Los Angeles, California – A last-minute bill would require Cal State to offer non-faculty staff raises, which would cost the university over $900 million over ten years – money the system claims it does not have. If it does not receive sufficient state funding, Cal State may reduce programs and hike tuition.
A bill that sailed through the Legislature at the eleventh hour could leave Cal State University on the hook for roughly $900 million in extra costs over the next decade, forcing it to hike tuition for only the second time in more than a decade.
This “may” presume that lawmakers do not allocate any new university spending increases. Governor Gavin Newsom has suggested providing the system with an additional $1 billion in state funding until the spring of 2027, although there is no assurance that this will occur. The additional costs would be guaranteed by this legislation.
Now, Newsom faces a choice: either sign Senate Bill 410, which would raise the wages of Cal State’s relatively underpaid non-academic staff and ensure the system receives its promised infusion of state cash, or veto it, angering 30,000 unionized employees in a state where labor groups wield considerable political influence.
Adding to the interest is the fact that Democratic legislators passed the bill while knowing that Cal State would likely have to reduce programs or increase tuition without more state financing.
“Yes, we don’t want to see students suffer, but what message are we giving to students by allowing them to pay for their school on the backs of these workers?” asked Connie Leyva, the bill’s author and an outgoing Senate Democrat from Chino. “This is not a valuable life lesson.”
Learn more about legislators mentioned in this story
State Senate, District 20 (Chino)
How she voted 2019-2020
District 20 Demographics
Sen. Connie Leyva has taken at least
from the Labor
sector since she was elected to the legislature. That represents
of her total campaign contributions.
State Assembly, District 45 (Van Nuys)
How he voted 2019-2020
District 45 Demographics
Since his election to the legislature, Representative Jesse Gabriel has received a minimum of $765,000. This equals twenty percent of his overall campaign contributions.
Cal State opposes the bill, stating that the system requires additional funding first. Cal State’s interim chancellor, Jolene Koester, stated at last week’s Board of Trustees meeting that the system would have to eliminate 6,300 classes, impacting 19,000 students, to fund the first year of the wage hikes.
She stated at the time, “We are not opposed to paying employees what they deserve.” We oppose the directive to extract it from existing funds.
Newsom has until September 30 to decide the fate of the bill.
The bill’s specifics
According to a research financed by MPs in 2022, the maintenance, office, and groundskeeping employees who keep the system’s facilities and operations running earn 12% less on average than their counterparts at colleges and in the general workforce.
This plan, which is supported by higher education staff unions, would follow the study’s findings and create a series of merit-based raises over 15 years. Employees would receive 5% raises annually for the first five years, then every two years, and a final 5% boost after fifteen years of service.
Leyva informed lawmakers that Cal State is the only state department in California without salary steps. These measures would take effect at the beginning of 2023; Leyva rejected a proposal by another politician to extend the implementation date by one year.
Unlike most proposals that proceed through the Legislature over a period of months, Leyva’s pay raise proposal was introduced just two weeks before the legislative deadline.
At last week’s meeting, Cal State officials informed the Board of Trustees that the bill, if passed, would cost $287 million initially and $878 million after 10 years.
After two years of no raises, the largest staff members received a 7% raise in June, partially paid for by diverting funds from student graduation projects, however this falls short of the staff study’s recommendations.
Andrew Heller, a research analyst with the 15,000-member California State University Employees Union, stated in a July interview that it is difficult to assess the shortfall since “it’s not as if everyone is 12% behind” the market rate. The April analysis revealed that the Cal State system paid some employee groups 20% less than the market median wage, while other staff groups were compensated similarly to other workers.
Can California State University afford this?
The financial agreement between Newsom and Cal State guarantees yearly 5% increases in state support through 2026-27, totaling over $1 billion in additional state support. After five years, this amount will be more than what Leyva’s bill will cost Cal State.
According to one metric, the system should be able to absorb the expenditures of the bill and still have cash available for other obligations, such as increasing faculty wages. In addition to the $287 in initial fees, the measure would cost the system around $50 million yearly, according to Ryan Storm, deputy vice chancellor for budget at Cal State. The system is drafting a comparable report on underpaid academics, according to Cal State trustee Jack McGory.
However, a promise is not a guarantee, Storm stated in an interview. “While the governor has pledged to offer additional funds in excess of a billion dollars, there is no assurance that he will do so. However, if this bill passes, costs would be guaranteed.”
If Newsom signs the staff salary measure, the Cal State system will be required to pay increased wages to its employees using existing money. It is a set expense regardless of the budgetary situation of the system or the state’s economy.
The Legislative Analyst’s Office wrote last year that California’s prior higher education compacts fell short of their objectives. Rarely have former governors been able to maintain their agreements throughout time, according to the analyst’s office report. In many instances, changing economic and fiscal situations inside a state have prompted governors to suspend their compacts.
Indeed, fears of a recession are growing in Sacramento and across the nation. A sluggish economy would result in less revenue for the state’s coffers and potentially reduced funding for Cal State. Cal State faced a $299 million loss just a few months after Newsom said it would receive a $199 million increase – a promise of 5% growth that never materialized.
The system’s educational purpose is funded by $4.6 billion in state aid and $3.1 billion in tuition. The allocation of state funds to the institution must be approved by both the legislature and the governor.
Legislative officials warned in an August bill study that “it is conceivable that (Cal State) could increase tuition” to cover the program’s expenditures. If this were to occur, the majority of low-income students would not pay more since the state’s tuition-free Cal Grant would automatically cover the increase. Tuition would increase for middle-class students, but a new state subsidy would likely cushion the shock and in some cases pay the difference.
Before voting to approve the staff compensation bill at a committee hearing last month, Democratic Assemblymember Jesse Gabriel of Van Nuys stated that lawmakers “have chronically underpaid California’s public higher education.”
While state funding for Cal State has increased, the proportion of state general fund dollars allocated to higher education has decreased. In the late 1970s, approximately 18% of the state’s general fund was allocated to higher education; in recent years, this proportion has decreased to approximately 10%.
“We’ve compelled the institution to make difficult budget-balancing decisions on the backs of its employees, which is just unacceptable,” Gabriel continued.
The Board of Trustees of Cal State believes Gabriel can inspire his peers to raise more funds for the university system. The trustees decided last week to accept a budget request for $530 million in new ongoing financing, which is significantly more than the $227 million Newsom will ask lawmakers to grant next year.
Regardless of the budgetary outcome, the 500,000 students at Cal State are begging the administration not to forget about them.
The Cal State Student Association wrote to senators, “Raising tuition or eliminating key student support services is an unacceptable method to fund” Leyva’s legislation. The students requested that Cal State, unions, and legislators “find a funding source that does no harm.”