Understanding the 2023–24 California Budget and How to Strengthen Higher Education Investments

By: Manny Rodriguez

Governor Newsom’s proposed 2023–24 state budget includes $40.3 billion allocated for California’s higher education segments and the California Student Aid Commission (CSAC). Overall, this provides the higher education space stability amidst slow economic growth.

Key Investments and Proposals

• 5% base funding increase for the University of California (UC) and California State University (CSU) per the multi-year Compact agreement.
• 8.13% cost of living adjustment (COLA) for the California Community Colleges.
• One-time investment of $200 million to increase student retention and enrollment rates at community colleges.
• Continued funding for the Californians for All College Corps, which helps students pay for college through a $10,000 stipend for completing one year of service.
• One-time investment of $227 million for the Middle-Class Scholarship.
• A long-term commitment for student housing investments, but a short-term delay on some funding for the grant and loan programs.
• A continued commitment to ensure state tax relief for $10,000 — $20,000 of federal student debt cancellation in the future.
• Ongoing investment of $3.9 million for student-friendly support services through the California College Guidance Initiative (CCGI).
• Staff capacity funding for CSAC to distribute toolkits to high schools which help students complete their financial aid applications.

Strengthening Higher Education Investments for a Stronger Economy

College Affordability: California has many opportunities to continue its leadership in re-imagining college affordability and lessening reliance on loans to meet students’ needs. A critical step towards that goal is fulfilling the promise of implementing Cal Grant Reform in 2024, which includes reforms that will better support students and families from low-income backgrounds by simplifying and expanding the Cal Grant program and implementing a long overdue inflation adjustment for awards that. In the meantime, Governor Newsom’s proposed budget can build out additional pieces. The Californians for All College Corps can supplement California’s creation of a debt-free pathway to college while simultaneously allowing students to contribute to their local communities through service, but first, we need to ensure that the stipend provided by the program is treated like financial aid and will not be taxed for students or count against their income.

It is promising that Governor Newsom is following through on the commitment of another significant one-time investment in the Middle Class Scholarship (MCS) program. But we should acknowledge that the investments being made now are through the Middle Class Scholarship, a program that — unlike the Cal Grant — does not prioritize the students with the highest need and excludes students enrolled in community colleges, which serve the majority of California’s low-income and BIPOC students. While no one doubts that middle class families are also struggling with the cost of college, research has shown that our lowest-income families bear the largest burden when seeking to pay for the total cost of attendance — emphasizing the need to equitably fund financial aid.

Housing: TICAS is aligned with the demands of students statewide who identified investments in, and development of, affordable housing for college students. We understand that delaying promised funding into future years is a necessary step for fiscal stability and could give the state’s postsecondary systems an opportunity to intentionally plan and execute the first round of funding in a student-centered and impactful way. But that should not erase the urgency of students’ long-term needs. The ongoing housing affordability crisis is impacting the ability of students to continue their education and is pivotal on the path of building a debt-free college experience.

Tax Relief for Student Debt Forgiveness: We commend Governor Newsom and legislative leaders for their continued commitment to ensure state tax relief for any federal student debt cancellation in the future. Currently, there are 3.55 million borrowers in California with an average outstanding balance of $37,400 who are likely eligible for the one-time student debt cancellation proposed by the Biden-Harris Administration. Over 2.3 million Californians had already applied or were automatically deemed eligible before the program was frozen pending the resolution of legal questions. However, it is important to note that California will need to implement a broader and more permanent state tax fix for borrowers who receive cancellation through one of the various federal pathways to student debt cancellation, including those in income-driven repayment plans.

FAFSA & CADAA Completion: We fully support the Governor’s commitment to being “All-In For Financial Aid” through key investments for CCGI and CSAC in the 2023–24 budget. Research has shown that students who complete a financial aid application are more likely to enroll in higher education, persist in their coursework, and obtain a degree. However, the work should not stop there. Filling out a form is just the first step in financial aid access. As the state builds an ecosystem that promotes FAFSA and CADAA completion, we should also examine downstream issues, such as Satisfactory Academic Progress policies, verification guidelines, appeals processes, and support for undocumented or mixed-status families, to further reduce the barriers that students face when trying to access financial aid.

California Public Colleges: We recognize and appreciate the Governor’s continued support for the University of California (UC) and California State University (CSU) multi-year compacts, as well as the California Community Colleges (CCC) roadmap as we move towards the statewide 70% attainment goal. While TICAS supports these investments so that our segments can better serve college students statewide, we are also calling for publicly accessible, transparent data that demonstrates how funding is making progress towards overarching goals, directly supporting academic and non-academic activities and services for students, and the centering of student needs and perspectives in the decision-making processes.

The process to craft the 2023–2024 California state budget has just begun and the path from now to July 1st will include grappling with unknown factors and working through tough decisions as our state and the country face high inflation rates, layoffs in key economic sectors, a looming debt ceiling battle in Congress, and overall fiscal uncertainty. Despite these challenges, higher education stakeholders must work together to ensure that this January budget proposal is a funding floor, and not a ceiling, and that students’ immediate and pressing needs are centered in future negotiations. We look forward to working with the Governor and Legislature to make sure that the state and our higher education systems protect and support students during a time of economic turbulence.

Many Rodriguez is the Director of Policy & Advocacy in California at The Institute for College Access & Success.

Originally published at https://ticas.org on February 23, 2023.