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Santa Barbara on December 24, 2023 |
CSU Chancellor Mildred García wrote, “The May Revision reduces proposed cuts to the CSU to 3% or $143.8 million of ongoing funding – down from the 7.9% or $375 million cut initially set forth in the governor’s January proposal.” UC got the same percentage reduction of the January cut—from nearly 8%, announced a week or so before Trump took office, to 3% now.
García went on to note that the Compact continues to exist at the convenience of the Governor and thus isn’t really a “Compact” in the normal sense. “It’s like the father who announces, ‘I have a compact with my children not to spank them—except when I really need to spank them.” Sorry, I misquote. García’s only comment was, “However, the 2025-26 CSU ongoing multi-year compact funding ($252 million) remains deferred until fiscal year 2026-27 to help address the state’s budget shortfall.”
García added, “I commend and appreciate Governor Newsom for taking a thoughtful and measured approach to addressing the state’s fiscal challenges, while recognizing the unique and invaluable role that higher education institutions, and the CSU in particular, play in driving California’s workforce and economy.”
Not to be outdone, University of California President Michael V. Drake wrote,
We are deeply grateful to Gov. Newsom for recognizing the value of the University of California’s contributions to our state in the May Revise. This is a challenging budget year for California, and our state leaders are facing very tough choices. Even in this difficult moment, the Governor has reduced the University’s cut from 8 percent to 3 percent, demonstrating his strong commitment to California’s students. His proposed budget minimizes cuts to vital student support services and preserves critical investments like affordable student housing construction.
The top managers at CSU and UC regularly teach their students and the public that Newsom is a sturdy hero of higher education funding. If you criticize Newsom’s budgets for your campus, you in effect criticize your president, chancellor, and university officials, even though they've already done the maximum.
UC’s Executive Vice President and Chief Financial Officer Nathan Brostrom presented the cut-of-the-cut budget to the Board of Regents on May 14th (Item F4; video is from Finance and Capital Strategies Committee starting at 14’30.” Here’s the summary slide.
Figure 1
I recommend ignoring the rightward columns, in which we imagine that the state stops hurting UC and turns over a new leaf. This is still very bad news. The ongoing $129 million state cut is oblivious to the cuts tsunami coming from the federal government, in the ten dimensions I outlined in my last post (Liner Note 25).
In his Remaking post, “Manufactured Austerity,” Trevor Griffey laid out the history of the negotiations. He noted the injustice of the January plan:
Budget cuts negotiated in 2024 seemed like a done deal. Then something unexpected happened: new, more optimistic revenue forecasts came in, and the state of California entered 2025 with a projected $363 million budget surplus.
The Governor could have proposed to use some of this money to give a reprieve to the UC and CSU systems, or try to sustain the compact another year.
Instead, the Governor’s January budget proposal reduced planned cuts to state agencies, while leaving the 8 percent cut and compact deferral in place for UC and CSU.
The May Revision is a partial correction of that extra cut meted out by the governor and legislature to UC and CSU. But it’s still a cut in the worst year in my lifetime for U.S. colleges and universities.
Where did the Department of Finance and the California legislature get the idea that it would be OK to replace the Compact increase with a $129 million cut?
At Cal Matters, Mikhail Zinshteyn has reported,
The chair of the Assembly’s budget subcommittee on education finance, David Alvarez, a Democrat from Chula Vista, asked UC senior officials how much the state could cut and still leave student academics largely unaffected, including graduation rates and other endeavors that “ensure that student access remains the same.”
For UC San Diego Chancellor Pradeep Khosla, the answer was about $30 million, much less than the roughly $73 million in state cuts the campus would absorb under the current plan. Systemwide, the UC’s 10 campuses could tolerate an ongoing cut of $125 million, said Seija Virtanen, a UC government relations official.
Mystery solved. The new cut idea came from UC officials themselves. Khosla told the Assembly Budget Committee that UCSD was cool with a $30 million cut three weeks after he told his campus community that they face cuts of $75-$500 million. Virtanen said a $125 million cut would be tolerable. UC’s cut was $129 million.
The official UC discussions take place in a short-termist bubble in which only the most recent increments are in public view. The repressed pattern is a quarter-century of cumulative shortfalls.
I’ve updated the blog’s ongoing calculations for the UC budget (CSU isn’t here) to reflect the May Revision. If you’d like more background or a refresher, see “The Essential Charts.” For Newsom’s funding pattern see “Shortfall.”
Figure 2
Here you see several lines.
The red line tracks the state's actual general fund allocation in nominal dollars.
The blue line is a benchmark, tracking growth in state per-capita income. This measures the strength of the economy as it exists in people's pockets. It goes up 4-5 percent a year most of the time.
UC enrollment did not stay flat through this period, but increased by about 50 percent. The yellow line takes the per-capita income benchmark (blue line) and corrects it for actual UC student growth.
The purple line is the California state budget (right-hand scale). State government--health, corrections, transportation, K-12 education, etc--has grown at around the same rate as personal income. California doesn't have an exceptional government, measured by growth rates. It has an average-growth government--except for higher education, which state government has made sub-par.
Note that none of this data is corrected for inflation.
