Assembly Budget Subcommittee No. 3 on Education Finance

Good morning everybody. Welcome to our Assembly Budget Subcommitee number three on education finance. I am chair David Alvarez and we will get started with today's hearing on the UC and CSU budget. We will be discussing the main budget issues for both the University of California and the California California State University system. Obviously, it's an important discussion as the state faces, as we all know, some major budget deficit issues that we need to deal with.

You probably have all heard by now, the Legislature is beginning to take some steps towards deferring funding for both UC and CSU from the 24-25 fiscal year to the 2526 year old will be taken believe in the Assembly later this week. And while it's difficult, unfortunately it is also necessary. We may also need to look further at both the segments budgets depending on how the revenues look in a few weeks in May.

So today we will talk about the difficult decisions we are faced with and my hope is that the Subcommitee can review both segments core budgets, previous state appropriations and other areas in which state state funds are being used. I hope to better understand both segments reserves. We have a whole item set aside for that.

And on how campuses and system offices are thinking about this economic downturn, we'll need to ask how state dollars are being used to support these priorities, including access, affordability and supporting student success. As we discussed from day one in this Committee, are there efficiencies, inefficiencies or other ways to cut costs or increase revenue? We are absolutely looking for creative ideas and thinking outside the box. We know that segments face multiple cost pressures such as supporting appropriate compensation for employees, which is important.

But we face a few years of projected bad budgets. So we must talk about how these systems will weather this situation, at least for the next few years.

So as we've been doing, I don't see a lot of Members of the public here today, but we'll give people who may wish to speak first prior to the agenda finishing or completing today, instead of going at the end, allowing anybody to speak now, maybe a little brief 30 seconds possible if anybody like to speak on today's agenda before we hear today's agenda, welcome to come forward. If not, I don't see anybody jumping up. So we will start with the items on the agenda.

So first we will have the University of California. We'll be discussing four separate issues, core operations and deferral proposal, UC Merced medical school, past appropriations that have been made, and the office of the President's budget. So we will kick it off with the Department of Finance and then we'll hear from the LAO and the UCOP. Welcome and thank you.

Good morning chair Alvarez and Assembly Member Fong Gabriela Chavez with the Department of Finance. The governance budget reflects the third year of the multi year compact with the University of California and despite the state's current fiscal condition, the Administration remains committed to the shared goals of increasing access to the University of California and improving student success.

To address the projected budget shortfall, the governance budget proposes a one time deferral for the plan 227.8 million ongoing General funding increase in 2024 to 25 as part of the multi year compact investment and the planned investment of 31 million ongoing General Fund in 2024-25 to offset the revenue reduction associated with the replacement of 902 non resident undergraduate students.

Ongoing General Fund support for the UC will remain approximately the 2023-24 baseline levels while enabling the University of California to use interim financing structures, other internal borrowing or cash reserves to support plan operating expenditures in 2024 to 25. This approach will enable the UC to continue its effort to meet the compact goals to expand student access, equity and affordability and to create pathways to high demand career opportunities. The Administration will continue to monitor the UC's actions towards meeting the compact goals. Happy to answer any questions you may have.

Thank you. We'll hear from the Legislative Analyst Office.

Thank you Chair Alvarez, Member Fong Ian Klein with the LAO, you've heard Department of Finance explain what the deferrals are and we do have serious concerns with these deferrals. We've written about those concerns in our reports and those are also included in your agenda. These concerns include that paying bills late is generally considered poor fiscal practice and the deferrals notably worsen the state's projected budget deficit in 25-26.

This approach is risky as neither UC nor the state can be sure that the associated funding will be provided in 25-26. Furthermore, increasing spending when facing multi year budget deficits generally is considered poor fiscal practice, making balancing the budget the next year that much more difficult. Our recommendation to hold funding flat is less disruptive programmatically than expanding funding in 24-25 only to potentially have to cut it in 25-26.

Were the state's budget condition to improve at that time, the state could Fund higher base increases that it could afford. Finally, UC will receive additional revenue in 24-25 from increases in their tuition charges. It can use these non state funds to support some of their spending increases. In this regard, you see as advantaged relative to those state agencies that won't have access to non state funding augmentations in 24-25. We understand that you are considering the deferrals in your early action package. So I will close here, but I am happy to answer any remaining questions that you have on that subject.

Thank you, UC Office of the President.

Thank you Chair Alvarez and Assemblymember Fong. I'm Seija Virtanen for the University of California. Thank you for having me here today. The University of California is a multifaceted organization with operations ranging from traditional campus instruction to hospitals to nuclear laboratories to student housing operations. The total budget in the current year of the University is estimated at $50 billion. Today, I will focus on the University's core operations, which are to traditional campus instruction and student services that most people people are familiar with.

The University's core funds pay for campus operations. These core funds include state General Fund tuition and student services fee, non resident supplemental tuition, and a few smaller revenue streams such as patent revenue. Core funds provide permanent support for the core mission activities of the University as well as the administrative and support services needed to perform them. Core funds total 10.4 billion in 2023 to 24 and represent about 21% of the University's total budget.

In November of 2023, the UC Board of Regents approved a budget plan for the 2024 to 25th year that estimated the campus operations cost would increase by $650 million. About 500 million of this amount is for sustaining core operations, almost all of it for salaries and benefits of existing campus employees. The remainder was for costs related to increased enrollment and financial aid. The region's budget plan anticipated that new revenues from several core funding sources would help cover a portion of these cost increases.

The third year of the compact funding, a 5% or 227.8 million base budget increase would have helped cover a portion of these expenditures. Modest adjustments to tuition fees and non resident supplemental tuition revenues in 2024 to 25 will cover just over $200 million of the anticipated costs. As your agenda notes, the University intends to manage our financial assets and save on procurement costs to cover approximately $100 million in new core campus expenditures.

The early action budget proposed by the Legislature defers the 5% base budget increase and non resident replacement funding for the University from 2024-25 to 2025-26. This would hold the University's state General Fund operating budget flat from the current year to the budget year, as was proposed by the Governor. The University is grateful that these funds would be deferred rather than eliminated.

The compact sets expectations for the University to increase enrollment to replace nonresident students with California undergraduates at our most in demand campuses to reduce gaps in graduation rates, to increase financial aid available to students and increase collaboration with other public higher education segments. The University intends to continue this work despite the funding deferral. This work, especially in increasing California undergraduate enrollment, places real increased costs on our campuses.

While the University is still determining the exact steps that will be taken to address the new cost growth in the budget year, the use of reserves and borrowing from the University's own funds are being considered. Campuses are also looking at ways to contain costs. The University's core fund's budget is people oriented. 69% of the campus expenditures are salaries and benefits.

The increase in these categories in some cases is mandatory as they are determined by represented employee contracts or necessary for the University to excel, such as faculty merit increases. Containing employee costs can mean implementing strategies such as hiring freezes or chills or furloughs. The remaining core Fund expenditures include nearly 15% for student financial aid, which reflects the University's commitment to making education affordable.

We have no intention to reduce financial aid bond debt financing, which cannot be reduced by the University, currently takes up about 7% of the core operating budget, with the remaining 9% for equipment and utilities.

I want to stress that the University of California campuses do not have sufficient unallocated reserves to cover the known core operating budget cost growth for 2024 to 25 since the campus ongoing costs will increase in the budget year, the University is requesting that the Legislature approve the one time backfill of 258 million on July 1 of 2025 as proposed by the Governor.

The campus cost will increase in 2024 to 25 partially due to increased enrollment and if the backfill funding is not received, campuses would have to spend the 2025-26 funding to catch up on the budget year expenditures. This would mean that campuses would be seriously challenged to keep hiring talented faculty, growing student services, and sustaining the educational investments necessary to deliver high quality experience that both meet the enrollment growth demands for 2025 to 26 and continue to serve existing UC students across the system.

It would also mean that in order to repay any loans taken, campuses would have to further reduce expenditures in 202526 even if they receive a base budget adjustment during that year. This is why we are requesting the one time backfill to make campus budgets. Preserving funding is essential so that the University can continue to expand access, improve our offerings and serve the State of California well. As part of the University campus, the buildings and infrastructure are important that make up those campuses.

The University of California has over $12 billion in identified seismic safety repairs that need to be done and over $7 billion in deferred maintenance for which there currently is no funding source identified. Additionally, campuses have identified $35 billion in classrooms, student services and General campus infrastructure projects they would like to build if there was available funding. The Governor has proposed a General obligation bond for educational facilities and the University would like to be included in that bond for $2 billion. Thank you for your time today. And I'm available for questions.

Thank you very much. Appreciate all three of you. I'll just kick it off with some questions. My questions are kind of in two themes. One is on this conversation about the deferrals and what it means for the operations. I think towards the end of your comments, UC officer, the President really I think clarified, but I just want to be very clear on the record what this means. The second sort of theme will be on the reserves and trying to understand that.

And it goes also for the CSU system. You have two different ways of, and it's different than what the state does and it's different than what local government does in terms of how you, the reserves policies. And so just trying to get a better understanding on that. Let's start just with the governor's proposed budget that now has taken a legislative form, if you will, for potential action later this week. The governor's proposal is on deferring funding.

And I heard, I heard mentioned that if there is a deferral, that the expectation is that the deferral gets paid on July 1 of 2025 in order to avoid further decisions. And I don't think you were too clear on what those were, but can you just clarify that on the record, just so we understand? You're essentially taking on all of the responsibilities of as if you were receiving this augmentation for next year. Year, but you're not.

And so we'll talk about how you're going to pay for that in a second. But can you just clarify that that's what the UC is doing? We're not cutting back on the number of students. We're not changing programmatically anything.

At the moment, the University is planning on increasing undergraduate enrollment by 1% as required by the compact, and replacing 902 non resident students with resident students at Berkeley, La and San Diego.

So the 1% just to, let's try to break it down. The 1% growth is the, what you in the compact refer to. That's about roughly $250 million is the cost.

The cost of the enrollment growth is closer to, I think it's about $30 million. Hang on a second. But. So it's not that full 250 most. The rest of that cost is for the current employee salaries and benefits so it is this current, the cost growth to the current operations of the University and.

But this is not a one time augmentation. This becomes base budget.

That is correct. So the University is taking on new cost during the 24-25 year that we're not receiving new money for. We have to cover that from our internal resources in some way. What we would like to do is get those internal resources paid back. For example, if we take on a loan, we would like the one time backfill so we could pay off the loan or replenish our reserves.

