Newsom and Legislature at Odds Over College Funding Ahead of Budget Deadline

Democrats controlling the Legislature and Governor Gavin Newsom, both Democrats, have less than a week to harmonize their competing higher education budget proposals for California, impacting student financial aid and the state’s public universities’ short-term fiscal well-being.

The focal point is the 2024-25 state budget effective July 1, amidst California’s multibillion-dollar projected deficits. Lawmakers and the governor are in the final stages of crafting the state government’s spending plan amid secrecy.

The Legislature passed its budget plan last Thursday, triggering a countdown for Newsom and legislators to reach a consensus on the final 2024-25 budget by late June.

In terms of higher education, significant disparities exist between Newsom’s initial proposal in January and the Legislature’s current stance, setting the stage for potential clashes.

“As disheartening as the situation was in January and despite lingering budget cuts, progress has been made in education within this budget,” remarked Senator John Laird, a Santa Cruz Democrat, and chair of the budget subcommittee on education.

How much will the Middle Class Scholarship be?

Newsom’s latest spending proposal, disclosed in May, seeks to reduce the Middle Class Scholarship funding to a mere $100 million annually, significantly impacting California’s aspirations for extensive college financial aid coverage.

Opposing Newsom’s stance, the Legislature aims to increase the program’s funding to $926 million in 2024-25, potentially improving debt-free access to college.

The competing proposals may either reduce average awards significantly for approximately 300,000 students attending UC and CSU or bring closer the reality of debt-free higher education.

According to a hearing last month, the governor’s plan could lead to increased student loans, as mentioned by an official from the governor’s Department of Finance.

Laird highlighted the Legislature’s efforts to reintroduce the Middle Class Scholarship at a crucial time when students are selecting colleges based on available financial resources.

Will Cal Grants support more students?

The Legislature is aiming to expand the Cal Grant program partially for the 2025-26 budget year, potentially accommodating 21,000 new student recipients.

Despite Newsom’s rejection of expanding the Cal Grant due to fiscal constraints, legislative leaders are determined to extend it to more students to honor years of dedicated advocacy.

If approved, about 11,000 additional community college students could benefit from the Cal Grant, supporting their transfer to UC or CSU.

The proposed changes aim to lower the GPA requirement for community college students to maintain or regain eligibility, gradually easing the conditions over the next few years.

Assemblymember David Alvarez confirmed the proposed alterations, including an anticipated increase of 9,000 Cal State students obtaining the Cal Grant.

Further, the revised plan will financially assist new recipients with dependent children, gradually increasing the award amount per year.

However, UC may witness fewer Cal Grant beneficiaries due to altered eligibility criteria, sparking concerns among lawmakers regarding the university’s equity standards.

Advocates, including student associations from various institutions, expressed satisfaction with the proposed adjustments, acknowledging the phased implementation process.

If greenlit, the modifications will be incorporated into a separate trailer bill to be presented later this month or in early July.

What’s the financial outlook for UC and CSU?

Newsom’s strategy involves budget reductions and delayed funding for UC and CSU in 2024-25, followed by a partial restoration in the subsequent fiscal year, albeit less than initially promised.

The legislative plan proposes budget enhancements for UC and CSU in 2024-25, possibly deferring cuts to the following year to provide the institutions with additional time to adjust.

Reduced funding for UC and Cal State could result in larger class sizes, vacant faculty and staff positions, limited student services, and program closures.

Both plans aim to increase funding for UC and Cal State over a three-year period, offering financial relief and supporting California residents’ enrollment at these esteemed institutions.

Senator Laird acknowledged the challenges posed by inflation and deferred maintenance but praised the budget as a significant stride forward given the circumstances.