California State University – Public Policy Institute of California

Public Higher Education in California Faces a Fiscal Crisis

[vc_row][vc_column][vc_column_text]As the coronavirus pandemic continues to disrupt California’s economy, the Newsom administration is projecting a $54 billion decline in state revenues for the 2021 fiscal year and revising the budget accordingly. California’s public universities—which do not have dedicated funding streams or constitutional protections—face disproportionately large funding cuts. So far, the federal government has provided some emergency relief to mitigate the pandemic’s unprecedented impact on higher education. Without additional support, however, the state’s public colleges might have to reduce student access and services.

During the Great Recession, a drop in state revenues of $40 billion in 2009 led to cuts equaling roughly one-third of state funding for the University of California (UC) and California State University (CSU) systems (on a per student basis). Consequently, tuition doubled at UC and CSU, faculty and staff were laid off or furloughed, and critical capital improvements and maintenance were deferred.

In turn, students faced reduced access to courses, higher student-faculty ratios, increased costs, and fewer support services. As the economy improved, the state was able to increase allocations to the state’s colleges. As a result, UC and CSU admitted thousands of additional students, graduation rates went up, and the number of degrees awarded increased substantially.

Early evidence suggests that the global pandemic could have an even more dramatic fiscal impact on public higher education in California. In the short-term, public colleges face critical revenue shortages: now that students have been sent home and instruction has moved online, revenues from auxiliary enterprises (housing, food, parking, etc.) have evaporated. In addition, UC has suspended elective surgeries at its medical centers and is incurring costs associated with research and treatment of the coronavirus. CSU has projected revenue losses of $337 million for the spring semester, while UC projects a $500 million loss for the month of March alone.

In the longer-term, the systems may find it challenging to raise additional revenues. The percentage of out-of-state students—who pay higher tuition—is now capped at 18% for the five most popular UC campuses, and enrollment of international students is likely to decline due to visa and travel restrictions. Endowment funds are shrinking and tuition increases are controversial. Moreover, unprecedented levels of unemployment will increase demand for federal, state, and institutional financial aid programs.

Governor Newsom’s May budget revision includes a 10% cut for each public higher education system. The revised budget proposal also reduces state financial aid for students who attend nonprofit private colleges from $9,084 to $8,056 per year. The budget proposal does allow UC and CSU to redirect some restricted revenues and to refinance debt at historically low interest rates. However, without additional revenue–whether through federal or state support, or tuition increases—it will be difficult to improve access, quality, and student success in the coming years.[/vc_column_text][/vc_column][/vc_row]

COVID-19 Alters College Admissions

[vc_row][vc_column][vc_column_text]Admissions may look different for students entering college in fall 2021. Social distancing to protect communities during the COVID-19 outbreak will impact where students attend classes and where they will live—and recent policy updates around standardized testing and GPA requirements will impact how colleges determine eligibility and placement in courses. But even as admissions become more flexible, some students still struggle to get on the path to college.

California’s public universities are the primary destination of the state’s high school graduates and community college transfers headed to a four-year college. In 2017–18, nearly 200,000 California high school graduates applied to the University of California (UC) or California State University (CSU), and 84,000 were enrolled.

For students applying for admission to colleges in fall 2021, eligibility requirements and application processes are changing. Most standardized tests used for admission—such as SAT and ACT—and for placement purposes, such as the Smarter Balanced Assessment, are either postponed or cancelled.

In light of these cancellations, UC and CSU temporarily suspended testing requirements for fall 2021 applicants, meaning students do not need to include a test score on their application. In addition, UC and CSU systems are temporarily accepting pass/fail in lieu of a letter grade for courses completed in winter, spring, and summer 2020, as more K–12 districts and community colleges choose not to assign letter grades while students adjust to distance learning during the pandemic.

These adjustments are meant to ease anxiety over college admissions in a time of crisis, and there is some evidence that eliminating high stakes standardized tests could lead to more underrepresented students being placed in college-level courses and being eligible for college.

However, when high schools and community colleges lack sufficient resources, even with flexible grading in place, remote education may fail disadvantaged students. More than half of K–12 students from low-income households do not have broadband access at home. Notably, PPIC research found that online courses at community colleges exacerbated achievement gaps.

During their junior and senior years, high school students are more likely to fall off the college pathway, and disadvantaged students are even more likely to do so. And until recently, disadvantaged students were also more vulnerable to being diverted away from community college courses necessary for transfer admissions.

All students must cope with the changing college application process. But first-generation college applicants come from families who are new to the process; those with less internet/technology access may also be less familiar with how to apply. These students may see less support in the college application process than they would if they were still in school.