Or if we end up having to let go, if we end up having to have a hiring freeze and thus lose actual worker FTE in order to have the funds to hire new faculty to teach those new students, we would like the backfill so we can rehire people.

So if there's been two years of 250 million roughly in the compact augmentation, you are now receiving a total of $500 million more than you were, I guess, three years ago. But only the growth of students only cost at this point, 60 million. What was the other additional growth of the roughly 200, or, sorry, $440 million that has been grown in terms of how much the state has contributed to the UC?

The non resident replacement growth for those two years was about 60 million, but we actually grew more undergraduate, non resident, undergraduate California students, pardon me, about 7300 of them during those two years, which cost an additional amount of money. The remainder was for sustaining core operations. We provided our faculty with a salary increase. We also had contractually committed or union contracts that had negotiated increases, and we provided our non represented staff salary increases during those two years.

That ended up taking up the remainder of those funds.

And I was going to get to the non resident. That to me is like a separate item. That is the, what I thought, $31 million for the 900 students per year. I'm just talking about the compact figure, which was the $250 million figure.

Please. I just want to clarify for the record the amount on the compact, the 240.8. That's what is estimated for 2025. But in 2022 was 200.5, 2023 was 215.6, and 2024 is 227.8. So it's a little less.

Thank you. So we're really talking about 415 million over the two years, not 500. But still, I'm trying to do the rough math and completely understand. There's been cost increases in everything and there's negotiations recently and further back on employee compensation, but I'm trying to break that down and maybe, maybe there's someone at the table who would like to add something to the conversation?

So, Jennifer Pacella LAO. So, Ian's colleague, I was actually just here in case you did need further clarification, because I think the basics is ever since the compact started, the compact has proffered 5% annual increases. Finance just shared those allocations with you. Within those amounts, under the compact, enrollment, 1% enrollment growth was to be covered. Now, the Legislature has taken a somewhat different approach.

So in year one of the compact, it paid for enrollment on top of that 5% base increase, and in year two, it paid for most of the additional enrollment growth on top of the compact. There was a little bit that was, there was the right way to say it is. In year two, the Legislature funded more than 1% growth. The 1% growth was still funded within the compact, if you want to call it that.

But then the state funded notably more enrollment growth and paid for it separately this year without the resources. I think the idea is that the enrollment growth would only be 1% and would come from within that default amount. If that's helpful.

That is helpful. It's an important distinction. So the growth was funded separately from this commitment.

And if I may chair, the compact includes several goals, which is why it provides the 5%. One of those is increasing access, which is what we're discussing, the 1% enrollment group. But there's also other elements like student success, equity, reducing equity gaps, improve the affordability, intersegmental collaboration so that we have more students transferring, working with community colleges, we have workforce preparedness, access to online courses, and of course, a non resident part. So it's a lot of different goals, all connected within that funding.

Thank you for that further clarification. Who is measuring the outcome of all of those?

So the University of California is reporting annually to the Legislature. We also have a dashboard on the UCOP website that has all of these metrics, as well as discussion of the progress that we're making towards them. The chancellors are meeting every other month to discuss these goals and how their campuses are addressing them and what kind of progress they're making towards them.

And appreciate the history, because I wasn't here when the compact was agreed upon, or at least introduced by the Governor and the Legislature agreed for the first two years. Were there specific metrics assigned, or was it just generally increase in those five? I think it was five program goals. Was there an, some number that was expected?

We do have some metrics. I can get back to you in the specifics, unless the LAO want to provide them.

Has the LAO had a chance to. This annual report is important. I'm glad somebody thought of doing that, at least with this program. And have you done any reports on that?

Well, this might have been what UC was about to share. They do prepare that report. We do read it each year. Year. There are many, there's those five basic performance domains like collaboration, access, workforce, schools. Within each there are several performance data that, pieces of data that they're providing. Some they're meetings, some they're not. I think in the totality, the Administration has concluded they're making progress, which is why they continue to Fund the compact.

But it's not as specific as, and I'm sorry, I don't have the numbers like they've met half of them or a quarter of them. There are some workforce goals that I think maybe they're falling a bit short on and the others they're probably doing a little bit better on, as I recall.

Well, it certainly gives me homework to go and review the. When was the last report put out?

Last November.

November. Okay. Okay. I'll definitely be taking a look at that. And certainly in context of what our decision is further for the budget, I think I may be revisiting what that is and making sure that we are having that progress and that we're measuring it appropriately. So why don't we stop with that for right now? Anyway, in terms of reserves, this one I did spend some time trying to understand and it was a little bit more to say, confusing to me.

Anyway, there are some reserves from the UC's perspective, that are held, I guess, by campuses. And then I'd like to hear about what is held by the office of the President or if it's all held in the office of the President for the campuses. And then there's committed, as you saw in the report, there's committed reserves and then there's uncommitted reserves. And it varies all sorts of levels, campus to campus.

And I'm just trying to understand what the direction or policy or best practices that are being recommended either by campus or just share with me more about the approach from UC on reserves.

Absolutely, sir. And if I may, on the last item, just for the record, that we are expecting the compact enrollment growth to cost the campuses 55.5 million in 2024 to 25, plus the additional 31 million from the non resident replacement. That's the enrollment cost without the financial aid we're expecting next year. Then moving on to the reserves. The University of California implemented back in 2013 a funding system called funding by where the campuses get to keep the revenue that they generate.

So the tuition dollars and the non resident supplemental tuition, the patent revenue, those all stay with the campus that generates that revenue. If the campus is not spending all of that money, they are allowed to put it in reserves for future uses. Campuses have various guidelines and policies on their reserves. They are not totally standard and consistent across the system. We did examine if there was a higher education institution accepted Reserve policy in the nation. There is not.

Reserves are handled very differently from one institution to the next. In General, student fees ought to have a much lower Reserve than other kinds of revenues. For example, student fees should not have a Reserve greater than 10%. Other revenues, like dormitories, can have a 25% Reserve because they, you know, we're not. We're planning for future buildings as part of those reserves.

The reserves are then set aside and determined by the campus, but those revenues are placed into a Fund and invested on behalf of the campuses by UCOP. We have a Chief Investment Officer who invest money in a Fund we call stip. It's a temporary account that holds a lot of short term funds that campuses may need in the next 12 months.

They get placed in there, invested by a professional staff, and those investment returns then are returned to the campus to help them supplement their budgets, which is what I referred to earlier when I said we have some savings from procurement. Procurement and investment returns that will cover about $100 million of campus expenditures next year. That's coming from all those reserves being invested is partly where that's coming from. I do want to draw a distinction between the Reserve investing and endowments.

Endowments have to be returned back to that endowment Fund and the purpose set by the endowment donor. 99% of UC endowments have a legal purpose that is set by the donor and we cannot shift it away. But they can sometimes help supplement budgets if the donor gave it for General operations or some other purpose. UCOP has a Reserve policy. The regents adopted one back in 2017, and the policy was fully implemented by 2018.

UCOP was audited and found that there were Fund balances that probably should have been returned to campuses. Those were returned to campuses at that time as part of the State Auditor's requirement. So the reserves at UCOP right now are either for specific programs and there's a $15 million Reserve for UCOP purposes.

That $15 million Reserve, as I'll talk in my UCOP presentation later today, is not sufficient to cover the campus expenditures, but it might be enough to cover UCOP cost increases for 24-25 so that we don't end up placing an additional burden on the campuses.

Okay, let me ask you about, you know, the fluid budget situation and your expectations. Expectation to receive the augmentation for in fiscal year 2526 July 1, because that's an important thing for us to note if our situation is that we cannot afford to do that. And there are many who would argue that that is, in fact, where we stand today, and many would say that that's where we will be. Um, what. What is UC's plan at that point? How would you handle the situation if you were not to receive the 227,000,000?

That is being deferred.

If we were not to get the deferred base budget funding, we would have to implement double the cuts because right now we are planning on using other funding sources to grow our campuses in 24-25. If we then didn't get the money in 25-26 we would have to reduce expenditures by that amount. But then we also are anticipating new cost increases for 25-26 driven both by our represented employee contracts. The desire to take on even more enrollment.

We'd have to have a question mark, big question mark. With the Legislature on could we take on more enrollment in 25-26? If there's no money, how would we take care of those students? But we would have to then reduce campus budgets below where they are in 2023.

I think I'd be interested as a follow up on, because that's certainly been a theme from this Committee on the impacts to student enrollment growth. Given that, and nothing occurs in the vacuum, there's expenses completely. Get that right. So the funding on just the growth is significant and it's meaningful. But understand that there's additional costs that are associated with growth. So let's just. I want to make sure that that's clear.

But I think given the situation that we're in, I think there's a desire for growth and opportunity for more students, and so understanding what that is on a long term basis as a standalone item would be important. Now, we just heard from the Lao that we do Fund that and we are continuing to Fund that in this year's budget. Is that the case? The 1%?

The 1% is part of the compact funding that's proposed to be deferred as part of the governor's package.

So, yeah, so maybe I'm still confused because I thought I heard that the compact funding the, what was 200 in year one, grown to 227 now was separate than separate to the growth. Is it not any clear clarity on.

This within the... Gabriella Chavez Department of Finance. Within the compact, we do include that 1% growth in that amount. I think the Lau was referring to previous budget acts where there was investment for just enrollment. But to rate the rate, the compact provides funding for a 5% growth in their funding, which includes a 1% enrollment growth each year during the duration of the compact.

So if I can make it clear as much. Back two years ago, in the Budget Act of 2022, the Legislature funded about 4700 students over two years. In addition to that growth, the governor's compact required and another 1% under California undergraduate growth. So there were two different pools of money, one coming out of the 5%, the other on top of that.

Okay, we will sort out the exact numbers on that, but I think you get the point. The point is supporting how do we create more opportunities for students, specifically California students? So it'll take me pride. My last question, and I'll turn it over to Mister Fong, who's here. When we spoke about enrollment a few weeks back now, we talked about the non resident issue.

Is the UC at this point, considering an increase in nonresident tuition as a way to generate more revenue to help cover the costs of increased California students? That was one of the questions I proposed, or maybe one of the ideas I proposed at the hearing a couple weeks ago.

The University of California has what we call a tuition stability plan, and that sets tuition, student services fee, and non resident supplemental tuition flat for all current students, and then raises it for that incoming class. The incoming class raises are set at 5% or less. The tuition increase will be 0.5% plus inflation, but with a cap at 5%. And the non resident students who are already here, their tuition is now set. So we have promised them it will not increase.

