By: Lena Moreno, April, 29, 2025
The California State University system will endure a $375 million budget cut, according to the California Gov. Gavin Newsom’s 2025-26 proposal.
The cut will be reflected across 23 campuses in the CSU system, indicating an 8% hit to expected state funding, according to the budget briefing session held by the Division of Administrative Affairs April 17.
When the 2025-26 budget proposal was unveiled in January, Newsom highlighted the current standing on high state revenues and significant cost increases. The proposal is dependent on the state’s rainy-day reserves — funds set aside for unexpected income emergencies — in order to balance out the budget.
The budget proposal also includes a deferral of compact funding, a contract where finances are provided to a program for a defined period, of $252 million for the fiscal years of 2025-26 and 2027-28. Two one-time payments of $252 million are scheduled for those following years. The expected 8% cut in the CSU’s general fund appropriation was a result of the $375 million decrease in ongoing state funding support.
On the budget proposal, the fifth and final year of the original compact agreement does not provide any ongoing funding for 2026-27. A bleak budget prediction regarding unfavorable developments in the next May revision could occur because of the federal policy changes and outcomes of the Los Angeles wildfires. The state is already undergoing a multiyear budget deficit.
“The state doesn’t even have the funding and the ability to meet their own needs, let alone allocating funds to their respective state agencies, including the CSU,” said Michelle Cardona, the interim vice president of Administrative Affairs. “So that’s why it’s bleak news, because it does not look like the state has the ability to award the CSU.”
Growing CSU expenses, such as salaries and utilities, cannot be covered anymore by the state alone. According to Cardona, the enrollment rates steadily declining at CSU campuses also contributed to the overall CSU budget gap.
As the 6% tuition increase implemented in 2024-2025 academic year semi aids the situation, essential expenses, such as compensation increases and mandatory costs, aren’t fully covered.
To minimize the current funding gap from $38 million to $19 million, the university implemented a voluntary separation incentive program in March.
VSIP aims to lower the budget gap by allowing employees who decide to depart from the university to voluntarily leave their positions. Although CPP saves money because of this, the decrease in staff poses significant operational challenges, according to S. Terri Gomez, the provost and vice president of Academic Affairs.
Moreover, the suspension of the capital call for the 2025-26 fiscal year will allow the institution to concentrate on necessary maintenance and repairs.
Reserves and one-time designated balances set in place to bridge the funding gap, these funds are nonrecurring and should only be used for temporary solutions, said Carol Lee, assistant vice president for Budget Planning and Analysis.
Cardona said the university’s main revenue sources rely on state funding, student tuition, and fees. State funding makes up 51% of 2025-2026’s operating revenue, whereas student tuition and fees are the remaining 49%. The total amount allocated with state funding is dependent on the number of enrolled students at CPP.
Gomez addressed the current state of enrollment trends, revealing the notable drop of high school graduate rates expecting to decline by 16.2% by the 2031-2032 academic year.
The decline in enrollment rates is reflected across all 23 CSU campuses. The system’s funding objective fell 5.6% short of its goal regarding California resident enrollment in the 2022-2023 year. Despite modest improvements to conquer the issue, the 2023-24 academic year’s shortfall remained at a total of 4.4%.
In fall 2024, the CSU noted its 2% enrollment increase that resulted in a 461,000-student population. Yet the CSU will remain 2.4% short of its enrollment goal indicated by the 2024-25 school year projections.
Despite the overall CSU decline in enrollment, nice campuses face the record-breaking enrollments, and as such, CPP is challenged with over enrollment and an inability to admit all qualified applicants.
Campuses like CPP, Cal State San Marcos and Cal State Fullerton are overenrolling students but don’t get compensated for that by the state, because the overall CSU enrollment rates decreased resulting in Newsom’s budget proposal decision.
The Chancellor’s Office allocated $6 million from the 2023-24 fiscal year despite compensation costs increasing by $13.7 million, leaving only a $7.7 million gap for workforce investments.
To address these challenges, CSU has been working on financial and strategic adjustments. Gomez claims a historical step has been taken as the system has reallocated funding and enrollment growth targets to meet system goals. Doing so will ensure affordable and high-quality education despite facing challenges in managing enrollment numbers, Gomez said.
“We’re nervous about the economic picture for the next couple of years,” Gomez said. “It’s not just a one-year thing, but Cal Poly Pomona is embedded in a pretty solid position to weather this storm. And you know it’s going to take sacrifice, but we’re going to get through it.”
Held in a two-part budget briefing —the first being April 17 — the next session will take place May 15 to discuss Newsom’s May budget revision that contains up-to-date information regarding the campus deficit.
Featured images courtesy of the presentation by Administrative Affairs