Now, more than ever, targeted outreach efforts and collaborations between K–12 and higher education will be critical to ensuring equitable access to a college education and economic mobility.[/vc_column_text][/vc_column][/vc_row]

Displaced by COVID-19: Moving Out of College Housing

With college students already taking courses online in response to the COVID-19 pandemic, many are also faced with moving out of campus housing. It’s a necessary disruption to help keep the virus from spreading, but one that can place students far from academic support and other services precisely when they need support and services most.

While the disruption is temporary, the benefits of being on or near campus go beyond proximity to classes. Campus housing gives students better access to tutoring, counseling, health, and academic services. For these and other reasons, students who live in university housing have higher persistence and graduation rates.

Nearly all colleges are urging students to move out, and the vast majority of university-housed students will likely leave—or have left—campus. Some colleges have allowed students to stay in housing if they choose, while others require students to leave unless they qualify for an exemption, such as for international students, for health and safety concerns, or if they do not have a home to return to.

Prior to the pandemic, about 24% of all undergraduate students, at least 177,000, lived in university owned or operated housing at California public and private nonprofit colleges, most commonly in dormitories. Most students living in college housing are at the University of California (UC) and private nonprofit universities, even though the California State University (CSU) system enrolls far more undergraduates. CSU students are much more likely to commute from home or an off-campus apartment. Community colleges, which educate the largest number of college students in the state, rarely own and operate their own housing.

Freshmen are especially likely to live in university housing, making up a slight majority (51%) of the total. About 90% of freshmen at UC and private nonprofits live in college-operated housing. If the pandemic continues to displace students into the fall semester, those colleges will have to grapple with how to help new students adapt to college without living on campus.

The consequences of this large-scale early departure from campus are uncertain. As students move off campus, schools are working to find ways to provide essential student supports and potentially offer new ones, such as laptops and internet access, to limit the disruption in learning.

One effort by the California College Student Emergency Support Fund offered $500 hardship grants for low-income students to help pay for housing, technology, and other expenses. Within 90 minutes of the launch of the application, 1,000 students had applied. Within 24 hours, demand had far surpassed resources, and 65,000 students were placed on a waiting list, suggesting that a significant unmet need remains.

COVID-19 Shutdown Forces Colleges to Ramp up Online Learning

[vc_row][vc_column][vc_column_text]California colleges are moving classes online in response to the COVID-19 pandemic, which means most students at most colleges will take classes remotely. For example, the entire University of California and California State University systems have moved almost all undergraduate education to online settings. Such a dramatic change is necessary for public health, but may interfere with student access and success.

California’s community colleges can offer others a lesson in effective practices for distance education. These schools have been at the forefront of remote learning for more than four decades, from correspondence courses in the early days to instructional television and video cassettes in the 1980s. In the early 2000s, community colleges began to offer internet-based online courses.

The availability and popularity of distance courses have exploded with the internet, as have course success rates. The share of enrolled students completing and passing a course has skyrocketed, narrowing the gap in success between online and in-person courses substantially.

Policies around closing the success gap were intentional, with the Community College Chancellor’s Office leading efforts to improve online courses through the Online Education Initiative and the California Virtual Campus. Resources available to administrators and faculty include modules on effective course design, remote tutoring, student services, and even proctoring of exams.

Effective practices involve more than moving a face-to-face course online. Success means providing faculty support and training, setting appropriate student expectations, and promoting interaction among faculty, students, and course materials.

Better software has also cleared paths to and shifted the debate around online pedagogy. Instead of discussing how to replicate face-to-face learning, educators are examining the advantages of online learning over the traditional model. By identifying student needs, personalizing learning, and giving instant feedback, teachers may have more avenues to eliminate the online performance gap.

Still, problems remain. Students with limited technology, such as those without access to broadband, may not be able to access online courses. In community colleges, Latinos are less likely to enroll in online courses than other groups, which may reflect the digital divide. And while course success rates have improved across the board, equity gaps remain large.

The COVID-19 crisis is unprecedented, and California’s colleges deserve credit for quickly moving courses and student supports to online platforms. Clear and effective communication with students remains key. More than ever colleges must also identify and reach out to vulnerable students—low income, food insecure, and homeless—who face challenges transitioning online and need extra support.[/vc_column_text][/vc_column][/vc_row]

Testimony: California Is on Track to Close the Degree Gap

[vc_row][vc_column][vc_column_text]Hans Johnson, director and senior fellow at the PPIC Higher Education Center, testified February 25, 2020, before the Assembly Budget Subcommittee (No. 2) on Education Finance, chaired by Assemblymember Kevin McCarty. Here are his prepared remarks.