We would only be able to increase that incoming cohort, but because we are already so close to the coming school year, we don't know if we can even increase it for 2024-25. We have previously lost two court cases on raising fees too early, too close to the start of the school year. These were the Kashmiri and Laquetta lawsuits, ended up costing us many, many millions. I can send the Committee consultant information of on them.

But the point of those lawsuits was that the University had told students they would have one fee, and then when school year started, it was increased, and the court found that action not something the University could do. The regents can always examine, re examine the tuition stability plan, but at this point, we think that they would not be able to do so until 25-26.

Okay, definitely want to hear back on feedback from the regions, specifically as it relates to the three campuses that are in question. Right. Those are the highest in demand from not just California students, but from students out of the state. And so it's my understanding that the policy at the regents is to do the same tuition rates, no matter which campus students are at.

Just as a courtesy, one of the requests that we'll make is, can you look at that policy and look at changing that policy for the three campuses exclusively, who are dealing with the situation, who are impacted by the. The ask being made, and that UC is participating in, which is to increase Californians and reducing the out of state students.

And so I would hope that as you communicate back to the President, let them know that that is something that we're interested in hearing more about how to Institute a plan to allow that to happen going forward. I'll pause there with my questions and turn it over to Mister Fong.

Thank you so much, Mister chair, and thank you so much for the presentation and to follow up on the Chairman's questioning on the non resident supplement of tuition. I also wanted to ask that question. So just to amplify that, I think when we look at our most impacted campuses, UCLA, Berkeley and San Diego would really encourage the regents to look at the policy on the non resident supplemental tuition to help generate more revenue. So that's something that I want to amplify those efforts.

If you can relay that. Thank you. Secondly, on the reserves as well, when I was looking at the chart on page eight, there's a wide variation in terms of the reserves. We have UC Riverside, with close to six months, and San Diego with probably looks like a few days of reserves or much less than one month. So there's a wide discrepancy in terms of the reserves on each of the campuses. And so this question is to the LAOor UC or both.

Are you concerned about how so? Are you concerned about how Low some of the campus reserves are? And secondly, should there be a system wide policy on reserves?

Yeah, sure. I'll go first. So, as you highlighted, as of June 2023, UC reported that they had a total core Reserve amount of about 1.4 billion, of which only 238 million of that is uncommitted or sort of discretionary Reserve funding. This equates to roughly nine days of operating expenses at UC. So it's a relatively Low amount. This places UC well below the governor's finance officer's recommendation to have uncommitted reserves that total at least two months of operating expenditures. So this is a relatively low amount.

Additionally, if UC were to borrow from their short term investment program, they would be accruing interest costs, which estimate to be roughly about $7.3 million, on top of the borrowing from the unrestricted Reserve amount that they are potentially going to be doing to cover these costs for 24-25.

I think I would just add that both CSU, as I think you've heard and will perhaps hear on the community colleges, they do either have CSU as system wide policy or the chancellor's office system wide guidance. And I think the chancellor's office guidance used to only be 5%, and they've recently I think changed it to align with the Governor of finance officer's minimum of two months. So it is generally good practice to set these at least minimum Reserve requirements at something like two months.

Two months. Thank you.

I do think that it would be good for the system to have guidance for the campuses on their Reserve policies and I will take that guidance back and we will consider developing a policy.

Thank you so much. We would love to hear the report back on that. I think as we just heard from earlier, consistent policy at the CSU to really make sure that we're looking at two months and on this graph here, I think only Santa Cruz, Santa Barbara and Riverside at least had the two months reserved with a number of campuses over a month and then a few campuses lower than a month.

So I think anything we do to bolster, to really look at that system wide policy would be critical going forward. And then secondly, in terms of operational efficiencies, we heard from our chair about thinking outside the box, looking at different areas. Are there any suggestions or has the UC identified any additional operational efficiencies going forward?

The campuses are looking at operational efficiencies right now to see if they can reduce costs for this coming year. Some of the actions that UCOP has taken system wide over the last several years have been our procurement efficiencies, which we think are saving the campuses about $200 million annually. That effort has been going on for multiple years now.

We have also become self insured, so we now insure our own buildings and do a lot of the medical malpractice insurance in house, which is currently saving us money. We also try to save on our employee insurance plans by offering our medical centers and our clinics as a less expensive way for our employees to receive care, and that helps us keep some of those plan costs down.

Thank you so much. And we look forward to future conversations about the system wide policy on reserves and also looking at the supplemental tuition for non residents. So thank you, Mister chair.

Thank you. Appreciate you sharing about the efficiencies and consolidation. I think it makes total sense from a system wide coming from local government, but a large local government, that was one of the things that was frustrating even within departments. In your case, you've got schools within the system, but they weren't working together to do simple things like procurement. And so it's good to hear. I'd be interested in hearing about how that could be maybe furthered with our other large system, the CSU system.

Maybe there's some memorandum of agreement that could happen at that scale I know our systems work well, certainly with students, but maybe as systems, maybe not so much. So would be interested in any other more ideas? This is the year of thinking about ways to do things a little bit differently. So any thoughts you've got on that going forward, we love to hear as well. So any, any other last comments before we move on? Okay, thank you very much on that one.

We will move on to the next conversation, which is the UC Merced medical school discuss the Governor's proposal of 14.5 million of ongoing General Fund to support debt service for the medical education building at UC Merced.

Good morning chair and Members Gabriela Chavez with the Department of Finance. Consistent with the 2019 Budget act, the Governor's Budget includes an increase of 14.5 million ongoing General Fund to support a medical school project at UC Merced beginning in 2024 to 25. Happy to answer any questions you may have.

Thank you.

Ian Klein with the Lao we recommend pausing the funding for the medical school project at UC Merced. As you heard from Department of Finance, the 2019 Budget act authorized UC to pursue a medical school project at or near the Merced campus and included the legislative intent language to support the debt service for that facility, which comes out to the 14.5 million beginning in 24-25.

UC has indicated that it has not yet drawn commercial paper nor issued a revenue bond for the project, which means that the project remains in its early phases in response to the state's projected budget deficits. We were looking for budget options that would avoid immediate negative impacts on student, students and staff. The timeline for the development of a UC Merced medical school is relatively long, with UC Merced indicating that it will need at least another 10 years before having the new medical school receive accreditation. Given these points, this project could be paused without immediate negative impacts. Thank you very much. I'm happy to answer additional questions.

Thank you.

Thank you chair Alvarez and Mister Fong, I'm Seija Vertanen for the University of California. California's Central Valley is struggling to provide adequate health care to its residents. Recognizing the need for additional doctors in the Central Valley, the Budget Act of 2015 to 16, the Legislature directed UC to redirect 1 million from existing funds to cover costs associated with the process to create a medical school at Merced. In the Budget Act of 2019, the Legislature authorized UC to construct the medical education building at UC Merced.

The campus is about to break ground on this important building that will serve as the future home of the medical school at UC Merced. The building will house medical education and allied healthcare programs and their associated instructional facilities. Two allied health departments. These are psychological sciences and public health. It will house a health research science Institute and General assignment classrooms to support increased student enrollment. It will allow the campus to continue to expand overall enrollment by housing growing departments.

Ability to provide additional space to in demand majors is crucial to UC Merced to continue to grow enrollment. The proposed building is more expensive than many of these projects the Subcommitee has previously reviewed for several reasons. First, the building contains unique features not found in most classroom buildings, such as simulation labs and freezers for storing cadavers.

Second, the San Joaquin Valley is expensive to construct in, as few companies are capable of constructing a multi story concrete building with complicated features and are willing to take on the project. The relatively remote location drives up the cost of this project. Third, the building will be built to be energy efficient. And lastly, fourth, when compared to the most recent UC Riverside building, the UC Merced building has more than doubled the amount of assignable square footage.

The UC Riverside School of Medicine has two separate buildings because the first one, constructed prior to the school opening, turned out to be too small for their needs. The Merced project intends to bypass this problem and build a single building large enough to house the future UC Merced School of Medicine. The University requests that you allow this building to continue to construction because it is necessary for the development of a medical education at UC Merced.

UC Merced cannot receive accreditation for a medical school without the proper instructional facilities. The cohorts of students who will receive their medical education at Merced have been selected based on the student's interest in working with underserved populations. The Legislature has repeatedly endorsed and funded medical education at UC Merced, and stopping now would not be cost effective in the long run. Construction inflation it's much higher than national inflation.

Construction inflation in California was 9.6% in February of 2004, according to the Department of General Services, which tracks the California Construction Index. For these reasons, the University requests that the Merced medical Education building will be allowed to continue. I'm available for questions on this project as well as the UC Riverside School of Medicine.

Thank you. You know, I've had a chance to learn more about the valley and certainly the value of medical programs, and I'm glad the state is thinking about this region of the state and assisting in providing opportunities like this. So I'm just trying to understand where we actually are at with the project itself. So in November, the regents approved the project from moving forward. In which way did they select a contractor? What was the action that was taken in November by the regents, the UC.

Regents authorized the, they approved the design and they authorized the campus to go out for bid, and they say that the regents approved the spending of these funds, so they approved the total budget. And once the construction company bid has been awarded, we are expecting this will start construction sometime between now and early May. So we're, like, literally within two weeks away from starting construction on this project.

So it's already been awarded?

I believe it's about to be awarded or has been awarded.

Okay. This project's usually, the reason I'm asking is there's questions that are legitimate being asked about timing and usually, at least government contracts. You might select a bidder, you negotiate. That takes some time, then you award. And project doesn't start like that quickly, within a couple weeks. So I'm trying to understand where we are in the phase to see if the Laos can concerns about. We haven't even initiated certain parts of a process, including drawn any commercial paper loaning instrument for this. Has that happened already?

That will happen once the ground has been broken. We start issuing commercial paper, and the bonds will be issued later in the process. So far, the University has spent about $20 million on the preliminary plans and working drawings. The RFP for the construction went out in January, so we are very far along on the.

So do you have a pre approved commercial paper program, or was that approved as part of the November Regents board meeting?

When the regents approve the project, they are authorizing UCOP to sell the commercial paper at the appropriate time. UCOP has a small team of people who handle our bond sales and commercial paper sales.

Okay, so you expect that to then the first sale to occur by May of this year?

That's correct.

Okay. We'll just confirm that probably in May with you and then. So this appropriations is meant to cover maybe to the Department of Finance. Is it to cover the, the operations on an annual basis, or is it to cover the.

Financing, the debt financing, yes.

And so that's expected to continue for how long?

The approximate time is about...

Apologies, ... UC would typically. UC would typically take out a 30 year bond.

Typically 30 years. That's correct.

