California State University is bracing for significant budget cuts next summer, with a projected shortfall of nearly $400 million and a delayed state support of over $250 million. This financial strain could hinder the system’s ability to enroll new students, provide employee raises, and allocate additional funding to enhance graduation rates.
During a public meeting, Cal State’s Board of Trustees was presented with grim financial projections depicting a budget hole of $400 million to $800 million for the 2025-26 fiscal year, a substantial portion of the estimated operating budget of $8.3 billion. Trustee Jack McGrory expressed concerns about the daunting challenges facing the system, including potential layoffs and the impact on the diverse student body.
The budget deficit is attributed to new mandatory expenses, state cuts, and a delay in expected revenue from tuition hikes approved the previous year. Despite implementing tuition increases of 6% per year until at least 2028-29, these adjustments are insufficient to offset the impending state budget cuts. Mandatory expenses include increased health insurance premiums for workers and additional financial aid for students.
The proposed $400 million cut would be equivalent to the cost of educating 36,000 students within the system. Moreover, the larger $800 million figure accounts for desired expenditures such as employee salary raises and increased investment in student academic services.
The potential budget cuts could disproportionately impact vulnerable students, limiting their access to academic support tools and counseling services. Additionally, efforts to enhance graduation rates for Black students, a demographic that Cal State has strived to support, may be jeopardized.
To address the financial challenges, a budget request has been submitted to Governor Gavin Newsom, with discussions on the next fiscal year’s budget proposal slated for January. Cal State officials are emphasizing the severe repercussions that the cuts could have on students, faculty, and staff across all campuses.
The financial strain has already led to job cuts at various campuses within the system, affecting both lecturers and tenured faculty members. The system is grappling with an operating deficit of $218 million this academic year, prompting campuses to utilize reserves and implement cost-saving measures to manage their budgets.
University officials are highlighting the need for improved communication regarding the impact of budget reductions on the system. Campuses are considering pulling funding from academic services to cover operational expenses, raising concerns about maintaining essential student support services.
Despite these challenges, Cal State campuses are exploring strategies to boost revenue, such as enrolling more non-resident students who pay higher tuition fees. The system’s reserves, totaling $777 million, may not be sufficient to sustain operations during a prolonged deficit, necessitating proactive financial planning and resource management.