California’s public colleges and universities emerged as winners in the latest state budget after lawmakers sent them hundreds of millions of dollars in new public spending. However, that largesse was tempered by decisions by Democrats in Sacramento to reject bond measures that could have awarded campuses billions more.
The changes were enshrined in the state budget for 2026-27 that the Legislature and Gov. Gavin Newsom approved last week.
Students were also major beneficiaries, as lawmakers continued to support one of the nation’s most generous state financial aid programs. The Cal Grant, which generally covers tuition at the University of California and California State University and partial tuition at private colleges, remains fully funded as part of an ongoing commitment by lawmakers and Newsom to keep student costs down.
UC and Cal State students receiving the Cal Grants will have their tuition charges waived, even as schools continue to raise tuition. And more affordable student housing may be built soon if voters approve a bond that lawmakers and Newsom put on the ballot for November.
Prioritizing higher education spending will be “a strong part of Gov. Newsom’s legacy,” said Jessica L. Thompson, a senior vice president at The Institute for College Access & Success. The organization is a think tank that advocates for increased financial aid for low-income students.
“We’ve never had to work to convince the executive branch that public higher education was incredibly important and central to a lot of the ambitions for the state and for the future, and that’s not something to take for granted,” she told CalMatters.
Still, the smaller Middle Class Scholarship, which last year awarded recipients an average of $3,000 in aid to cover school expenses, will decrease to an average of $2,000 this year.
Here’s a breakdown of higher education’s wins and losses in California.
More money for UC, Cal State
The UC and Cal State systems each received more than $500 million in ongoing taxpayer support that can be used to hire faculty as they enroll more students and keep up with other expenses, such as rising energy, insurance and staff health costs.
That public generosity isn’t guaranteed. Public K-12 schools and community colleges are constitutionally guaranteed around 40% of the state’s general fund. But public universities have no such ironclad dibs on state money.
The Legislature’s top budget and policy adviser, the Legislative Analyst’s Office, recommended smaller increases for the universities in February. The office cited projected multibillion-dollar state deficits. And it argued that both systems can still rely on new revenue from their annual tuition hikes.
Newsom’s eight-year tenure coincided with dramatic spikes in state spending for each system. The year before he took office, the UC and Cal State each received about $3.7 billion in state support. The latest budget act sends more than $5 billion to each system from the state’s general fund.
That’s a growth of 50% — but less than the 80% in overall state spending increase Sacramento approved from the general fund during that span.
The latest university increases are a combination of new ongoing money for the two university systems and the restoration of more than $100 million in funding cuts that lawmakers applied to both the UC and Cal State in last year’s budget.
That drop in money prompted an ongoing impasse between Cal State and unionized workers. Cal State argued the funding cut prevented the system from honoring full raises for thousands of its staff; some unions disagreed by pointing to the loan the state offered Cal State to make up for last year’s cut. Cal State said that doesn’t count since it has to repay that loan.
One large union of 36,000 administrative and groundskeeping workers, CSUEU, filed an unfair labor practice charge against Cal State last July. The union contends that last year’s budget triggered a union contract clause to put workers on higher experience levels. Each “step” increase comes with a 2% raise. Cal State advanced workers one step, but the union says some were supposed to climb five or more steps.
CSUEU expects to come to a deal with Cal State on the grievance in the next month — before the state California Public Employment Relations Board is set to issue a decision in August.
The union also seeks 11% raises annually for the next three years. It hasn’t sought approval from its members to strike, but the union has threatened work stoppages.
Students mostly benefit
The budget deal continues to fully fund the Cal Grant, a politically popular program that has no guaranteed stream of funding like public K-12 schools and community colleges do.
Since 2015, the number of Cal Grant recipients has grown from around 330,000 to more than 450,000. State spending also leaped from about $1.9 billion to $2.5 billion, according to the Legislative Analyst’s Office.
A major reason for the expansion of students receiving the grant is a set of relaxed rules lawmakers approved in 2021. Those permitted more than 100,000 community college students older than 28 to qualify for the Cal Grant each year. The Legislative Analyst’s Office estimates that Cal Grant’s costs grew by $167 million last year just from those rule changes alone.
The annual tuition hikes at UC, starting in 2022, and Cal State, beginning in 2024, have also pushed the price tag on the Cal Grant higher. About a quarter of the increased costs of Cal Grants for UC and CSU in the last decade is due to tuition increases, the analyst’s office wrote in February.