Okay, so 30 year.

So the state would be providing the 14.5 million ongoing, each year, annually for the 30 year period.

So my recollection at the local level of commercial paper programs is that those are short term notes. And so how do we know that the 14.5 million, do we expect finance, Lao or even UC, that this figure will increase then? Or is it. This is the height of interest rates? So I assume maybe we refund what we call refund or refinance a loan. What is the expectation on the annual commitment going forward?

The project cost above the $14.5 million of financing will be covered by UC. They will be covered by either the campus and the campus's fundraising for a portion of the building costs. So the state is covering about $243 million of the building cost, which is total 300 million.

But another way, I think if you have experience in local government or any even other state agencies, UC and CSU are exceptional in that most of the time, you know exactly what the cost of the commercial paper and the annual debt service is, and it's budgeted in finance. The Administration has been doing something different where it sort of makes an estimate of the debt service. It does that by looking at the project cost. In this case, the project is 243 million.

It uses a sort of ratio, and it makes a proximate an assumption. That's how you get to the 14 and a half, if it comes in a little higher or lower, once they sell the 30 year bond. At this point, there's no expectation an adjustment will be made. If there are short term costs for commercial paper, UC will cover that.

Okay. Okay. So just to be very clear, for everybody, we're talking about the bond debt obligations, the cost service costs for that, not commercial paper. That's the. The short term to get you started. And we anticipate, again, just to be very clear, that's the 243 million, roughly, at whatever bonds are going today, of a 14.5 million annual debt service. Do we all agree with that or?

We all agree with that, I would like to emphasize that the University cannot sell bonds without having the budgetary authority for the funds that will repay those bonds. So if these funds are removed from the budget act, we will not be able to sell the bonds, and we may have to halt the project entirely because we're not certain if those funds will return.

So when do you anticipate to sell the bond?

I don't have that date at the moment we expect the project to be completed in fall of 2026.

So this is really to the question of are we ready to commit to this expenditure of 14.5 this year or is 14.5 a partial of an annual service debt?

So it's 14.5 for the UC Merced campus.

So what very likely will happen because they won't complete the project right now. It's a two year construction window. It would open in 26. Students arrive in 27 as they get further along in the project. Yusu will sell the 30 year bond in the interim. They'll use commercial paper in the interim. On an annual basis, their cost is probably going to be less than 14.5 million. Now, out of that, I said they'll cover it.

But if the state provides $14.5 million ongoing in 24-25 before the 30 year bonds are sold, there will be more than enough for UC to cover whatever short term costs it has. That 14.5 is intended to represent the full annual cost once the 30 year bond has been sold. It's almost as if the state is probably providing a little bit too much in the near term because they used a proxy way to budget for it and it sounded about right at the time.

So finance that conflicts with what the proposal is to cover the debt service for the bond, which will, there will be no bond for a few years, or do you have a different opinion on that?

The debt service funding was provided ahead of the issuing of bonds to provide the University with a level of confidence that the resources will be available to support the issuance of the bonds. Like UC mentioned, they cannot issue the bonds if there's no legal authority for them to get the debt financing. So that was one purpose. But the Administration has been in communication with the University of California regarding if there's any extra funds not used for this debt service. So we are in conversation on that.

So do you believe that these conversations that you're having, you might have an update for the May revision? Is that what those conversations are about, or are they about the 30 year conversation?

We're talking about the issue that the funds, the funding has not been issued and that there could be some savings. In the last Senate hearing, there was that conversation brought up like, okay, if UC has not issued the bonds, there's possibly some savings. So we started a conversation of what would that look like?

That's fair.

Yes.

Let me just be really clear, at least from my perspective, this project is too important for it not to move forward. So, but I think in a time like this, you've got to identify what are the things that are absolutely needed in order for the project to move forward. I don't think that we provide two, maybe three years in advance of potentially funding to cover debt service for many other projects. And if I'm wrong about that, I might be wrong. But I hear what finance says.

I think that sounds like the appropriate approach. We want to hear back on those conversations and we'll hold the issue until then. Mister Fong, do you have any other questions?

Just a quick question. Thank you so much, Mister chair to UC. I know you mentioned the unique factors, simulation labs and other features that make this project a little bit more expensive than UC Riverside. Are there additional features on there that compare to UC Riverside that this project costs a certain amount?

Other reasons are the remote location. There are only so many construction companies in the state that can handle a project like that. And they do charge extra for trucking all the supplies out to Merced. Also, the site needs work and it needs utilities. So because Merced is still expanding and it is still, you know, developing all of these sites, it's currently a field. So we need to pull in the utilities. Those things add costs.

Thank you for that information. And I think to echo the chair's comments, we know that Central Valley has been underserved for many years. And this medical school is a tremendous, there's a tremendous need for the UC Merced medical school. And I appreciate the chancellor's engagement on this as well for Merced in terms of the ongoing commitment that will support the medical education building going forward. The Central Valley is definitely in need of additional healthcare practitioners and providers. And this is something that I support.

And I want to echo the comments made here that this is a very important project. I know it's very challenging bunch of times, but I'm glad we're asking the tough questions as well on this. But this is something that's very critical for the Central Valley. Thank you, Mister chair.

Thank you again. We'll hold the issue open, move on to item or issue three, which is previous appropriations review. We will be discussing previous UC appropriations, including the Governor's Budget proposal to forego $300 million of one time General Fund for the UCLA Institute for Immunology project. The item is intended to provoke conversation about state support for UC during this budget downturn.

We have the same panelists, so we'll turn it over to the Legislative Analyst's office first on this one, and then we'll go to the Department of Finance.

Chair Alvarez, Ian Klein with the LAO so beyond the governor's deferral as you mentioned, the Governor's Budget has one additional budget solution, which is foregoing additional funding of 300 million for the UCLA Immunology and Immunotherapy Institute. We recommend adopting this proposal as the additional funding is no longer needed due to a scope change of the project. Additionally, to try to help the Legislature balance the budget, we worked with UC over the last few months to identify if there were other budget solutions opportunities.

We focus primarily on funds that either hadn't been spent or encumbered from recent initiatives that received one time funding. Over the past three years, the state provided UC with 1.31 billion one time General Fund for about 50 initiatives, roughly about 600 million in programmatic funds and 700 million in capital funds. About two thirds of the programmatic initiatives had some funding remaining, which totaled about 325 million as of January of this year. We recommend reverting this unspent one time programmatic funding.

Reverting one time funding is generally less disruptive than cutting ongoing programs as it allows the state to retain more of its reserves for next year. And as you heard in the housing hearing earlier this year, we recommend pausing some debt finance projects that had not entered later construction phases. We are also recommending pausing one academic project. This is the UC Merced campus expansion project.

This project, like the student housing projects, remains in the early planning phases as UC has not yet sold the bonds for this project. All of these projects are new construction projects, so there are not only near term costs, but also long term facility upkeep costs as well. The objective of pausing these projects is to help the state address the budget situation. The projects could be revisited once the state's budget condition improves.

Finally, as we just had the conversation, we recommend the state consider aligning debt service costs with the academic projects for the actual debt service costs. This action would provide the state with near term budget solution as UC issues their bonds over the next few years. If the Legislature were interested in this option, we would be happy to work with UC to obtain the most recent debt service cost estimates. Thank you.

Thank you Department of Finance

Good morning. Chair Members Gabriela Chavez with Department of Finance. The Governor's Budget proposes to forego a planned investment of 300,000,001 time General Fund to support for the construction of an Institute for Immunology immunotherapy at the University of California, Los Angeles. I'm happy to answer any questions you may have.

Thank you UCLA.

Thank you chair Alvarez. Assemblymember Fong, for the record, I'm Seija Vertanen I will start with the Governor's proposal for the UCLA Institute for Immunology and Immunotherapy and then move on to the one time appropriations UCLA acquired the Westside Pavilion in December of 2023. The Westside Pavilion is a 700,000 square foot property located 2 miles from the main UCLA campus. The site will be renamed the UCLA Research park.

The UCLA Research park will house the California Institute for Immunology and Immunotherapy, the UCLA Center for Quantum Science and Engineering, as well as programs across many disciplines. The research park will bring together scholars and industry experts from around the world. It will serve as a Center for innovation and scientific discovery and will provide an engine for economic growth for Southern California and beyond. In August of 2023, the UC regents approved a term sheet agreement with the California Institute for Immunology and Immunotherapy.

The Institute is a private, nonprofit organization that will rent space from the research park from the campus. For the term sheet, the Institute will be responsible for tenant improvements to the space that they will occupy. The term sheet also addresses intellectual property rights and requires the Institute to pay UCLA 7.5% in profits for their inventions that the University did not contribute funding towards. Other details of the affiliation agreement are still being determined.

At this time, the University estimates the research park renovation cost will be $560 million. This is an early cost estimate and it will change. The Center for Quantum Science and Engineering is expected to move into the space in 24 months. The remaining renovations will be completed soon, soon after barring any delays. And now I will move on to the one time appropriations listed in your agenda.

I want to thank the Legislature and the Governor for looking to the UC when you want to address a policy problem or provide a statewide public service, the expert faculty and staff at the University are ready to work on issues that would benefit from the University perspective. The list of one time appropriations in the agenda includes three items that were requested by the UC regents. These are the climate change funds, sapep and faculty equal opportunity. The remainder were legislative additions.

The majority of these one time appropriations are for program funding. When the University receives program funding appropriated to a specific project in the Budget act, those funds are provided to the University as a reimbursement by the state rather than a direct allocation. The process is that UCOP first notifies the campus that the Legislature has made an appropriation. The program receives an appropriate Fund number and other information necessary to track expenditures from the campus budget office.

The program begins to spend funds on a deficit basis, and the receipts are sent to UCOP accounting, which submits them to the state controller for reimbursement. That process of information flow from the program to the controller can take months, which is why it is likely that more funds have been spent already than are shown in the agenda. I also want to note that many of the programs listed were provided between 3 and 5 years to spend the funds received.

These programs are being delivered with the longer time horizons in mind, and staff salaries will not be fully spent until the conclusion of that original time window. Ill briefly discuss the largest appropriations in your agenda. The campus specific climate change initiatives were funds provided to three UC campuses.

UC Riverside was provided authority to use the funds for capital outlay projects in a policy Bill AP 2046 UC Riverside is placing the $47 million towards a larger project, the Oasis Clean Technology park project, which is currently in the design phase. These funds will help the campus complete that project. UC Santa Cruz received $20 million from the climate change initiatives and has already committed $14.5 million of those funds to grants and hiring research postdocs and students.

