Senate subcommittee warns proposed cuts and deferrals threaten UC and CSU enrollment and operations

Senate Budget Subcommittee No. 1 on Education Chair Jared Laird opened a hearing on higher education funding by saying the governor's January budget recommends large base reductions and the deferral of multiyear compact funding for public higher education.

The University of California president and the California State University chancellor told the subcommittee that the magnitude of the proposed 8% reduction combined with deferred compact payments would force campuses to cut classes, reduce hires and scale back student services that support retention and graduation.

The chair framed the discussion as part of a larger fiscal problem. "Last year, the state faced significant fiscal challenges with having to solve for projected almost $40,000,000,000 deficit," he said, noting that the governor's January proposal recommends roughly $770,000,000 in base reductions for higher education. Jennifer Paciello of the Legislative Analyst's Office reported segment‑level figures: a roughly $300,000,000 reduction for CSU and a $272,000,000 reduction for UC under the governor's plan.

University leaders described impacts and recent gains. University of California President Michael Drake said the system has expanded California undergraduate enrollment and debt‑free pathways but that "the magnitude and severity of these cuts would have detrimental impact on our students and on the progress that we've been able to make." Chancellor Mildred García told the committee an 8% cut to CSU's base equals about $375,000,000 and would be "equivalent to 2,400 full time faculty," forcing campuses to reduce courses and services.

Both systems also warned of concurrent federal policy changes that could reduce research and student aid funding. Drake described potential adjustments to the federally reimbursed facilities and administrative share of research grants, saying the change could mean "hundreds of millions of dollars" lost annually and would require universities to cut research activity. Chancellor García and CSU representatives added that reductions to Pell and TRIO‑type federal programs would disproportionately affect historically underserved students.

Department of Finance representatives told senators the administration remains committed to the compact in principle but noted the compact deferrals are a fiscal tool tied to the state's projected revenues. Gabriela Chavez (Department of Finance) said the 2024 budget act included a control section directing a 7.95% reduction across segments and that the administration views the governor's plan as continuing commitments while addressing a large state shortfall. Devin Mitchell (DOF) underscored the state's near‑term budget reality: volatile revenue requires tradeoffs even where policy priorities exist.

The Legislative Analyst's Office recommended rejecting the proposed deferrals and urged the Legislature to avoid setting expectations for future payments the state has not budgeted, noting that the proposed 26‑27 augmentations are not currently funded and that the state faces larger deficits in later years. The LAO recommended revisiting multi‑year enrollment targets if the state's fiscal condition does not improve.

Senators pressed for specifics. Senator Susan T. Perez said budgets are statements of values and questioned the disparity between proposed cuts to higher education and more modest reductions elsewhere. Committee members repeatedly asked whether enrollment growth targets set under the compact should be maintained if funding is not provided. LAO and system witnesses said campuses already have started hiring freezes, program eliminations and other measures and that further cuts would exacerbate those actions.

The university witnesses asked the Legislature to reject the proposed 8% cuts and the deferral plan or to identify offsets that protect student pathways and research. Drake and García both said they would press to protect current admissions cycles and support plans to admit the promised classes for the coming academic year, but cautioned that sustained underfunding would make growth and compact commitments hard to maintain.

The subcommittee did not take formal action at the hearing. Members asked staff and system representatives for follow‑up details and signaled continued oversight through the May Revision and the final budget process.

Ending: The hearing moved on to other agenda items, and Chair Laird asked the systems and budget staff to provide additional written materials and clarifications for senators before the May revision.