CSU renews contract with OpenAI, meaning three more years of ChatGPT

California State University officials have renewed the system's contract with OpenAI, a leading generative artificial intelligence company that has established business deals with universities across the country.

Under the renewed contract, the CSU will pay $13 million a year to use OpenAI’s ChatGPT college product for three years, “with the option to cancel annually with advance notice,” said CSU spokesperson Amy Bentley-Smith. The new agreement also expands access to 675,000 users (up from 500,000) and enables students to continue using the product up to one year after graduation.

University officials say providing access to quality AI tools is an equity issue and that the CSU needs to prepare students for the future.

But when ChatGPT was first implemented across the system, faculty raised concerns about AI’s toll on the environment. They also noted that chatbots have been known to generate inaccurate information and can have built-in racial and gender biases. Some students and faculty still refuse to use it.

According to Bentley-Smith, the CSU’s decision to renew the contract “was made following extensive evaluation and input from across the system. Our stakeholders, including the CSU’s Generative AI Advisory Committee and its three subcommittees unanimously recommended renewing the contract. ... This was not a one-time consultation, but an ongoing and iterative process intended to balance innovation, risk management and educational outcomes.”

"We recognize that artificial intelligence is a topic that has sparked important debate and a wide range of perspectives, and we take seriously the concerns expressed about the ethical and responsible use of AI,” Bentley-Smith added. She also noted that, under the new contract, “the per-subscriber cost is lower than during the first contract [with OpenAI] and substantially lower than the price offered by any other vendor.”

Public records obtained by LAist showed that under the system’s first contract with the company, CSU paid a much better rate than other universities, albeit for a lot more users — roughly $1.9 million dollars to make ChatGPT available to 40,000 users during the first six months of 2025. Then, from July 2025 to June 2026, the university system paid another $15 million to make the product available to 500,000 users.

The system is now carrying out 63 faculty-led projects, aiming to use AI to revamp pedagogy in everything from Japanese language instruction to computer science.