The funds are being used to advance research policy, community engagement, education and training to identify solutions for building resilience to climate change in California and helping vulnerable communities to adapt to climate change in California. UC Merced received $18 million from the climate change initiatives and has provided $9 million to faculty for research grants, 6 million to start a climate research Institute, and 3 million to set up a field education Reserve. The UC San Diego Scripps Reserve vessel has just put out the RFP for the ship.

The vessel will conduct research on an and will serve as a platform for essential education and research dedicated to understanding the California coast and climate change impacts the coastal ecosystem. The campus took time to secure non state funds for the vessel as well, and have a $20 million matching Fund commitment from the Federal Government that will be lost if the state funds are withdrawn. I am available to discuss the appropriations and consideration and thank you for your time today.

Thank you. I thought you were going to go through each one of them.

I'll spare you.

It would probably be useful because there's some context that is missing, like the fact that there's. If there's matching funds, that there is a. That is very important context for us to know. I think when you first started talking about the climate, and I apologize, I might have missed the. I was asking a question, the climate change initiatives, there's two items in this document. There's the campus specific and then there's the grants line. So two different lines. I think you said that.

Okay, for one of them, the grants, those seem to have gone out almost entirely for the campus specific ones. They have not. Or can you tell me, give me an update of where, why that were they different programs were the same? Why has some of. Why have some of the. Some of this funding has been utilized and the other has not?

The main grants, the $100 million for climate resiliency grants, were sent out and were awarded. So those are legally encumbered and have been promised to. And the grantees have either already fully claimed the funds or are in the process of spending them. When the funds were given to the three campuses, they developed spending plans for those, but they have been very slow to claim the funds.

UC Riverside has the largest chunk at that, $47 million, and they are holding it for the building that they will be constructing. And their building is currently in the design phase. They're using a different set of funding for the design and intend to use the $47 million for the actual construction. The construction contract has not yet been awarded, so pulling back those funds would halt that project. For the Oasis Clean Research Technology research park at UC Riverside was this.

Sorry, and you started by saying this and I couldn't identify them. Was this one of the UC approved. Requested.

Correct. This was a regental request to the Governor and to the Legislature for climate resiliency funding. It was to respond to. It was to offer the University's expertise to respond to the most recent climate crisis. It was in the middle of those massive wildfires we were having.

So we had Riverside, Santa Cruz, and what was the third campus for that first?

Santa Cruz received 20 million, of which they let me know that they have committed 14.5 million at the moment. They have now hired staff and are moving forward with establishing a research center. And UC Merced received. Merced received $18 million. They have provided grants internally to their campus for 9 million of that, but have not recorded those funds as encumbered. But they told me they have actually awarded.

They spent $3 million to set up a nature education Reserve, which will be used by both their students and also students from the k 12 system in the nearby area to learn about the environment. And they are spending $6 million to set up a climate resiliency center permanently on the campus.

Okay. We could go through every single line item. Those are the. Those. That was the major one, and that's why I asked. But I think I'm certainly interested in sort of the status of the ones that have the vast majority of the amounts that were appropriated unspent. So I think we'll follow up on that.

I'm happy to provide your office a written explanation.

Thank you. Appreciate that. Figure 12 in the agenda on page 18. You know, we had this discussion about issuance of bonds with the previous item. The LAO has raised it. I think the same questions remain here, and I'm not sure if the same conversation occurred in the Senate about whether there's some potential savings associated with the lack of the issuance of the bonds on I see Santa Cruz and Merced, the two that are listed here as the non issuance of bonds yet.

That is correct. Programs have not yet issued the bonds. They're still in the planning phases. We will be issuing the bonds later. As I stated previously, in order to issue the bonds, we do need the appropriation in our budget in order to be able to prove to the bond purchasers that we have the funds to repay the bonds.

However, we are in conversation with the Department of Finance on if those bonds are not sold, if they are not sold at the beginning of the fiscal year, but rather later, and there turns out to be some one time savings that we could return those to the state.

Interesting. You mentioned the fact that the appropriations happened on an annual basis, so I'm interested how the markets react. We're only budgeting one year, and I get that they wouldn't be willing to offer debt service and maybe this is for another conversation.

I don't want to take over today, but of how immediate it needs to be in the ledger in order for someone to approve a bond, given that it's, if I'm in the market, if I'm an investor and I'm looking at, you know, the situation in terms of finances and in our state and understand that the state appropriates on an annual basis. I'm just curious as to why one year appropriation is so significant versus this is a 30 year commitment to pay back.

And so I'd like to learn more about that. Not here, but definitely just point that out. The other one. So I guess the same thing is with the other. There's another Merced project. Merced got a lot of love, which, you know, need to give some love to our Central Valley folks. But there was another project here, an expansion of the campus, also no issuance in debt. So I think the same answer that you gave to previous ones is for this one.

That's correct. They're in the planning phase.

Thank you. On the, let me just, I think the last one I'll ask at the UCLA because that one I asked about last year, and it was very. There wasn't a very direct answer on what the funding was for, just to be very Frank and honest. And now it seems like it was for one thing, and now it was rolled into something different, maybe the same mission and purpose, but a different purpose it was going to be for an expansion on campus. This went now to this west side pavilion is the name of the facility that was purchased, of which 200 million from previous allocations came from the state.

And then 357 million, it says is covered by seller credits. What does that refer? Is that a 1031 exchange? What is that? What are seller credits?

I would refer to UC to talk specifics about the project, .

The seller of the property. I'm not exactly certain what that item that you were referring to was, but the seller credits were a deduction on the price that we received.

Okay.

So we didn't end up having to pay that as cash out of pocket, but we did use the $200 million from the state to purchase the property.

So just to confirm, this has been fully bought and paid for?

That is correct.

So even though it was a 700 million price tag, you had some deduction. 200 million came from prior year appropriations. $143 Through a loan that UCLA.

That's correct.

Entered into. So a total of $343 million for that project.

For a very large property, Yes.

Yeah. Okay. Okay. I will see if Mister Fong has some questions.

Thank you so much, Mister Chair. And thank you, everyone for the presentations here today on page 17 for the one time appropriations. A lot of great projects here. Just a similar question. Does the UC Office of the President get regular updates on the status of the projects and how the funds are being encumbered? How do we know that the funds are being spent?

The majority of the campuses choose to send in their receipts on a quarterly basis. That is really the only update that UCOP gets across the board is our accounting Department receives the receipts from the central campus Budget office and then makes a claim to the state controller on the funds. They have to check that the funds are being spent in accordance with the legislative budget Bill Language. But other than that, we do not exercise and across the board oversight for the vast majority of these programs.

Thank you for that update. So on a quarterly basis, the UC office, the President finance team, will get updates in terms of expenditures on this respective projects. Is there a follow up saying on the terms of the amount of funds unspent how those funds can be encumbered.

Going forward, the programs are supposed to provide their campus budget office an explanation of how they will spend the full amount of the funds. But we do not collect those explanations necessarily centrally.

Okay. So it goes to the campus, on the respective campus directly as to how the funds are being encumbered going forward. Really want to make sure with the legislative intent that these funds are being spent, and that it seems that at least on this chart, it shows 325 million unspent or unencumbered, versus 273 million. So more than half is currently unspent or unencumbered. Is that correct?

That is correct. This list was put together in January. So between now and then, some more of these funds may have been spent already. The encumbrance definition is rather strict as a legal requirement to pay the funds in full. If a and so many of the programs and campuses have a plan for what they would do with those funds, that would not necessarily be considered a legal encumbrance by the state.

Okay. Thank you for that clarification. It's a lot of great, important work being done here, and I appreciate that context. And then secondly, just wanted to thank you for the update on the UCLA research park. I think that's a transformative project for the LA, Southern California area and really appreciate the updates there. And please keep me posted on the progress there as well. So thank you so much. Thank you, Mister chair.

Thank you, Mister Fong. I think just the last item, you know, consistent with the conversations and the agreement on all unencumbered expenditures, I think we want to understand exactly what our options are for May. And so, so knowing exactly where in the process these are and what potential funding is like matching funds, as you mentioned, for one of the examples, is jeopardized, is important to know on an itemized basis. So I appreciate the follow up later on that. Thank you very much.

With that, we'll move to issue item number four, the Office of the President Budget Review. We have Miss Virtanen from the University California office of the President as our one panelist for this item. Please go ahead.

Thank you, Chair Alvarez and Assemblymember Fong. For the record again, I'm Seija Vertanen. The University of California Office of the President budget is divided into three parts, the UCOP budget, the UC path budget, and the UC Agricultural and Natural Resources, or UCANR budget. In 2021 to 22, the Legislature returned the funding methodology for UCOP and UCPath to the same campus assessment that was used prior to 2017. Before the UCOP line item, the state has decided to retain UCANR as its own line item.

The University of California office of the President budget in 2023-24 is 1,228,000,000.1 million. The total budget is two is sorry. The total budget is 192.3 million or 18.6% higher than the 2022 to 23 UCOP budget. This reflects all of the funding that moves through UCOP. The UCOP Administration, which is what most people think of as UCOP and which is funded through an assessment on the campuses, increased by 3.9% in 2023 to 24.

The annual increase to UCOP Administration was less than and the 5% base budget increase received by the campuses. The UCOP budget includes over 893 million or 72% in pass through or fee for service funding. This is over a 27% increase in pass through funding from the prior year, mostly due to additional state support or federal programmatic funding. Examples of these kinds of funds are the Breast Cancer Research Fund funds UC receives through Proposition funding, the National Laboratory programs, and the UCANR programs with farmers and communities.

These pass through funds are not spent at UCOP, but rather sent to the campuses or other California research locations. The UC Office of the President receives 293.5 million in unrestricted funding. These funds are used for system wide and core services programs and initiatives and strategic priorities. Today, I'm going to focus my comments on the UCOP budget and reserves.

When UCOP returned to the campus assessment in 2021 to 22, the campus assessment remained the same as the state appropriation for UCOP had been since the first year of the direct appropriation in 2022 to 23. We saw the first increase to UCOP Administration since 2017 to 18 when the direct appropriation was put in place. The 2023 to 24 campus assessment is 232.4 million of the total UCOP budget. This is an 8.8 million or 3.9% increase over the prior year.

As I stated previously, this increase was smaller than the base budget adjustment received by UC campuses. Much of the 2023 to 24 increase has been used to Fund system wide salary program for UCOP employees, contracted cost increases, and limited new investments. The salary program invests in all UC employees and addresses the labor market trends as UCOP and campuses focus on maintaining key human capital resources.