At the PPIC Higher Education Policy Center, we have long been concerned about the future of California’s workforce. Would the state have enough college graduates to meet evolving economic demands? We have produced a series of reports addressing the dynamics of this issue.

Five years ago, we projected a shortage of highly educated workers in California. Specifically, our economic projections to 2030 showed that about two in five jobs would require at least a bachelor’s degree, while demographic projections suggested that only about one in three Californians would attain this level of education. This shortfall amounts to 1.1 million bachelor’s degrees.

PPIC noted that to fill this shortfall, the state and its higher education systems would need to act—increasing access, transfer, and completion especially among groups historically underrepresented in higher education, including low-income students, first-generation college students, Latinos, and African Americans.

We identified ambitious targets that—if met—would close the degree gap. Those targets included large increases in access to the University of California (UC) and California State University (CSU), both for first-time freshmen and for transfer students. They also included substantial increases in graduation rates. At the request of the legislature, UC and CSU both issued reports on how they might meet those targets.

Today, I’m pleased to say that California is currently on track to close the gap. The concerted efforts of policymakers, higher education officials—including staff and faculty—and, of course, students have led to these early gains.

State General Fund allocations for each system have increased substantially since the Great Recession, allowing for increased enrollment and renewed efforts to improve student persistence and completion. Both UC and CSU have exceeded PPIC’s closing-the-gap targets. These early gains have reduced the degree gap by almost 80,000.

Two primary actions have led to these gains.

First, increases in state funding have allowed UC and CSU to enroll substantially more first-time students from California—both freshmen and transfer students. At UC, enrollment of transfer students went up 16% between fall 2010 and fall 2019. Enrollment of freshmen grew 14%. At CSU, enrollment increased 41% for transfer students and 33% among freshmen over the same time period. Notably, UC’s gains occurred primarily in one year, from 2015 to 2016, when the legislature and governor tied a $25 million allocation to increasing enrollment by 5,000 students. In that single year, total first-time enrollment of freshmen and transfer students went up 10%, with gains concentrated among African Americans (36%) and Latinos (25%).

Second, programs to improve student persistence and graduation rates have also paid off—and contributed to enrollment growth. These gains have been especially sharp at CSU, which has received substantial funding from the state to support its graduation initiative. At CSU, six-year graduation rates for California-residency students have increased from 57% for 2009 entering freshmen to 67% for the 2013 cohort. At UC, four-year graduation rates for California-residency students have increased from 62% for 2010 entering freshmen to 68% for the 2014 cohort. (Six-year graduation rates at UC remain very high, around 85%). Graduation rates for transfer students have also increased at both systems.

These early successes are very promising. Still, California needs to build on them if it is to close the degree gap fully. The demand for college remains high. PPIC’s statewide surveys show that the vast majority of parents (79%) want their child to earn at least a bachelor’s degree. College preparation among high school graduates has increased, with the share of students completing the college preparatory requirements of UC and CSU now at an all-time high. And while applications to UC and CSU have levelled off or even declined a bit recently, application levels are still near record highs. All but one UC campus and many CSU campuses already do not have room to admit all eligible applicants.

Looking ahead, strong demand for UC and CSU is likely to continue as college preparation improves and the transfer pathway becomes more efficient and effective. New initiatives, including reforms in remedial education at the community colleges and CSU, have the potential to substantially improve student success rates and boost transfer. New articulation agreements, such as the Associate Degree for Transfer, have streamlined the pathway from community colleges to four-year colleges, especially CSU. (PPIC will be issuing a report on transfer trends later this year.) And an increased focus on improving student outcomes has led to multiple substantive reforms designed to increase persistence and completion at UC and CSU.

Finding ways to accommodate all eligible students is a pressing challenge, but one that must be met in order to ensure a better future for all Californians. Through thoughtful planning—and yes, additional funding—closing the degree gap is possible. Improving access and completion is a necessary and critical component to ensuring that more low-income, first-generation, and underrepresented students enjoy the benefits of a college degree. The early progress I’ve highlighted here has led to greater access and success for underrepresented students, creating momentum to improve the wellbeing of all Californians.[/vc_column_text][/vc_column][/vc_row]

Pointing Eligible Students to Available CSU Campuses

Large numbers of students are turned away from their campus of choice each year because many California universities receive more freshman and transfer applications than they can admit. At the California State University (CSU), campuses with more applications than they can admit are called “impacted.” All but 2 of the 23 CSU campuses have at least one program of study impacted for the 2020–2021 school year; at 7 campuses every program is impacted.

