg WallisRepublican congressman from Rancho Mirage, at the same hearing.
But if Newsom’s May budget update becomes law, Cal State would face a three-year operating deficit of $831 million through 2025-26 — more than $500 million more than estimated last September, he said. Ryan Storm, assistant vice chancellor at Cal State. overseeing the system’s finances at a trustees meeting last week.
Budget math
The huge gap is the result of two forces: Newsom sharply reducing its pledges of increased financial support to Cal State due to the state’s multibillion-dollar deficit and rising labor costs fueled by recent 5% salary increases for a large part of the system’s approximately 60,000 unionized workers.
Other expenses include nearly $80 million in higher health premiums to provide insurance to its employees in 2024-25.
Newsom’s May spending plans for Cal State, the UC and other state agencies are complex, leading the Legislative Analyst’s Office to call them “opaque and unnecessarily complicated.”
After a combination of cuts in 2024-25 and much less new spending in 2025-26 than initially promised, Cal State would see new state revenues that are $470 million less than forecast last fall, according to summary tables that Storm showed the curators. The promise to fill the teaching staff increases to end a strike earlier this year it added about $30 million to the system’s budget deficit.
Cal State was already projecting a three-year budget gap of more than $300 million last September. This was even with the assumption of nearly $500 million more in state support through 2026 and about $200 million more in new tuition revenue, after the board approved tuition increases of 34% over five years starting this fall.
Half a billion dollars is equivalent to the entire operating budget of San Diego State University, one of the system’s largest campuses.
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University strategies
The presidents of Cal State’s 23 campuses met in April to quantify what the more than $800 million budget shortfall would mean for student learning and hiring decisions. It was more of a reflection exercise than an implementation plan. The presidents and system leadership assumed no new state spending for the next two years — despite Newsom’s plans for May. He also assumed workers would receive raises in 2024-25 but not in 2025-26.
Campuses are considering increasing class sizes, reducing the number of courses available to reflect student demand, and decreasing the number of professors and part-time teachers – actions that some campuses have undertaken this spring to close a combined budget deficit of $138 million. Other potential cost-saving measures include leaving several positions unfilled, not replacing retiring staff and faculty, and early retirement programs on some campuses.
So far, the system is not recommending layoffs, but expects the various hiring freezes and unfilled positions to lead to “a reduction of about 450 faculty and staff positions between 25 and 26,” Storm said last week.
Campuses also aim to tap more than $500 million in reserves by 2025-26, depleting 22% of the system’s one-time emergency funds.
The April meeting also calculated a projected systemic deficit for 2026-27 of more than $200 million – the equivalent cost of 12,500 classes taught, 1,500 teachers or 1,100 managers, which represents a quarter of all managers at Cal State.
Effect on classes
Cal State trustees learned in March that campuses have cut or suspended 137 academic programs and other areas of study in 2024 — a huge jump compared to 2023 and 2022. when only 47 combined were cut or put on pause. This was “in light of changes in enrollment patterns, workforce trends, and resource constraints,” officials wrote to administrators. The number of new programs has also decreased. Campuses regularly create additional academic offerings in response to new industry and business trends. By 2024, central office staff were projecting 30 new programs – down from an average of about 60 in each of the past two years.
Assembly budget staff reported last week that Cal State officials warned “that timely services for students may decrease and class sizes may increase over the next two years” if the system receives less funding than anticipated.
In January, when campuses were planning for a smaller budget gap in 2024-25, Long Beach State President Jane Close Conoley told CalMatters that it was planning to address its then-projected deficit of about $10 million in several ways:
- Not replacing the usual turnover of 30 to 35 teacher retirements per year, a savings of around US$5 million
- Do not fill vacant positions – savings of around US$2 million to US$2.5 million.
- Freezing travel, postponing equipment purchases and withdrawing reservations were other options.
In other cases, professors who run laboratories or research projects may be asked to abandon these efforts and teach classes.
“So another way to save money is to say, ‘That’s a great idea, but no, you have to teach,’” Conoley said.
One small ray of hope is that enrollment appears to be recovering systemwide, which will generate more revenue for the system and help stem the projected fiscal hemorrhage. The system enrolled the equivalent of an additional 7,500 full-time students this academic year. By 2025-26, the system projects to increase full-time enrollment by 4 percent, or nearly 14,000 — a change in fortunes after experienced Cal State students declined in the previous two years.
The system also expects one-time $240 million state money to be used in the coming years, Storm said, part of a promise Newsom made in January and confirmed in May.
But some campuses could receive even less funding next year as administrators begin redirecting millions of dollars from campuses with declining enrollment to those that are growing – a plan conceived at the beginning of last year. Less money could further harm campuses’ ability to attract new students, some in the system fear.
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