The UC chancellors requested the return to the campus assessment and they decide for their campus which funding sources are used to pay the assessment. For 2022 to 23, which is the last full year of data available. The campuses reported that 35% of the assessment was paid from campus core funds. During the line item, 100% of the UCOP administrative budget was paid for with state funds funds.

Significant changes made to the UCOP budget process in response to the state audit are still in place today, important changes to transparency, documentation, and decision making have been made. These reforms include the formation of the Executive Budget Committee, who review the UCOP expenditures and provide guidance to the President on the UCOP programs and expenditures. The Executive Budget Committee is composed of chancellors, chancellors of finance, and other campus leaders.

In 2018, UCOP implemented an entirely new budget and planning system and completed a comprehensive review of each UCOP Fund and its use. There was also an extensive process to document each program and initiative and provide clear definitions of each UCOP reports annually to the Legislature on all UCOP programs and initiatives. In addition, UCOP has developed and documented a Reserve policy, and reserves are now reported regularly to the UC regents along with budgeted amounts to actual expenditures.

The UCOP Reserve policy calls for an unallocated Reserve of $15 million, or 3.5% of covered funds and expenses, whichever is greater. Currently, the UCOP Reserve is set at 15 million. Unfortunately, the 15 million unallocated Reserve is not sufficient to cover the anticipated campus state General Fund cost growth for 2024 to 25, which is currently estimated over 258 million.

The campus assessment has been growing at less than the UCOP Reserve amount for the last two years, so there may be opportunity to cover some of the UCOP expenditure growth from the UCOP Reserve in 2024 to 25, should the regents choose that route. If the campus assessment is increased for 2024 to 25, that recommendation would be made by the President with review and support from the Executive Budget Committee and voted on by the UC regents.

The University believes that the campus assessment funding model allows for the highest collaboration with the campuses to determine the system wide priorities and resource allocations. The UC regents will approve the 2024 to 25 UCOP budget proposal in May. If the Legislature takes actions that will impact the UCOP budget, the regions would approve the final UCOP budget in July. Thank you for your time today.

Thank you. And just a programming note. After this item will take a short recess to allow us to go to other committees, and then we'll return for our second item. But appreciate your presentation. I'm going to try to keep mine really brief. I will admit on this one as well. I'm trying to figure out where exactly we are with reserves. You mentioned earlier in the presentation about the $15 million policy.

Understand that, but there is $151 million in reserves according to our, the information that we have before us, and so of which 15 million is that, and then 136 million is not. And so could you succinctly try to share generally what that is, and maybe that requires a follow up as well, which obviously happy to take that also.

So some of those reserves. Other reserves have actually been declining. And we're estimating that the June, that the balance will drop to 90 million on those other reserves. 60 million of that is from the federal laboratories, the nuclear laboratories that I discussed. Unfortunately, we're not allowed to shift any of those funds to other purposes. They can only be spent on the lab or returned to the Federal Government. Then there are other. Some programmatic health reserves.

We have about $2.4 million at UC Health for health collaboration reserves. The California Digital Library has a little bit of Reserve. They are currently converting much of the UC written materials to be digitally available. It's a massive process, attempting to bring our paper libraries to the 21st century. We have about $2.8 million there, another $3 million for operations on endowment that are designated, and then we have $1.0 million waiting for energy sustainability projects.

So there are funds there, but they are currently designated for specific purposes. The 15 million is unallocated.

Okay, we'll get that from you in writing, because I think you went through that. Appreciate that. The one that was surprising to me as new sort of, to this role is the assessments to the individual campuses that are made and that are varying amounts and in various categories. And that was also in the agenda on page 22. I guess I'm just. Just curious if there's a policy or more of a practice on determining what these amounts are. And then there's been increases from previous years.

Is that. Is there a policy on what the increases are based on? Some figure, some metric? Just what is the General explanation of. Of how these assessments are determined, including core funds, and then a quite substantial, almost equal amount of unrestricted funds?

Thank you for that question. I think it's a very important one to use. COP assessment is based on the number of w two s generated by each campus, and also the number of students on each campus. So we look at the size of the campus, their staff, and their student population. Make a rough estimate of the amount of services that campus might require from UCOP and the staff resources at UCOP required to serve that campus.

The UCOP, the administrative budget, which is now paid for with the assessment, was held flat from 2017 all the way through until the next increase was in 2022 to 23. So for a long time, UCOP was shrinking and being held flat. The growth in the assessment is determined by the Executive Budget Committee, which is the chancellors and the campus CFO's. They carefully scrutinize all the programs at UCOP and decide which ones they value and want to Fund, and then they allocate an increase to those.

For the last two years, they have allocated an increase of 3.9%, while the campuses have received a 5% increase. So they have decided that they do want UCOP services to increase, but not quite as much as their own. The funding mix was intended to actually return state General Fund to the campuses. So in 2017, when UCO PCAP moved to its own line item in the state budget, 100% of those funds came from state General funds.

By returning that state General Fund to the campuses and allowing the chancellors to change the mix of funding that pays for UCOP services, the campus has got to retain more state General Fund because almost a third of UCOP administrative employees are helping to serve the medical centers. It makes sense that the medical centers pay a significant component of UCOP employees, or that they help pay for a lot of those administrative expenses. And that's why there is a mix of state General Fund and core funds and other funds.

Okay, thank you for walking through that turn over to Mister Fong.

Thank you so much, Mister chair, and thank you for the presentation. In terms of the reserves from the UCOP, can UCOP use some of its reserves or Fund balances to help address the deferral or any other campus shortfalls?

Unfortunately, we not able to shift our Fund balances, or the vast majority of them to the campuses. We are required to have them for the programmatic purposes at UCOP, we could shift the $15 million in unallocated Reserve out, but we would have to build it again. It's not very prudent for an organization to have zero reserves that they can spend on any emergency, especially when in charge of directing legal services for the entire UC system. For example, we may need.

We may have some need for those funds. Back in 2017, the State Auditor found that UCOP had balances that didn't necessarily need to be held at UCOP. At that point, UCOP returned well over $100 million in Fund balances to the campuses. And after that, we have selected to move some programs and their balances to the campuses. So we no longer have the same kind of Fund balances for programs at UCOP.

We've done some restructuring to addressed the state auditors concerns that UCOP was not moving all the funds through in the most efficient manner, and we've changed that now.

Thank you so much. And then this is a last question. On the campus assessments, we just heard that it's challenging times in terms of we don't want any additional negative consequences for our students at the campus level. Is UCLP willing to take campus assessment to decrease campus assessments going forward in these tougher budget times?

In order to decrease the assessment, we would have to constrain UCOP costs. We would leave that up to the regents and the Executive Budget Committee. The Executive Budget Committee is going to bring their recommendation on the UCOP budget to the regents at the May meeting. I'm not aware if they are what they want to recommend on that, but the chancellors will place that depending on what value they place on those UCOP services.

Great. Thank you so much. Thank you, Mister chair.

Thank you. Thank you very much. UC. Obviously some follow up hold the issues open till May. Thank you.

Thank you for the opportunity.

I said earlier we're going to have a programming change, just short recess likely, I assume 10 to 15 minutes as we get to other committees that are either hearing bills or requiring votes of some of us. But we will be back and do the same exact routine with the CSU. So we will be back in a few minutes. Thank you.

All right. Thank you everybody for your patience. We are going to try and work efficiently and get through the four items that are before us remaining from the California State University, so we will get right to it. I'd ask those panelists for issue number five, the CSU core operations review and deferral proposal. If you can please come forward and we will hear from the Department of Finance Legislative Analyst Office and the CSU chancellor's office on these items. So if you are ready, please, please go ahead. Department of Finance.

Good morning. Chair Alvarez Assembly Member Fong Devin Mitchell with the Department of Finance. Similar to what you heard earlier about the University of California, the Governor's Budget defers to 2025-26 the planned investment of 240.2 million General Fund for the California State University. The budget reflects the third year of the multi year compact between the Administration and the CSU. This agreement is focused on achieving shared priorities to benefit the system's more than 457,000 students.

The budget maintains ongoing state support for the CSU at the current year. That's fiscal year 2023-24 level. While the deferral enables the CSU to use interim financing structures or other internal borrowing, this approach allows the segment to stick with the operating budget plan approved by the CSU board of trustees last year that factored in the compact investment. Thank you, and I can answer any questions you might have at the appropriate time.

Thank you. LAO

Good Morning. Chair Alvarez, Assembly Member Fong Lisa King with the Legislative Analyst's office. I'll be brief on this issue as our concerns with the CSU deferral largely mirror what we we shared earlier this morning on the UC deferral. Typically, when the state faces a multi year budget deficit, it seeks to contain spending at the universities. But under the proposed approach, CSU would increase spending in 202425 with the state paying for the higher cost in 202526.

This approach worsens the state's projected deficit for 202526 making the budget harder to balance in that year. It does also come with some risks for CSU, as there is no guarantee the state will be able to provide the funds at the planned time. I'm happy to take questions on the deferral or other aspects of CSU's core operations. Thank you.

Thank you.

Good morning. Chair Alvarez and submer Member Fong I am Ryan Storm. I'm with the Chancellor's CSU Chancellor's office. So these are difficult fiscal times for the state, and you are faced with many competing needs and an equal number of difficult choices. But the state's ongoing investment in the CSU is very important for several reasons, and I will mention two of them. First, the CSU is heavily dependent on state funding.

So on page 25 of your agenda, it correctly notes that we essentially rely on two, and only two, revenue sources for our core operations. That's the state's General Fund that makes up about 60% of our operations, and then student tuition and fees. The second reason for the importance of the state's ongoing investment in the CSU is that we are facing many increased costs that total more than $300 million of ongoing costs for 24-25.

These include recent collective bargaining agreements, rising health, liability and property insurance premium costs. We'd also like to strengthen our Title IX and other anti discriminatory programs, as well as fully comply with NAGPRA and Cal NAGPRA activities. So we plan for these additional expenses in reliance on sustained state investment. So without that funding, without the funding identified in the governor's January budget proposal, the only source of added revenue we could count on for our operating costs is about $98 million from our new tuition plan.

The balance of our new tuition revenue, or another 49 million on top of that, is committed to financial aid so that eligible students will continue to have the full cost of tuition covered. And it dovetails well with the goals of the multi year compact. Now, the importance of sustained state funding is not just about dollars and cents, it's also about predictability and our ability to appropriately plan to meet the needs of our students.

