Governor’s Higher Education Budget Proposal Elevates Workforce Alignment and Brings Back Public Segment Compacts

California Competes Budget insight 2022-23

This week, Governor Gavin Newsom unveiled his 2022–2023 budget proposal for California. With a significant budget surplus, this year’s budget proposal lays out several investments that aim to help California’s students and higher education system.

The governor’s budget broadly aligns with both the Senate’s and Assembly’s key values and priorities of improving higher education quality, affordability, accessibility, and capacity. Moveover, the governor’s budget proposal recognizes higher education’s role in addressing critical issues across policy areas, from health to climate change to learning. From seeding innovations through investments in dyslexia research and climate-focused research to growing education pathways that increase the supply of healthcare workers, higher education plays multiple roles in supporting California’s ability to recover from the pandemic’s economic and health crises. We applaud the governor’s proposed investment in higher education and the value he has placed on it in supporting California’s economy and communities.

In this blog post, we analyze a key component of the governor’s higher education budget proposal—the multiyear investments and negotiated agreements with public higher education segments. We explore how they can help drive the state’s recovery, examine how California’s budget history informs the current proposal, and ask critical questions that must be answered to maximize the impact of the historic investments.

A Snapshot of the Proposed Higher Education Compacts and Roadmap

The governor proposed $39.6 billion to flow through the California Student Aid Commission (CSAC) and California’s public higher education segments: the University of California (UC), the California State University (CSU), and the California Community Colleges (CCC). Additional funding will reach California’s higher education system and students through allocations to other state entities, such as funding to early childhood education that will support student parents and funding to labor and workforce development that will be braided with higher education workforce alignment efforts.

In this analysis, we focus on three significant aspects of the governor’s budget proposal:

  • the five-year commitment to public higher education that provides a 5 percent increase each year to the UC, CSU, and CCC,
  • the agreements that lay out the goals and results expected for this increased, multiyear investment, and
  • the leveraging of higher education across the governor’s statewide policy priorities.

The Trajectory and Predictability of an Increasing, Multiyear Investment Opens an Opportunity for Significant Reform

The governor’s January Budget Proposal lays out an increasing, multiyear investment in California’s public higher education segments in return for commitments from the segments for improvements in student access, affordability, equity, pathways to employment, and intersegmental collaboration. Governor Newsom’s proposal offers the CCC, CSU, and UC each 5 percent increases in funding for each of the next five years. If delivered, this would result in an increase of 28 percent at the end of year five.

This funding increase combined with funding predictability addresses one of public higher education’s perennial issues–funding volatility and uncertainty. In typical years, higher education segments had to make decisions about fall enrollments before knowing what the state would allocate them just months before the start of the fall semester. And recessions often led state policymakers to gut higher education funding in an effort to balance the state budget. After all, colleges and universities have their own revenue streams they can tap into (tuition and fees), while other significant state line items (such as K–12 education, social services, and criminal justice) do not.

The proposed multiyear commitment has the potential to change this. The known and higher funding amounts present an opportunity for the CCC, CSU, and UC to better align resources for longer term sustainability and make more significant reforms that require more than marginal increases in funding. The agreements with the CCC, CSU, and UC aim to ensure that this funding commitment is, in fact, used to drive systemic change to address students’ biggest challenges and meet the governor’s 70 percent higher education attainment goal.

Agreements Seek to Address Access, Outcomes, Equity, Affordability, Intersegmental Coordination, Workforce Alignment, and Online Education

The Governor negotiated the proposed five-year increase in higher education funding to support agreements with California’s public higher education segments—multiyear compacts between the state and the UC and CSU and a road map for the CCC. Together, the growing state funding for higher education with the agreements with segments aim to meet the goal of 70 percent of California adults to have completed a postsecondary certificate or degree by 2030 that Governor Newsom announced in 2021 and reiterated in this year’s proposal.

The UC and CSU compacts and the CCC roadmap outline six primary areas of work for the segments: increasing access and improving outcomes, closing equity gaps, increasing affordability, strengthening intersegmental collaboration, supporting workforce preparedness, and expanding online education. Additionally, agreements include plans to increase online course offerings. The Governor’s January Budget Proposal outlines results sought, building off each segments’ existing goals—the UC 2030CSU Graduation Initiative 2025, and the CCC Vision for Success.

Increasing Access and Capacity

The agreements outlined in the budget proposal include access and capacity goals for all three segments. Increasing the number of seats available in California’s public higher education segments has been a priority for higher education institutions, advocates, and state policymakers, alike. We urge the state to consider how the structure of its institutions effectively exclude significant numbers of Californians from matriculating. These include Californians who are not the typical 18-year-old, recent high school graduate; they are the 6.8 million Californians ages 25 and older who do not have an associate’s or bachelor’s degree.

Improving Outcomes

Improving student outcomes is a main component of all segments’ agreements, building off the goals each segment has already set for itself. Combined with improving access and capacity, improving student success is critical to addressing California’s degree attainment gap and recovering from the pandemic.

Closing Equity Gaps

The governor’s budget also proposes investments and goals to close equity gaps in higher education. Meeting degree attainment needs, including the governor’s 70 percent postsecondary credential goal, cannot be done without increasing access and success for students of color and low-income and first generation students.