For CSU, students can easily apply to more than one campus. One application covers all campuses, and students pay a $70 per-campus fee for each school they select (although about half receive fee waivers). First-time freshman applicants and transfer applicants both apply to around 3 CSU campuses on average (3.3 campuses for freshmen, 2.6 for transfers).

About 32,000 eligible freshmen and transfer applicants were denied admission to their preferred CSU campus due to capacity issues in 2018. In 2019, CSU started a program to redirect denied students, offering admission to one of ten campuses with space. In the first year, about 20,000 students were offered admission at an alternate campus, and about 900 enrolled (4.5%), according the CSU Chancellor’s Office. The program was most successful among redirected transfer students, who enrolled at an 8.2% rate compared to freshmen at 1.9%.

We don’t know what happened to the students who did not enroll, as the state has no way of tracking student records between institutions. Some may have ended up at a UC, a private college, or other institution. Freshmen applicants may have decided to attend a community college with plans to transfer later. A statewide longitudinal data system can help the state create better policy around capacity in higher education.

As the CSU redirection program continues and applicants understand the process better, interest in the program—and enrollment rates—may increase. However, a similar long-standing program at the University of California has had similar low rates of enrollment from redirected students. CSU is considering ways to improve program timing and delivery; using their excess capacity to put almost 900 extra students on the road to a bachelor’s degree in the first year of the policy is already an important step.

Governor Newsom Proposes New Investments in Math and Science Teachers

The governor unveiled his proposed 2020-21 budget last week, which includes record-high levels of K-12 and community college funding—a $3.8 billion dollar increase over last year. This includes $900 million for K–12 educator recruitment and development, building on a nearly $150 million investment from last year’s budget.

These new investments are an attempt to address the statewide teacher shortage, which is most acute in the high-need subjects of math and science (special education is also a high-need area). The hope is that these investments will pay dividends in improving the size and the quality of the teaching force in these subjects, which are important for college success and for jobs in the 21st century economy.

Most notably, the proposed funding includes one-time increases to address teacher shortages in key ways:

$350 million in competitive grants for teacher professional development
$193 million to address teacher shortages in high-need subjects
$175 million for residency programs to prepare and retain teachers in high-need subjects
$100 million to fund $20,000 stipends for teachers in high-need subjects at a high-need school for at least four years

Schools across the state face critical teaching shortages in math and science, leading many schools to increase their reliance on less-credentialed and less-experienced educators. Difficulty in staffing these subjects also means that some schools must reduce course offerings, impeding student access to math and science coursework. Indeed, the number of new math and science teaching credentials has not matched demand for such teachers in recent years. In fact, the number of new math credentials has actually fallen over the past two years, constraining schools in both hiring and course offerings.

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These continued shortages have important implications for student opportunities in STEM fields. For example, nearly one-third of high school graduates do not meet current UC and CSU requirements for science coursework, and many schools do not have the number of teachers required to offer three or four years of math and science to all interested students. Proposed increases to science eligibility requirements for UC admission—and for math requirements at CSU—mean that increasing the supply of qualified new math and science teachers is more essential than ever. Continued shortages will make it difficult to both accommodate this increased demand and to address equity gaps in the availability of high-quality math and science coursework.

In this light, the governor’s proposal provides reason for optimism. Increased funding for teacher recruitment and retention should help to encourage young adults to enter teaching and retain those who do. And more money for training and development should help to ensure that schools are able to choose among qualified teachers. Whether this will be enough to truly make a dent in the state’s teacher shortage remains to be seen; it depends crucially on whether these investments will be continued in future years or end up as one-time relics from a strong budget year.

Demand for UC and CSU Enrollment Remains Strong

The number of high school graduates has remained steady for several years, with no expectation of significant increases any time soon. And yet demand for admission to the state’s public universities continues to grow.

A quick look at trends among California’s high school graduates—in particular, their preparation for college—helps explain this paradox. Other sources of enrollment growth, including increases in transfer students and improved retention, also play an important role. Understanding these trends is critical, since annual state funding for the University of California (UC) and the California State University (CSU) depends partly on anticipated enrollment growth.

The good news is that more and more of California’s high school graduates have passed the college preparatory curriculum (known as the “A-G” courses) required by UC and CSU. Over the past five years, the number of high school graduates completing the A-G courses has increased 28%, even as the total number of high school graduates has remained largely unchanged.

By 2017–18 (the most recent data available), almost half (49%) of California’s high school graduates had completed the A-G courses, a remarkable increase from just ten years earlier when only about one-third (34%) did so. As a consequence, the number of high school graduates eligible for UC and CSU has reached record numbers.

