Issues to Watch in 2015: Higher Education

December 30, 2014

As University of California (UC) students and their families enjoyed the holidays together, many of them were likely fretting over the prospect that their tuition may increase for the upcoming 2015-16 school year. Under a plan adopted by the UC Board of Regents last month, UC tuition for California residents could increase by up to 5 percent annually for the next five years. That means that tuition could rise to nearly $13,500 by 2019-20, after adjusting for projected inflation, a significant increase from the current level of $12,192 (see chart).



UC’s new plan runs counter to a separate plan set forth by the Governor in 2013 to give the UC and the California State University (CSU) annual state funding increases for four consecutive years in exchange for freezing tuition for California residents through 2016-17 at 2011-12 levels. This year’s budget agreement, signed in June, continued that plan and included modest funding increases of about $140 million each for CSU and UC in 2014-15. In early 2014, the Governor proposed 4 percent state funding increases for both CSU and UC in 2015-16 and 2016-17, the third and fourth years in the plan. However, UC President Janet Napolitano insists that it is not enough and that tuition will have to go up unless the state provides additional funds. CSU has also signaled it needs additional state funding by recently reducing enrollment targets for 2015-16 and raising the possibility of reducing freshman admissions this coming fall unless additional funds are provided.

For both CSU and UC, two sources of revenue — state funding and tuition — make up the vast majority of their core funding, which are dollars that support activities related to their primary education functions. As detailed in our report earlier this year, From State to Student, state disinvestment in higher education in recent decades has resulted in steep tuition increases at both institutions and has shifted a larger share of higher education costs from the state to students and families. Since 1990-91, tuition and fees have more than tripled at CSU and more than quadrupled at UC, after adjusting for inflation. Direct General Fund spending on a per student basis at both CSU and UC has generally been on the decline during this period and, in recent years, has been at or near the lowest point in more than three decades, after adjusting for inflation.

When state funding for CSU and UC gets cut or does not keep up with increasing enrollment, as California’s population grows and its economy changes, these institutions have very few options available to them. One is to raise tuition rates. Another is to reduce enrollment growth, as UC and CSU have each proposed to do in 2015-16, unless they receive additional state funding.

This is an issue that we, and surely many students and families, will be watching closely as we approach the release of the Governor’s proposed 2015-16 budget in January. Stay tuned for more CBP analysis on this topic.

— Phaelen Parker

Student Debt: Ripe for Comedy, but No Laughing Matter

October 2, 2014

In a recent segment, Last Week Tonight with John Oliver took on the subject of higher education in a hilarious rant on some rather serious topics, such as state disinvestment in public colleges and universities, skyrocketing tuition, and rising student loan debt. Injecting his signature brand of comedy, John Oliver touched on a number of important issues that we also highlighted earlier this year in From State to Student, the CBP report on higher education funding in California.

Oliver noted that in recent years, states have slashed funding for higher education by an average of 23 percent per student, according to a Center on Budget and Policy Priorities report. In response, public higher education institutions have raised tuition significantly. This is definitely true in California, as the state’s support for the California State University (CSU) and the University of California (UC) has deteriorated in recent decades and remains near the lowest point in more than 30 years on a per-student basis, after adjusting for inflation. This is even after accounting for the small state funding increases both CSU and UC have received in the last couple years. At the same time, tuition and fees have risen dramatically as state support has dwindled, remaining near historic highs at both CSU and UC, even after adjusting for inflation.

As Oliver points out, one of the consequences of state cuts for higher education and increased tuition is that students are being forced to take out ever-larger student loans to pay for school. The total amount of student loan debt now exceeds $1 trillion nationally after tripling in the past decade, surpassing all other forms of household debt except home loans. Shining some comedic light on the increasing pervasiveness of student loan debt, Oliver quipped that “it has surpassed Bob Marley’s greatest hits album as the thing seemingly every college student has.” Unfortunately this broader trend has not bypassed California, as a growing share of CSU and UC students are graduating with increasing amounts of student loan debt. This is a strong indicator that public four-year higher education is becoming less affordable and less accessible for many high school graduates in California.

As we discussed in From State to Student, these trends have fundamentally altered how higher education costs are shared between the state, on one hand, and students and their families, on the other. Whereas the state once paid most of the cost of public higher education in California, years of budget cuts and tuition hikes have shifted more of the costs to students and families, especially at CSU and UC. This cost shift potentially puts the state’s economic future at risk, as a well-educated workforce is critical to California’s future prosperity. At current rates, California will not produce enough college graduates to meet the demands of the state’s economy in the years ahead.

In his concluding remarks, Oliver commented that “our leaders have decided that, while [higher] education is incredibly important, it is not important enough to actually pay for.” Stay tuned in the coming months as we issue further analysis and commentary that explore these issues — and what they mean for public policy in California — in greater depth.

— Phaelen Parker

Decades of Funding Cuts Have Diminished Access to and Affordability of California’s Public Universities

May 6, 2014

A new report from the California Budget Project (CBP) shows that state support for the California State University (CSU) and the University of California (UC) has deteriorated over the past generation, endangering what has historically been a key pathway to economic opportunity and upward mobility for Californians.

