Among a variety of goals related to improving outcomes, including increasing graduation rates and closing the capital gap, the agreement also calls for a 1% annual increase in enrollment in both systems. By 2026-27, the University of California will add 8,000 students and CSU will add 14,000 students. The additional commitment calls for 15% of UC's enrollment growth to occur at its Berkeley, Los Angeles and San Diego campuses. These campus-related enrollment increases come with additional funding.
Both plans will be retired by 2028 and are subject to reauthorization or adjustment by system leadership. However, it is important to note that these agreements are not binding and can be adjusted, postponed, or withdrawn if the state determines that funds are insufficient. Similarly, if the system fails to meet agreed targets, the committed funds are unlikely to be adjusted accordingly. Nevertheless, determining a state's goals for higher education and aligning funding to those goals is an important step. Compared to UC and CSU, tuition is a smaller portion of the student body at CCC. However, the agreement with the CCC sets similar goals, but funding levels remain determined by the Proposition 98 formula (see text box above).
State financial aid is provided primarily through the California State Grant, but also includes other programs (such as the Middle Class Scholarship) that combine to reduce costs for students in each higher education system. Specifically, the Cal Grant is an entitlement and its value is tied to the cost of attendance. Therefore, as UC and CSU tuition increases, so does the level of state support for many students.
The role of federal funds
The majority of core funding for California universities consists of tuition and state/local spending, but the federal government also contributes. This has been in the form of financial support for students, research grants, and more recently, due to the COVID-19 pandemic, unstructured funding.
The majority of loans that students take out to pay for tuition and other college costs come from the federal government. California universities receive this federal financial aid in the form of tuition revenue, as it is given to students to cover tuition costs. At CSU and UC, about 1 in 4 students take out federal loans, while at CCC, less than 1% take out federal loans. Loan amounts vary, but the typical UC and CSU borrower spends between $13,000 and $20,000 over the course of their undergraduate experience (Jackson and Starr 2023).
The federal government also provides grants that students do not have to pay back. Pell Grants cover the educational costs of students with special financial needs and are by far the largest federal grant program. In 2023, Californians received more than 900,000 Pell Grants totaling more than $4.7 billion. However, the federal government also provides grants for research activities and other programs that are not necessarily included in core funding for student education.
During the COVID-19 pandemic, the federal government provided direct aid to campuses across the country to help offset budget shortfalls as they recovered from the pandemic. California public agencies received approximately $4.5 billion from March 2020 to March 2021, and all such aid was to be exhausted by 2023. Campuses spent those discretionary dollars on emergency aid to students, online instruction, and replacing supplemental income (such as parking and meals). Hall), social distancing and health care costs, and other pandemic-related costs (Jackson, Cook, and Starr 2022).
Although such events are relatively rare, the COVID-19 pandemic was not the first time that additional federal funds were dedicated to core funding. During the recovery from the Great Recession, the American Recovery and Reinvestment Act of 2009 provided discretionary funding to campuses. In both cases, some federal funds were used to replace state spending and tuition revenue.
Recent trends in higher education funding
State funding for California's higher education system has increased steadily throughout most of the past decade (Figure 2). CSU and CCC are now funded at record levels on a per-student basis, more than they were in the early 2000s when the state's economy was growing rapidly. Although funding per student at UC has not yet reached pre-Great Recession levels, tuition increases and an increase in enrollment of nonresident students, who pay nearly three times as much tuition, have helped. This compensates for a portion of the reduction.