Blog Post | July 14, 2023

Highlighting Higher Education Priorities California’s Final FY23-24 Budget

Author: Manny Rodriguez

With the final 2023- 24 state budget signed, a clearer picture has emerged for California’s fiscal situation and how it will impact our postsecondary space. One thing is obvious: the days of historic surpluses and one-time investments for specific projects are behind us. The state is now embarking on a balancing act of protecting and, if possible, building upon the progress of past budgets and the gains made within them. We are grateful that amongst so many competing proposals, the Governor and Legislature continue to invest in programs and policy changes that will make college more affordable, ensure that all students in California can access high-quality higher education opportunities, and build out a useful student data system. To find more details about specific investments, view this table that outlines the final three-party agreement between California Governor Newsom’s Office, the Assembly, and the Senate. Below are some key issues that stood out.

Building a path to debt-free college for current and former foster youth.

We applaud the Governor and Legislature’s focus on building a path to debt-free college through investments in student housing and by building a pathway to debt-free college for foster youth through modifications to the Middle Class Scholarship (MCS) and Student Success Completion Grant (SSCG). If there is one student population that should be prioritized for a pathway to debt-free college, it is the foster youth. Under this MCS policy change, current or former foster youth attending a UC or CSU will be prioritized for an award, and these students will be provided with their full award amount after subtracting other financial aid and the self-help portion. At the California Community College (CCC) system, current or former foster youth will be eligible to receive $5,250 per semester from the SSCG for 12 or more units of study to help cover their unmet need. Currently, MCS only covers about a quarter of all eligible students’ remaining costs, but this policy change will make it so that 100% of foster youth students’ remaining costs are covered.

Prioritizing current or former foster youth can conceptually set a precedent for how MCS and the SSCG can be restructured to meet the total cost of attendance (TCOA) for our lowest income and most vulnerable students first, before moving up the income scale. If paired with Cal Grant Reform in 2024, foster youth would continue to be eligible for their supplemental $5,000 Chafee award while using MCS as a “fill the gap” program to meet their TCOA. While we do have some questions around keeping the full-time unit threshold for CCC students and not buying out the self-help amount, overall, this is a step forward for a key student population. We look forward to accomplishing the promise of Cal Grant Reform in 2024 and further advancing college affordability in the future.

Continued efforts by Western Governor’s University to access California aid.

Last year, Western Governor’s University (WGU) made multiple attempts at accessing California financial aid through AB 2572 (B. Rubio) and then through budget efforts to create a separate funding stream for workforce development programs – both of which were unsuccessful. This year, WGU returned with a new effort to access the Golden State Teacher Grant program.

TICAS and our partners agree that growing and supporting our teacher pipeline is a critical state goal, but it should be done by building upon the good work our in-state institutions are already doing. Research has shown that the efficacy of exclusively online education remains in question and that learning outcomes tend to lag, particularly for BIPOC students, male students, and students with academic challenges. Furthermore, California has limited oversight authority over in-state non-profit institutions and virtually no current authority over non-profit institutions based out-of-state and operating online in California. We appreciate that the Legislature had originally rejected this language, but unfortunately, this did make it into the final budget, albeit with some slightly positive changes. WGU will be required to maintain a stricter cohort default rate than other institutions, oversight will be handled by the Commission on Teacher Credentialing, they will need WASC accreditation, and they’ll be capped at a $10,000 award.

Federal Issues Playing out in California.

Finally, this year’s budget maintains federal issues that will impact California in big ways. The first is the FAFSA Simplification Act and the expected delay in releasing the redesigned FAFSA application until December 2023, instead of the usual October 1 start date. This two-month delay is addressed by California through budget language which extends the state-wide financial aid application deadline – including the California Dream Act Application (CADAA) – from March 2 to April 2 for the 2023-24 application cycle. Our state’s higher education ecosystem will need to ensure that we communicate this to students, families, and local education agencies and encourage students to fill out their financial aid applications as soon as possible before the deadline. This will give higher education institutions the information needed to disseminate financial aid award letters and packages.

The second issue is the continued usage of the three-year cohort default rate (CDR) certified in 2020 as a metric for institutional eligibility for California financial aid programs, such as the Cal Grant program. The CDR measures the percentage of an institution’s federal student loan borrowers who default on their loans after entering repayment. In California, an institution whose CDR exceeds the allowable threshold of 15.5 percent is at risk of losing Cal Grant eligibility if paired with a graduation rate below 30 percent. While this accountability tool has had a decline in meaningfulness due to the COVID-19 student loan payment pause, this continues to be the best available measure. Moving forward, the Legislature should convene a workgroup to explore additional metrics that could build upon or work in tandem with CDR to ensure that schools meet a meaningful minimum standard to continue receiving access to taxpayer-funded aid.

While the 2023-24 budget holds higher education funding steady, the overall fiscal trends are a real retrenchment away from the historic budget surpluses and federal COVID relief funds. Moving forward, we must recall the hard lessons we’ve learned over decades of economic volatility; cutting or slowing down higher education funding is counterproductive to workforce development and economic vitality. We look forward to working alongside our advocacy partners and the Governor, the Assembly, and the Senate to prioritize access and affordability for our most vulnerable students during these difficult fiscal times.