IMPROVING CALIFORNIA STATE University’s financial future will require a tuition increase for all students starting in fall 2024, a new report from the system’s fiscal advisers concludes.
The confluence of higher wage demands, delayed building repairs and growing expenses has put significant financial pressure on the nation’s largest public university system. Improving employee salaries could cost the system up to $1 billion. CSU already has a nearly $6 billion backlog in capital maintenance and renewal projects, which grows by $284 million annually, according to the report.
“CSU is under real financial stress with growing cost pressures that well exceed current revenues,” according to the report presented to trustees last week. “The annual cost and revenue projections are daunting even without accounting for the huge backlog in capital renewal projects, the growing need to build and update facilities to stay abreast of the educational needs of students, and the full impact of unfunded mandates.”
The report suggested several different ways to increase tuition. For example, annual 3 percent increases in tuition for all students through 2030 would mean a freshman would see tuition increase to $5,914 in 2024, to $6,092 in 2025, and eventually reach $6,856 in 2030. A fourth-year student could see tuition in 2024 increase to $6,463.
Another suggestion would be to increase tuition by 5 percent for each freshman class, with no further increases until they graduate. A third suggestion was to increase tuition by 5 percent each entering class, but then increase their tuition by 3 percent each year until they graduate.
“CSU is under real financial stress with growing cost pressures that well exceed current revenues.”Report presented to CSU trustees
Since 2011, tuition at CSU has only increased once, by 5 percent in 2017 to $5,742.
CSU trustee Julia Lopez, who supports the tuition increase and the report’s recommendations, which she helped write, said the majority of CSU students don’t pay the full cost of tuition because they use financial aid, including federal and state aid. And if the system were to follow the work group’s recommendations, then a financial aid work group would work to minimize any impact of tuition increases on students.
The report recommends a CSU board vote by September on a tuition policy that includes “gradual, moderate and predictable increases” for all students starting in fall 2024.
The report, for the first time, is giving CSU administrators a chance to see how much it would cost to operate the entire system, instead of just providing annual budget numbers.
The work group, which spent a year working on the report, recommended CSU adopt a multiyear approach to budgeting its operations and capital budgets. Other recommendations included refining policies on campus allocations, adopting predictable tuition policies and appointing a group to develop a comprehensive financial aid policy. The system mainly generates new revenue through state funding and tuition.
Krishan Malhotra, president, of the Cal State Student Association, told CSU trustees May 24 that the students would be against any tuition hike.
The governor’s May revision budget maintains a promised a 5 percent base funding increase to CSU. However, to save money in other areas, Newsom proposed shifting some funding for several projects to CSU-issued bonds. The state would cover the debt payments for those bonds.