So, considering both the governor's multi year compact as well as that five year tuition plan I just described and that we adopted last September, our revenue projections enabled us to reach multi year contracts with our labor unions. And as you know, these agreements were reached after some difficult negotiations. But we believe they are reasonable and that they provide fair competitive compensation to our faculty and staff who are foundational to student success.

So these contracts also include increased parental leave and a return to salary steps for staff unions, both of which are a priority for the Legislature. So we must bring our costs in line with revenues. The chancellor's office and each of our universities have already begun the challenging process of finding ways to cover our additional costs, such as using reserves if required and appropriate, but more often by making the hard decisions that will translate into ongoing savings.

So in addition to the deploying the difficult cost containment strategies, we've also introduced key efficiency strategies. So one example is our enrollment target and budget reallocation plan that better aligns funding and enrollment resources with the realities of shifting demographics and student demand. Another example is identifying additional collaboration opportunities among our universities and to further reduce costs. And doing so with the help of Deloitte consulting. Recently but without sustained state funding, our work becomes exceedingly difficult.

Our progress in mission critical areas will be slowed to the detriment of our students. And when students enroll at the CSU, they expect to receive the quality academic programming and student support they need to graduate in a timely manner. So these can't be turned on and off due to the volatility of our ability to pay. So, in conclusion, the CSU asks for support in two key areas.

First, because of the reasons I outlined earlier, we ask that you for your support in continuing to honor the funding set forth in the multi year compact, either as originally structured or as modified in the governor's January proposal. And recently we were very pleased to see the inclusion of the deferral proposal in the Administration, the Assembly, and the Senate's early action plan.

The other second request is that you support an education facilities bond that includes higher education, so that we can bring our buildings up to modern academic standards and address safety and accessibility issues, too. And to reiterate Chancellor Garcia's comments from February, the CSU will continue to demonstrate that resources entrusted to us are not an expenditure but an investment, an investment with dividends measured in social mobility in more vital communities and empowering California's future, diverse and educated workforce at a scale only the CSU can provide. Those end my opening comments, happy to answer any questions.

Thank you very much. So, in interest of time, I won't go through this. I have the same similar questions that we had for UC on the enrollment growth and the 5% growth, and you also submit a report, which my homework is to read both of those.

But I think in context of where we're at from a budget standpoint, that, as you pointed out, the agreement is to move forward with the deferment, but also leaves open the conversation of perhaps needing to take more action depending on what happens in May. And so the concern with that being said, the concern still remains of where we're actually headed and where we will be in terms of being able to, to pay back that deferral and what the.

I'd like to hear a little bit about what the consequences would be from your end as you intend to implement growth and implement components of the compact and, I assume, other programs and projects that the trustees have perhaps supported going forward. What are the implications of not having a, in January 1 of 2025, that 200. And in your case, how much is it? $40 million? Yes, please tell us what that would be.

Sure. So right now, as I alluded to in my comments, we have some collective bargaining agreements that actually are creating some structural deficits within the University right now. Today, we have a structural deficit of about 138 million in the current year. In the budget year, we'll have something similar to that if the compact is not reimbursed or fulfilled with the deferral. You're looking at about a. We're looking at about a $345 million operating deficit in the 24-25 year.

With the University being heavily, we use our resources on people both to Fund salaries and benefits of staff, but to also to support financial aid so that 345 of ongoing funding will require some pretty difficult challenges. If that's not reimbursed in 25-26 structurally it'll be a challenge. So you're looking at potential hiring freezes, layoffs, and all those sorts of things, those mitigation measures that you've already described earlier.

Okay. And Department of Finance might correct me, but, you know, it's roughly from, between 200 and 240 that you've received for two years in terms of that compact, of which not all of that has gone to student growth. The commitment for student growth is only a portion of that. And so, again, similar questions to the UC.

I think we'll be looking to continue to discuss with you as to how do we successfully continue to increase student access without perhaps having the full amount that has been committed in terms of the compact from the governor's proposal. So let's not get into details on that. I think, I want to ask you certainly about reserves in about a minute here. But one thing that I just. I think we have to definitely mention is figure four.

And page 27 of the report on the staffing levels is something that definitely caught my attention, with the number of FTE students per employee, you know, significantly declining, which also indicates a growth of some amount, roughly a couple thousand of staff when we have declining enrollment. And how do you, I guess, what do you attribute that growth in staff, decline in students? And what has that, what kind of priorities have those individuals been assigned to? Or what is that headcount? It's FTE, so it's not part time, folks. What are they doing?

Yeah, a little bit. I'd say about 15 months ago when. When we realized that we were having a pretty significant change in our enrollment on our campuses. Remember, right before the. Right, even during the pandemic, our enrollment was actually still 5% above our funded enrollment. And then over a two year period, that enrollment declined by collectively about 5% so then we became about 5% under enrollment.

About 15 months ago, we worked through a potential plan, adopted a plan where we would reallocate resources from campuses that were significantly under rural to overall. We talked about this in the enrollment hearing. Correct. So one of the things that we're doing midstream right now is we're addressing our operational deficit, but then we're also at the same time, trying to balance our enrollments among the campuses.

So all of our campuses are instituting a variety of those cost mitigation and reallocation measures that you've heard before to try to get us in the right student, faculty, and student to staff ratios as we go forward. We're in the process of moving that direction. Right. We're not able to implement it.

Let me try to get maybe more clarity. Simplify it for me. Are you talking about moving staff from one campus to another campus to the campuses with the higher enrollment growth or projected growth? Is that what you're talking about, or am I missing.

No, no, we're just. What that plan does is it reallocates enrollment targets and funding to campuses that are in demand and growing. So in reality, what you end up having is if a campus is under enrolled, they're having to make some decisions about what the appropriate staffing levels are, both faculty and staff levels on those campuses. And then over time, the other campus, the recipient campus, is dialing up faculty and staff in order to educate those additional students.

So I see. So, as you explained, there was growth happening and you thought that would continue, so you ramped up for that growth that has clearly, in some instances, not continued and also actually declined in some campuses, while you have seen some other campuses with some growth. And so as a system, you are currently analyzing the allocation of resources by campus, which will then also lead, hopefully, to ensuring that they have the full time staff, faculty available to serve the students at those campuses.

Yeah. The actual level of staffing on the campus is determined by campuses, something that the chancellor's office doesn't direct or make decisions on campuses, and their Executive leadership team make those decisions.

But if there are more students at some campuses, how do they get more resources to serve those students with more faculty and more staff?

Well, it's gradual. Over time, this multi year plan shifts resources to campuses where there is more demand and growth happening. So that's part of the.

So they can plan to bring on more faculty, correct? Correct. Let me ask you about the reserves, because it's different from what UC is. It's different from what the state is, you take a different approach on this. And certainly I want to definitely call out during negotiations, we saw figures about reserves and where things stand. And so I really want to use this opportunity as a, hopefully a point in time when we are very clear about where we stand with reserves.

So you'll get some questions around that. Tell me about what the Reserve's policies are from the CSU system, how campuses individually adopt that or not. Tell me. Walk me through that process and share that with me.

Yeah. So in 2015, the Executive vice chancellor and chief financial officer of the California State University developed the reserves policy. That power is not. That power was delegated to the chancellor. So the trustees have delegated the chancellor the authority to manage budgets, and so that was further delegated to the CFO to establish a policy on reserves. So that was done in 2015.

And the policy is this, that when you have a particular Fund source, that the goal is to establish between 3 and 6 months of reserves for that particular Fund source, each individual Fund source. So we could. In this. In this arena, we're probably wanting to talk about the operating Fund.

This is the core funding of the University right now, where it's. Well, not right now, I'm sorry. June 30 of 2023, we had reserves for economic uncertainty, and these are reserves that are for any use that could potentially come up. Collectively, we had $766 million of reserves for economic uncertainty. One time money, of course, we'll have to see come July 30 what those new numbers are. Like. I was describing earlier, we have campuses that are implementing mitigation strategies in order to keep their.

Right.

To reduce their costs over the long term. Part of that strategy will be utilizing one time funds in order to bridge until ongoing solutions can occur. So, for example, if you have a hiring freeze, you're not necessarily going to be achieving ongoing savings right away. You might need to use one time money to cover costs until you achieve that full time savings later on. So that's the situation in reserves right now. So $766 million is approximately 33 days of reserves for the University.

We do have another tier of reserves, but we call them designated balances, and those are monies that campuses have determined need to be used for short term obligations, for potential capital needs, and also for catastrophic events when insurance doesn't cover the cost of those. So we have about $1.7 billion tied up in those designated reserves. Of course, those types of reserves are really for things that we anticipate we'll have to cover.

So, for example, we have financial aid obligations for the upcoming year that have not been booked yet. We also have capital, short term debt service that campuses have anticipated. That's kind of the lay of the land there in terms of how campuses manage their reserves and designated balances. It's largely left up to them to decide how much to designate in each of those areas, first in reserves for economic uncertainty, and then whether to designate money for capital for short term obligations or the catastrophic events.

We are in the process of fine tuning that policy just a tiny bit, just to make sure that we're better defining the amounts that campuses should be dedicating and for what definitional categories there. It was probably a little too open ended based on what we had established earlier, so we're fine tuning that just a tiny bit, but not substantially, just so there's greater understanding of what type of reserves campuses have available to them.

Okay, I'll see if Mister Fong has any questions on this.

Thank you so much, Mister chair, and thank you to all of you for your comments. As a follow up on the Reserve policy, I know that when we looked at the UC system, there was a campus by campus numerical information for CSU. Do we have that information available?

You certainly do. It's not in your agenda. It's very hard to print out. It's actually a webpage that we developed, I would say maybe five years ago. It's called, it's through the openGov.com website, essentially, but you can link to it through calstate.edu, our webpage. I can send a link to it to the Committee consultant.

Thank you.

You can drill down and get very lost in there. I'm sure many of my colleagues here sitting at the table have gotten lost in there trying to, but it's very transparent in terms of all the funding by campus, by category, etc. Etcetera. And we have many years of data loaded already in there so that you can see from retrospectively what's out there.

So thank you. Definitely. Please send the link over, and we'd love to take a look. And then in terms of which campuses are doing it better in terms of the Reserve policy, well, I would say.

Overall, you have 23 universities, and it's going to be a mixed bag and it's going to depend on where they are financially and where they are structurally. Right. Some campuses are doing very well, others it's more challenging.

But I would say overall, the beauty of having systems, and I don't think you guys covered this issue earlier, but the beauty of having systems versus individual campuses is that you as legislators or we as University heads are not necessarily required to have to go and perhaps maybe bail out a particular University because a particular University is underwater in reserves, as a system, we have the ability to work together in terms of making sure that none of our campuses are underwater.

