The Governor’s FY 2025-26 Budget May Revision aims to address a $12B shortfall amidst significant fiscal uncertainty, requiring tough decisions to balance the budget while minimizing harm to Californians. We applaud the Governor and Legislature for their past and current commitment to protect, and, when possible, expand, critical higher education programs or initiatives by utilizing thoughtful strategies. Today, as California faces new challenges – including wildfire recovery, increased Medi-Cal expenditures, shifting federal policies, and the unknown fiscal volatility from federal tariffs – we urge state leaders to reaffirm their commitment to accessible and affordable higher education as a cornerstone of long-term economic security for both students and the state’s economy.
Financial Aid Funding
Given this fiscal environment, we commend the Governor and Legislature for maintaining funding levels for the state’s two largest financial aid programs, the Cal Grant program and the Middle Class Scholarship (MCS). Additionally, the May Revise provided one-time emergency support for MCS recipients so they will not see their award reduced in AY 24-25 due to award calculation errors. The need for this MCS augmentation in a tough fiscal climate highlights the importance of long-term program improvements, as recommended by the California Student Aid Commission (CSAC) during subcommittee hearings. A missing piece within the college affordability space is whether California’s decisionmakers will support vulnerable student populations who have forgone federal financial aid due to data privacy concerns with the federal FAFSA. TICAS and other advocates call on the Governor and Legislature to prioritize these students by exploring and adopting a mechanism by which to backfill lost aid using pre-existing state financial aid programs or a new emergency fund.
Institutional Accountability Guardrails
Additionally, given ongoing actions at the federal level to weaken higher education accountability and oversight, it is more important than ever for California to strengthen the protections it provides to its residents via the Bureau for Private Postsecondary Education (The Bureau). We support the Governor’s request for resources and statutory changes to address the structural deficit facing the Bureau and urge the Legislature to adopt these actions. This action is the first step in ensuring the Bureau can address its fiscal solvency and continue to effectively protect and assist students. These allow the Bureau to draw funds from the Student Tuition Recovery Fund (STRF) to cover claim administration and to provide individualized support through the Office of Student Assistance and Relief (OSAR) in applying for and securing financial relief. Moreover, while we support using the three-year cohort default rate (CDR) from 2020 as a stopgap measure to certify a Cal Grant-eligible institution, we recommend the Legislature convene a workgroup to explore additional metrics that could build upon or work in tandem with CDR to ensure that high quality schools can continue receiving access to taxpayer-funded financial aid. By strengthening the Bureau and maintaining the 2020 certified CDR metric, California is upholding the guardrails which protect students from predatory online, for-profit programs that target our most vulnerable communities and ensure that the institutions utilizing Cal Grant funding are not leaving their graduates with unaffordable debt and degrees or certificates with little economic value.
Higher Education Segment Funding
We applaud the Governor’s decision to reduce the proposed cuts to University of California (UC) and California State University (CSU) from 7.95% down to 3%. This action is welcome news given significant federal cuts that are already impacting both the UC and CSU research awards and budgets, and ongoing threats that imperil billions more in federal funding to state universities. We urge the Legislature to support these reduced cuts and, if possible, further bridge the shortfall. If that cannot be accomplished, policymakers should lay out institutional guidelines so that the remaining cuts are frontloaded toward administrative positions, and do not disproportionately impact student services and academic departments.
Accessing Financial Aid
Finally, the Legislature should explore increasing funding for CSAC’s financial aid communication and outreach efforts, as well as by making permanent last year’s FAFSA completion support funds provided to financial aid offices across California’s community colleges to combat potential federal actions that decrease college access and affordability. These investments will ensure that California can maintain its top-five ranking for its 57% FAFSA completion rate.
For the last 20 years, TICAS has emphasized that California’s students and public higher education institutions are the bedrock of innovation and a strong economy. Students cannot be the first line of impact in higher education cuts, and this May Revise minimizes potential harm to students and institutions. We look forward to continuing to work with Governor Newsom’s administration and the Legislature to reach a final 2025-26 state budget agreement that protects and invests in key financial aid programs and builds stronger higher education guardrails for students during this difficult political climate and economic cycle.
