Infra Insight Blog

On May 14, Gov. Newsom unveiled his record-breaking $267 billion budget proposal to tackle some of the greatest challenges facing the state of California, kicking off what’s been described as the most ambitious era of government spending in the state since the mid-20th century. The new proposed budget comes exactly one year to the day after the governor announced spending cuts to schools, homeless services and health care in light of the state’s $54 billion budget shortfall and the worsening COVID-19 pandemic. Thanks to a booming stock market and greater than expected tax revenues, the state now finds itself with a staggering $75.7 billion surplus, an amount that surpasses most states’ annual spending.

The surprise surplus allowed Newsom to restore steep cuts imposed last year and invest a record-setting $48.7 billion in the University of California, California State University, California Community Colleges and the California Student Aid Commission to expand affordable student housing, repair aging facilities and better train students for state workforce needs.

To achieve his top priorities of “affordability, access and efficiency” for higher education, Gov. Newsom’s proposed budget includes:

• $4 billion in one-time funds over the next two years to award grants to UC, Cal State and community colleges to build affordable student housing or acquire commercial properties to do so;
• $115 million in one-time funding for community colleges to eliminate textbook costs by developing free and open educational resources and certificate and degree programs that don’t incur those expenses; and
• A new $1-billion investment of one-time funds over the next two years to create a program to help campuses identify employers interested in offering career opportunities to students related to their fields of study – funds would be distributed to campuses based on their share of low-income students, with priority on placing underrepresented students in science, technology, engineering and math (STEM) fields.

The governor’s proposed budget also provides UC with:

• $325 million in one-time state and federal funds to repair aging facilities and improve energy efficiency; and
• One-time grants to help renovate the UCLA Labor Center building, support research by the UCLA Asian American Studies Center to prevent anti-Asian hate incidents and funding for other worthy programs on UC campuses.

Under Newsom’s proposal, Cal State would receive:

• An increase of $514.9 million in ongoing funding for 2021-22, which includes restoring a $299-million budget cut last year and adding money for mental health, basic needs and other programs;
• A one-time allocation of $325 million, which includes $150 million in federal funds, for critical infrastructure, maintenance and renovation projects; and
• $433 million to shift Humboldt State University into the Cal State system’s third polytechnic campus – joining Pomona and San Luis Obispo – to train more students in the state’s underserved northern regions for fast-growing STEM fields.

The proposed funding is conditioned on no tuition increase for fall 2021, significant progress in closing achievement gaps, more online learning and greater alignment with state workforce needs. The governor also reiterated his directive that UC and Cal State create a program that would enable first-time freshman applicants to be considered for guaranteed admission to the UC or Cal State campus of their choice after completing required community college work.

Newsom’s budget proposal has been lauded by UC, Cal State and community college leaders, whose campuses collectively educate nearly 3 million students in the nation’s largest and most diverse higher education systems.

The governor will continue to negotiate the final spending plan with state lawmakers in the coming weeks. The budget must be passed by the Legislature by June 15 and signed by the governor by June 30.