A smaller financial aid program is dropping in value, however. The Middle Class Scholarship will receive $680 million, enough for an average of about $2,000 for its roughly 350,000 UC and Cal State student recipients. Last year Sacramento funded the program at nearly $1 billion, and the average award was $3,000. The drop in spending was a way to balance the state budget, which cannot run deficits.
The decrease may mean students work more hours or take out loans, though most UC and Cal State undergraduates complete their degrees with no debt.
Bond money is a mixed record
Still, higher education fell short in legislator-backed bonds.
One measure that appears to be dead for now is a $12 billion bond that would award science grants to universities and other research organizations. The UC and the union of graduate student workers, whose wages often rely on grant research money, advocated fiercely for it.
Proposed by Sen. Scott Wiener, a Democrat from San Francisco, the measure was viewed as a backstop against the Trump administration’s aggressive attempts to terminate existing and new research funding for the University of California and other campuses.
Trump alleged the affected grants violated his prohibitions on research into diversity issues and climate change; many of the grants sought to better understand diseases, new pharmaceuticals, cancer and dementia. The UC system alone collected $3 billion in federal research grant money in 2024-25 — nearly half of its research funding.
At one point last year the Trump administration froze or terminated more than 1,000 California science grants from the National Institutes of Health and National Science Foundation. Public tracking site Grant Witness indicates that most of those have been restored through various court orders after professors sued last year. But tens of millions of dollars in grants remain on pause in California from those research agencies, while nearly $900 million is frozen from the U.S. Environmental Protection Agency, according to a legislative analysis for Wiener’s measure.
Wiener told CalMatters in January that the bond funding would protect California from an unpredictable Washington, D.C. While Trump sought major cuts to science research agencies in his proposed budget, Congress rebuffed him. Still, experts believe fewer grants will be awarded to researchers under new Trump administration funding rules.
Wiener’s bond measure sailed through the Senate but stalled in the Assembly, never getting out of a key committee in time to beat the deadline to appear on the November ballot.
Nick Miller, a spokesperson for Assembly Speaker Robert Rivas, a Democrat from Salinas, said in an email that “Trump’s full-scale assault on California touches nearly every public service and program.
“Legislators face real, painful choices,” he added.
Several legislative and political insiders told CalMatters that another reason the science research bond didn’t advance was because some lawmakers worried it would lower the chances that voters in November approve an $11 billion affordable housing bond. That housing measure was a priority for the Assembly.
Another proposed bond would have allowed the UC and Cal State to reduce their backlog of aging structures and build new ones. An effort by Assemblymember David Alvarez, a Democrat from Chula Vista, to put a measure on the November ballot fizzled by late June. It had no price tag. His office said that Newsom’s Department of Finance determined that the state lacked the money in future budgets to repay the debt owed on such a bond.
Cal State reports that more than half of its academic buildings are at least 50 years old. The system’s five-year construction plan includes $24 billion in projects. UC’s campuses and hospitals say they’re short $46 billion in funding for infrastructure projects.
Students and faculty in recent years complained of broken air conditioners during heat waves and downed heaters when the mercury drops. The temperature swings affect expensive laboratory equipment and campuses have also endured floods.
The last time voters approved a facilities bond for the public universities was 2006. Both systems can issue bonds for construction, but their borrowing ability is limited because those debt payments come out of their annual budgets. Voters rejected a $15 billion facilities bond for schools in 2020 that would have provided the two systems $2 billion each. A subsequent bond that voters approved excluded UC and Cal State entirely.
“It’s too soon to plan for 2028 ballot measures but a facilities bond will remain within Alvarez’s priorities for sure,” spokesperson Chris Jonsmyr wrote in an email.
A silver construction lining is student dormitory money included in the $11 billion affordable housing bond measure on the ballot this November. If voters approve, Cal State and UC would each get $175 million to continue a state program to build housing that campuses would rent to low-income students at below market rates.
For UC, $175 million may be enough to construct around 1,700 beds for low-income students. Housing plans approved by the UC Board of Regents in the past four years that CalMatters reviewed range from $200,000 to $300,000 per bed — high costs fueled by ever-rising construction expenses and stratospheric land prices where the mostly coastal campuses are located.
Last fall 9,900 UC students were on waitlists for campus housing, according to data CalMatters requested from the UC Office of the President. The potential addition of affordable beds would complement UC’s ongoing housing construction blitz. It intends to add some 15,000 additional student housing slots by 2030.
The system needs it: The average occupancy rate is 104% across the system’s student housing network, UC data show. That means rooms designed as doubles become triples to absorb the inflow.