If a state wanted to fund an agency in an average way, it could use several metrics. It could increase that agency’s budget at the overall government median. The red line would track the purple line.
Or it could increase that agency's revenues at the same rate as per-capita income. The red line would track the blue line. (In such a case, the legislature wouldn’t be treating that agency as more special, but just letting UC or CSU or public health or transportation grow with the state.)
Or the state could also acknowledge the growth in that agency’s service obligations, like enrollment growth. In this case, the red line would track the yellow line.
You can see that none of these average treatments take place. UC’s state general fund revenues have fallen steadily behind the state in all three measures. And UC officials seem not only to be okay with this, but to co-create the substandard increases over years.
I’ve never understood why they do this, or why UC people don’t try in an organized way to make them stop. But here we are.
The traditional excuse was that UC will made up for state cuts with increases in student tuition. This has always been unpopular with the California public, so the line was that UC is compensating for state cuts by triple-charging international students, and this it’s a win for the state taxpayer. When the taxpayers’ 4.0 or 4.3 GPA kids were getting rejected in large numbers from the flagship campuses with the highest shares of international students, parents complained, and the state negotiated campus-by-campus caps. Resident tuition got frozen by Jerry Brown (thanks to student protests) in the early 2010s, and the “cohort” tuition replacement makes little revenue difference.
Long story short, if you calculate net tuition income, taking out some big expenses no longer covered by the state, you get this chart. The green line adds UC general funds and net tuition income to state general funds.
Figure 3
Any way you slice it, the University of California has been underfunded by the state throughout this century.
After these many years of substandard funding, UC (and CSU) are now woefully exposed to the ax-murdering of federal agency grants. At CUCFA, Eric Hays has calculated (conservatively) a UC-wide loss of $421 million in federal research funds from just one of the ten types of cuts—NIH reductions in indirect cost recovery rates to 15%.
Damage is settling in everywhere. The system has frozen hiring on all campuses, amid various campus measures.
I noted above that UC San Diego, Chancellor Pradeep K. Khosla warned of cuts on April 1st.
We are unable to predict exactly what the losses will be, but our initial scenario planning models indicate possible reductions ranging from $75 million to more than $500 million annually. In preparation, I have asked budget offices to model a 2.5% to 12.5% budget reduction based on these initial scenarios. We will continue to evaluate the data and further refine the range of our estimates.
That was the last update on his page.
At UC Santa Barbara, the chancellor has asked units to prepare for across-the-board cuts of 10%.
UC Santa Cruz already had a $107-111 million structural deficit before Trump’s election, and faces cuts and layoffs. Students are noticing educational effects.
UC Davis was already projecting a doubling of its core funds deficit to $90 million, and now expects further losses due to federal cuts of $118 to $408 million. The chancellor's statement following the May Revision (h/t Mikhail Zinshteyn) declares a $53 million deficit on tuition and state funds, and a prospective $500 -$907 million deficit adding federal sources at the campus and medical center combined.
And so on.
The financial information is woefully incomplete. It doesn’t tie specific levels of cuts to known policy variations. There are no “bridge funding” policies of the kind I discussed in Liner Note 25. There are no elements of a coming plan.
Researchers across the system engage in pure guesswork trying to figure out the near future of their research and of their students and staff. What kind support institutional support might they have? Nobody knows.
This atmosphere may explain why the chair of the Santa Barbara division of the Academic Senate resorted to writing, “I like to think that the temporal rhythms of institutions—which can admittedly be frustratingly slow, particularly in relation to the frenzied pace of the news environment—are ultimately going to be our best defense.” Perhaps that’s the function of opacity too: the psychic defense of knowing little and thus having a reason never to be ready with a large and possibly successful counteraction.
Pressure seems to generate many bad ideas on high. Faculty have had to spend time this year opposing ideas like converting the 7 quarter-based UC campuses to the semester system (look at the work already poured into this), or UCOP forcing universal adoption of root-level surveillance software on all UC computer hardware without consultation (this UC Irvine Senate resolution against the plan passed with a 94.9% yes vote).
Unquantified, undebated budget calamity is also behind serious challenges to UC’s educational core. At the UCLA Faculty Association blog, Dan Mitchell summarized part of EVC Darnell Hunt’s commentary like this:
After the student-worker strike a couple of years ago - which boosted labor costs - and given the current outlook of reduced federal and state support, the number of PhDs UCLA can train is being re-examined. The job outlook for PhD graduates has also been diminished by federal policy. Some departments in the past created sections staffed by PhD student TAs in order to support those students. Now only needed sections will be staffed. And UCLA is looking at whether even needed sections might be replaced by such tech alternatives as AI and remote/hybrid classes.
Hunt is suggesting a major shrinkage of UCLA’s doctoral programs, which will make undergraduate majors unteachable, which would require conversion of a large share of instruction to online or “AI” instruction. Some unknown large proportion of graduate students would disappear, and undergrads would have college on their phones.
It’s hard to imagine a better way to dismantle the UCLA product and brand--not to mention knowledge creation and public benefits. And yet there seem to be private talks going on about this at senior levels.
None of these budget disasters are acceptable. I hope more people will fight them furiously.