Of course, enrollment demand depends on more than just new freshmen. The number of students that transfer from the state’s community colleges also adds to enrollment growth. Over the past five years, that number has also grown (up 25% at UC and 14% at CSU).

Improvements in persistence and completion also lead to greater enrollment, as fewer students drop out. At both UC and CSU, persistence and graduation rates are increasing. For example, at CSU the share of freshmen that graduate within six years has increased from 54% (fall 2008 entering cohort) to 62% (fall 2013 entering cohort).

Accommodating this enrollment growth is good for the state. College graduates are in high demand in the state’s labor market and—on average—earn far higher wages than less educated workers. PPIC has projected that demand for highly educated workers will keep growing as the state’s economy continues to change. Finding ways for California students to attend and graduate from college improves their well-being—and that of the state.

College Applications Are Up and Admission Rates Are Down

Across California, thousands of high school seniors are in the process of completing college applications. If recent trends continue, the number of applications this year should be staggering. Keeping up with demand has been a challenge; most colleges have reduced their admission rates in the face of large increases in student interest.

California colleges and universities garner the most applications in the nation. Of the top 10 most popular schools in the country, eight are in California (six UC campuses and two CSU campuses). UCLA has led the nation in applications every year for at least the past 17 years. In 2017, it became the first college in the country to receive more than 100,000 freshmen applications.

The popularity of UC campuses has surged over the past 10 years, with UC Irvine moving to 3rd in the nation in 2017, up from 7th in 2007. UC Davis moved to 6th from 11th, and UC Santa Cruz jumped to 15th from 32nd.

In the CSU system, Cal Poly San Luis Obispo has moved to 18th from 23rd. And even though other CSU campuses fell in the rankings, they still experienced large increases in applications.

Of course it makes sense that California colleges would lead the nation: the state has more high school graduates than any other and offers a robust system of public universities. And students are applying to more colleges than they did in the past, which contributes to the growth in applications.

But much of the increase is attributable to improvements in college preparation. Between 2007 and 2017, the number of California high school graduates completing the courses required for UC and CSU eligibility increased by almost 60%. In 2007, only about one third of high school graduates completed the required college preparatory courses, but by 2017 almost half had done so, a remarkable improvement in a relatively short time.

Unfortunately, California’s public universities have not been able to accommodate all qualified applicants. In fact, they lead the nation in turning applicants away.

Each of the UC campuses except Merced are unable to admit all of the eligible students who apply. Seven CSU campuses (including Long Beach, San Diego, and San Luis Obispo) are impacted for all undergraduate programs, meaning they cannot admit all qualified applicants; all but one of the other campuses are impacted in certain majors. Both UC and CSU refer qualified applicants to campuses that have more room, but more needs to be done to expand capacity at campuses with high demand.

2020 Primary: Funding Higher Education Facilities

The state legislature recently passed a $15 billion bond measure to fund upgrades to education buildings and facilities. Voters will decide whether to support this bond as part of the March 2020 primary ballot.

For higher education, the measure would provide $6 billion to the state’s three higher education systems, the University of California (UC), the California State University (CSU), and the California Community Colleges (CCC). These funds would be distributed equally ($2 billion each)—even though the systems enroll significantly different numbers of students.

The legislature will approve specific projects as part of the annual budget process. As a condition of making funds available, the bill requires UC and CSU to develop affordable housing plans for their students.

The last time the state proposed and passed a ballot measure supporting higher education was more than a decade ago. Proposition 1D (2006) passed with almost 57% support. The total amount of funding for higher education in that initiative was about half of what is proposed in the current measure ($3.1 billion compared to $6 billion).

During the Great Recession funding for UC, CSU and the community colleges fell. One of the ways the systems responded was to defer maintenance on buildings, foregoing repairs and upgrades as a way to save money in the short run. Our estimate of the cost of addressing the resulting backlog of capital projects tops $30 billion for the UC and CSU systems. The proposed ballot initiative would provide bond authority to cover a little more than 10% of that.

The state’s community colleges are in a slightly different position. Local community college districts can issue their own bonds and make most of their own capital finance decisions. Since passage of Proposition 39 (2000), which made it easier for community colleges to pass bond measures, community college districts have been relatively successful in funding their capital needs. From 2001 to 2016, voters approved $35 billion in borrowing for local community college capital projects. In addition, Proposition 51 (2016) provided community colleges with $2 billion in state bond funding.

We know that bond measures for education generally have the support of voters, and recent PPIC polling suggests that a $15 billion education bond has a slim margin of support. Time will tell whether voters will be persuaded this time around.