From State to Student: How State Disinvestment Has Shifted Higher Education Costs to Students and Families shows that even with a growing state population and increased demand for higher education, state funding per student at both of California’s public four-year universities is down significantly compared to the 1980s. As a result, tuition and fees have skyrocketed, with more students and families having to take on student loan debt in order to afford a CSU or UC education.

From State to Student shows that:

  • State support for CSU and UC has not kept up with the significantly increased demand for higher education in California. Since 1980-81, enrollment has increased by more than 50 percent at CSU and by more than 90 percent at UC. Yet during this same period, General Fund support for each institution has declined by nearly 13 percent, after adjusting for inflation.
  • As a result, General Fund spending on a per student basis at both CSU and UC remains near the lowest point in more than 30 years, after adjusting for inflation. General Fund spending per student at both CSU and UC has fallen significantly in the past generation. At CSU, General Fund spending student in 2013-14 is $6,417, down from $11,240 in 1980-81 — a 43 percent drop. At UC, General Fund spending per student has fallen from $24,045 in 1980-81 to $10,879 in 2013-14 — a 55 percent drop. (All of these figures are in 2013-14 dollars.)
  • Tuition and fees have skyrocketed since the early 1990s — more than tripling at CSU and more than quadrupling at UC, after adjusting for inflation. Between 1990-91 and 2013-14, CSU undergraduate tuition and fees for California residents have risen from $1,376 to $5,472, while UC tuition and fees have jumped from $2,865 to $12,192. (All of these figures are in 2013-14 dollars.)
  • A growing share of students are graduating with increasing student loan debt. In 2010, about four in 10 first-year full-time undergraduate students at CSU or UC took out student loans, the largest share in a decade. Furthermore, undergraduates at CSU who took out loans graduated with an average of $17,150 in student loan debt in 2010-11, while UC undergraduates with student loans graduated with an average of about $19,750 in debt in 2011-12 — both well above pre-recession (2006-07) levels, after adjusting for inflation.

The proposed 2014-15 state budget put forth by Governor Brown earlier this year would increase General Fund support for CSU and UC by $142 million each, the third consecutive year of increased funding for both institutions. However, these increases in General Fund support represent only a small step toward reversing the long-term trend of diminished support.

— Steven Bliss


New CBP Report: Under Governor’s Proposed 2014-15 Budget, Funding for CSU and UC Would Be Nearly One-Quarter Below Pre-Recession Levels

February 27, 2014

The California State University (CSU) and University of California (UC) together educate more than 675,000 students statewide and play a critical role in providing pathways to opportunity and economic mobility. Yet in recent years, both CSU and UC have had to operate with diminished levels of support due to deep state funding cuts made during and after the Great Recession.

A new CBP analysis — the latest in a series of briefs on key components of Governor Brown’s proposed 2014-15 budget — looks at spending on the CSU and UC systems. This brief shows that although General Fund support for CSU and UC would increase by approximately $142 million each under the Governor’s proposed budget, state support for these institutions would still remain nearly 25 percent below 2007-08 levels, after adjusting for inflation.

This brief also discusses how CSU and UC tuition and fees have increased dramatically compared to where they were prior to the recession as well as how more students are now graduating with increasing amounts of student loan debt.

— Steven Bliss

The UC Looks Beyond California for Students … and Dollars

July 13, 2011

The University of California (UC) is increasingly looking outside California for its incoming freshman class. This year, more than one out of every six students (18.1 percent) admitted to the UC’s Fall 2011 class came from outside California, compared to one out of 10 students (10.0 percent) admitted in the Fall of 2007. Why is the UC admitting more out-of-state students given the large number of young Californians seeking a UC education? One reason is that out-of-state students pay nearly three times the tuition and fees that California residents pay. Given state cuts to UC funding during the past few years, the sharp increase in the number of UC students admitted from outside California likely has more to do with the UC’s budget gap than with the desire to increase the geographic diversity of the UC’s student body.

The recent budget agreement signed by Governor Brown cut the UC’s 2011-12 funding by $650 million. The cut to UC funding could rise by $100 million if state revenues do not meet certain targets. Even without so-called “trigger cuts,” General Fund support for the UC has dropped by 27.1 percent since 2007-08, with more than half of that drop occurring in the past year.

How has the UC responded to state budget cuts? To close the gap, the UC has reduced salaries, laid off staff, eliminated courses, and increased student tuition and fees. In fact, since 2007-08 the UC has increased tuition by more than two-thirds (67.6 percent), and the Board of Regents will consider an additional 9.6 percent increase at its meeting tomorrow. If the increase is approved, undergraduate tuition for California residents would rise to more than $12,100 in 2011-12, which does not include the cost of housing, transportation, food, or other campus-based fees. Tuition for undergraduates who come from outside California would top $35,000. The extra $22,900 per student is one reason the UC has increased nonresident enrollment. It also may be a reason why the number of international applicants admitted for the Fall 2011 UC class is triple the number admitted in the Fall of 2007. While increasing the number of out-of-state students may help bring in more dollars for the UC, it also reduces opportunities for young Californians seeking a college degree.

— Jonathan Kaplan