Increasing Affordability

The compacts between the state and the CSU and UC note the need to increase affordability. More specifically, the compacts call on the UC and CSU to lower the total cost of attendance for students, primarily affordable student housing and zero or low cost textbooks.

As California aims to improve student affordability, it must consider the substantial costs that today’s students face and the nuanced ways that traditional higher education structures ignore those needs. For example, for the hundreds of thousands of student parents, the total cost of attendance must include the cost of childcare, which is greater than CSU tuition but often excluded from student budget calculations. Moreover, for student parents and other adult students who have caregiving responsibilities, student housing must include affordable options suitable for families while they pursue their education.

Addressing higher education affordability in our state is key to recovery, and one way to defray the cost of attendance could be through a new program that fully funds the educations of low-income, uncredentialed frontline essential workers, like the US does with military veterans with the G.I. Bill. After all, these populations have literally put their lives on the line to keep our communities safe and enabled the economic growth that has driven the state’s budget surplus. Investing in their education and upward mobility is a smart investment in our recovery.

Strengthening Intersegmental Collaboration

The budget’s proposed compacts and roadmap include a series of specific agreements for the segments to collaborate with each other in several different areas. The budget directs the segments to fully participate in the Cradle-to-Career Data System, share data to identify equity gaps and trends (and address them), and support efforts to establish an integrated admissions platform between all the segments.

This call for greater coordination is a step in the right direction for California higher education. Currently, each segment operates separately from the others in many ways, causing friction points for the millions of students who move between segments. Increased efforts to coordinate between segments would make the higher education system easier to access and more seamless for students. To enhance the goals laid out around intersegmental coordination and across all the agreement goals, the state should stand up a higher education coordinating entity. The size and complexity of higher education in California necessitates an independent, transparent entity that focuses on coordination.

Supporting Workforce Preparedness

The budget’s proposed compacts and roadmap emphasizes the need for greater postsecondary-workforce alignment. The budget proposal calls for clear pathways to careers in health, education, climate, and technology through various efforts. These goals are seen throughout the governor’s budget proposal. The compacts and roadmap also lay out plans to increase credit for prior learning and competency-based education program offerings, which would help students with work experience and students facing obligations that make attending class in a traditional schedule progress through their education more quickly and affordably. Another effort outlined in the agreements is for the segments to provide students with greater exposure to job opportunities through participation in internships and faculty-led research.

The workforce investments and outlined plans in the budget play an important part in the state’s recovery and overall economic growth and well-being. While higher education is an important piece of the state’s recovery, it is not and cannot be a policy goal in and of itself. Higher education is critical for the outcomes it brings individuals and the state, including economic mobility for Californians and a robust economy for the state. We applaud Governor Newsom for his focus on what happens to students after they leave California’s postsecondary institutions, not just getting them there or through.

Expanding Online Education

Expanding online education is another key component of the CSU and UC compacts. Here, the budget outlines goals for the UC and CSU to increase their online course offerings and make investments that would allow all students to effectively access online learning opportunities. Online education allows for the flexibility that many Californians demand. Students often hold multiple jobs, struggle to afford transportation, and have caregiving responsibilities that make it challenging to show up physically to a campus. Online education also serves Californians, particularly those in rural areas, who live outside commuting distance of a broad-access public university and cannot relocate. Increasing online course offerings and ensuring online courses and programs deliver equitable outcomes could make higher education a reality for millions of Californians.

Let’s Not Ignore History: California’s Past with Higher Education Compacts

California past governors are familiar with compacts with the state’s higher education segments (at least the UC and CSU). Governors Pete Wilson, Gray Davis, and Arnold Schwarzenegger all proposed (and sometimes secured) higher education compacts that offered funding promises in exchange for enrollment and programmatic commitments from the UC and CSU.

These compacts largely fell short. Economic recessions, inability to hold segments accountable, and conflict with the Master Plan for Higher Education were among the many reasons why these compacts didn’t achieve the goals set forth by the multiple administrations who lobbied for them.

If California moves forward with a new set of agreements for higher education, let’s do it with our eyes wide open. First, we should be clear about the limitations of such agreements. Then, we should do all we can to address those limitations and maintain focus on other strategies to advance higher education in our state.

What’s Next?

Looking just at the new higher education agreements, there are many questions still to be answered about how to maximize their impact. Some of the key issues that California Competes will be thinking about to ensure that any future higher education compacts are more effective than past compacts, include:

  • What are the benchmarks and milestones for the year five outcomes that will alert the segments to necessary continual improvements? Who should be evaluating and informing the segments of their progress?
  • How will state government and the higher education segments be held accountable to both the multiyear funding commitment and the concomitant actions and results? Particularly when the five-year agreement extends beyond the terms of many of the elected officials that will vote on it this year?
  • How can we support the higher education segments to think beyond the margins with the committed funding trajectory?
  • What is needed to ensure the segments effectively act on these agreements?
  • What does success at the end of year five look like? How will we know success has been achieved? What longer-term plan gets us to year five success?

The Senate’s, Assembly’s, and Governor’s budget priorities continue to reflect those that California Competes has advocated for, and we are ready to continue serving as a research partner for policymakers and education leaders. We look forward to guiding the state through these times that are at once challenging, yet bring an incredible opportunity to address our state’s long-standing and thorny public problems.

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