Obviously, mitigation wise, the first thing to do is to work through that campus to make sure that those reserves are in appropriate levels. And then if it ever becomes a case where we need to assist with the other 23 universities and the system to contribute to reserves, then we would need to step in and do that. But that's the beauty of having a system, is that you can manage these mitigations as a system versus individually.

Thank you for that context. I think that's the flexibility that leads into the next question. So, in terms of flexibility, in terms of the funds that the CSU system has in reserves, we know that there's $1.7 billion in reserves designated for specific functions. And if a campus is happening to need additional resources that the state's budget situation was to worsen, would the CSU system be able to backfill and help assist these campuses?

Well, the first tranche of money that would be able to assist in any state budget deficit or any fiscal crisis would be that 766 million that I mentioned of reserves for economic uncertainty. They're not designated for anything. Then when you get to that $1.7 billion that I mentioned that are designated balances and reserves, that's when it gets a little bit trickier, and that's when it becomes where you really have to talk to the campus about what those exact amounts are designated for.

As I mentioned before, some of that money may be for upcoming debt service, short term debt service. On particular things. It could be for the, we need to pay bills on things that we've already are under contract for, or it's financial aid that you've already realized that you will be paying in the upcoming year. So those types of, in those circumstances, the opportunity to be flexible and be able to flex it to help with the budget deficit are limited.

But I would not limit that 1.7 million in its totality, saying, zero, it's offhand, it's not flexible in any way, shape or form. There are categories in that website I'll be sharing with you called program development. That's a potential area where you could read where a campus could redirect from program development and utilize that to help bridge a funding crisis.

So there is some flexibility in that 1.7 billion, but it's going to be far less, obviously, than the 766 million that I mentioned earlier where it's fully discretionary.

Thank you so much for that context and information. Thank you, Mister chair.

Thank you again. We'll hold this issue open and certainly look forward to responding to some of those questions that we asked either earlier or in this session. Now, with that, we'll move on to item or issue six, the CSU Legal services program. We'll discuss the Governor's Budget proposal to reduce support for the California State University Legal Services project. So we have Department of Finance, Legislative Analyst Office, chancellor's office and joining also the panel will be the immigrant legal defense.

We will kick off with the Department of Finance.

Hi again, Devin Mitchell with the Department of Finance. Just to clarify, this item is in the Department of Social Services budget, not the CSU. The budget reverts 5.2 million General Fund in the current fiscal year and reduces 5.2 million in 2024-25 and ongoing for immigration legal services at the California State University.

The Immigration Services Project, which serves students, faculty, staff and their immediate family Members, alumni within two years of graduation, and students who intend to enroll, was established in 2019 with the reduction 1.8 million ongoing General Fund would remain in the budget for this program.

Lisa King with the Lao under the Governor's Budget, we're tracking that the CSU Immigration Legal Services program has 8.8 million in unspent funds, consisting of 7 million that was previously allocated in 2022 to 23 and 1.8 million that remains in the current year. 2023-24. Our understanding is that the Department of Social Services intends to use these remaining funds to cover services under this program through June of 2025.

The Legislature could use the time in the meantime to get a better understanding of the potential impact of the governor's proposed ongoing reduction and to consider an appropriate funding level for this program moving forward. Thank you.

Thank you.

Ryan Storm with CSU again. So my colleague from the Department of Finance did a great job of summarizing the program. One other thing I'll add is that social services, the CSU chancellor's office, and nonprofit legal services provide collaboration on this work. Some of the examples of the services provided under the project include legal consultations, application assistance for deferred action for childhood arrivals, or DACA, application assistance for naturalization and removal, consultation and defense. Just some of the examples.

A little factoid that I have from my colleagues in the chancellor's office is that approximately 21,000 students, family Members, staff and faculty received services in 2022. The preponderance of those services were to students. We are not taking a position on the governor's proposal with the CSU. While we recognize the immigration legal services have merit, this is a challenging budget year, and we know that tough budget decisions soon will be made by the Governor and the Legislature.

But one thing that we wanted to also point out is that if an alternative were introduced to reduce CSU's core operating budget to restore the legal services funding, the CSU would not support such an alternative simply because that would take funding away from our academic programs, our core mission. Happy to answer any questions.

Thank you. Go ahead.

Good morning. Chair Alvarez and Members of the Committee, I'm Barbara Pinto. I'm the co Executive Director and co founder of Immigrant Legal Defense. The CSU Immigration Legal Services program provides Free Immigration Legal Services, along with education and outreach programs, to CSU students, staff, faculty, their immediate family Members, and recent alumni at all 23 CSU campuses. The CSU system has nearly 10,000 undocumented students and thousands more undocumented and mixed status household Members from 2019 through August 2023.

The four nonprofit organizations involved in this project, Immigrant Legal Defense, Goddess in LA, CHIRLA, and Jewish Family Service of San Diego have provided over 11,000 individuals with one on one consultations, accepted over 7000 cases for full scope representation, represented over 4000 individuals in DACA applications, and reached over 20,000 individuals through education and outreach events and presentations. In over four and a half years, this program has proven to be a successful model in serving immigrant students and families in California.

Given the geographical reach of the CSU campuses from Humboldt state down to San Diego State, this project has been able to reach immigrants in pockets of California that have been historically underserved. That includes students and families in the Central Valley, Central Coast, and the Inland Empire. Part of the long standing challenge in working with immigrant communities is building trust and providing them with support and services that are accessible.

Through this project, we've been able to become trusted Members of these communities and deliver these accessible services with a huge credit to the CSU employees, student leaders, and allies that have been instrumental in the program's success. Since 2018, the State of California has fully funded this program, but this year, the Governor is proposing slashing this program by 75% from from an annual investment of 7 million to 1.8 million. And this will be devastating for our CSU and immigrant communities across the state.

A funding reduction will mean that this infrastructure is dismantled right when it's achieving its established goal, creating a partnership to provide immigration legal services to underserved, under resourced Californians so that they can focus on their education and experience stability for themselves, their families, and entire communities. And I want to highlight a few reasons why shrinking this program would immediately harm immigrant communities in California.

First, tying legal services to a statewide educational partnership with the nation's largest public University system is a highly successful model that provides quality legal services in an efficient manner, covering the majority of our state and infusing resources in hard to reach immigrant communities in California. A reduction in funding will mean that our organizations have to immediately reduce the number of attorneys. We will soon have to stop conducting intake and will stop being able to accept new cases for representation.

As we have thousands of pending cases through our CSU partnerships, any remaining resources will be focused on meeting our legal and ethical representation obligations for existing clients. This will erode the years of work it took for us to become part of the fabric of the CSU communities that we serve. Second, it's important because it provides legal resources in a higher education system that ultimately leads to economic empowerment and workforce development.

Guaranteeing that immigrant students obtaining their education have access to legal services ensures that they have the tools that they need to complete their education, enter the workforce, and obtain economic mobility. Many of these individuals are first generation college students who are working hard to give back to their families and their communities. And this critical service can radically change their lives, not only allowing them to complete their education, but providing them and their family with a pathway to legalization and economic stability.

Third, individuals need full scope representation now more than ever. Defunding this program now, when immigration processes and policies have increasingly gotten more complex and difficult to access for immigrants, would be detrimental for our communities. Some of these areas we serve through this project are historically the first to be targeted by aggressive immigration enforcement, but the least able to defend themselves due to a lack of legal services.

Providing immigrant communities with stability and foundational programs that they can trust and rely on allows them and all our communities throughout California to be united and prepared for whatever the future holds. And now I want to share a few of the examples of clients that we've been able to serve through this program. At one of the first clinics that we had under this project, we met with a student and her father who wanted to see if they had any option for legal status in the US.

They thought they were undocumented, but we determined in meeting with them that they were in fact both us citizens, both father and daughter, had been living as if they were undocumented in the US for their entire lives, over 40 and 20 years respectively. And this was the first time they received a full screening by an attorney who explained that they were citizens, a result of the student's us citizen grandmother.

At another clinic that we did at CSU Monterey Bay, we met with an undocumented student who was only eligible to apply for DACA at the time, but through this project, we later did consultations with his twin sister and parents, and after meeting with the parents, we determined that they were eligible to apply for their green cards through their younger us citizen daughter. The twin sister also married her us citizen partner, and IlD represented all three of them in their green card applications.

So now they are all three lawful permanent residents, and one of the parents has now petitioned for the student. These stories are just a few of the thousands of students and families we've been able to serve, and we need this project to remain fully funded to be able to serve thousands more. This is a project that is very special to me and hits close to home. I'm also proud CSU an alum, and when I was studying at San Francisco State University, I was also undocumented.

My parents and I desperately needed legal services at the time as we became eligible to apply for our green cards, but could not afford to hire an attorney. I am incredibly fortunate to have helped design and launch this program at SF state and other CSU campuses so that students and families can continue to have access to the legal services they need to obtain status, remain united with their families, and continue to contribute to our state's economy. We ask that the Committee reject the governor's proposal and fully fund the CSU Immigration Legal Services program. Thank you.

Thank you. Thank you for your testimony and sharing your story. Appreciate that. I have a question on this item as it relates to the, you know, we're going through all of these proposals and why, the timing of it. And, you know, the LAO does raise a point that I'd like to just try to get to the bottom of that.

There is about 8.8 million in unsparing funds, and I'm just wondering if that's the rationale for the governor's reduction for this year or if this is a reduction. Ongoing, maybe for the Department of Finance. Is this an ongoing reduction proposal or just the one time?

So it's ongoing. The point is important, though, that there are unspent funds in the program that would allow current service to continue through the next fiscal year until 2025.

So maybe to help us understand whether that's sufficient or not, because that's really what we need to figure out for those of us who want to maintain this program funded. So there's been, how many years of funding for this program? Has it been two years?

So I think there was one time funding in the Budget Act of 2018, and then it was made ongoing in 2019.

So 19-20. It's actually been like five years, and it's been at the amount of about 7 million every year since 19.

That's right. I believe 2018, too, though. Don't owe me on that.

Is that correct, LAO? Do you?

Yes, that's our understanding of that.

So then there's been a Reserve that's been built, but it's been a Reserve over the course of five years.

It sounds like the 8.8 million that we're tracking is attributed to prior year 202223 and the current year 202324.

Okay.

In the previous years, the, our understanding is that about 27 million in funds from those first several years has gone out to the nonprofit partners to provide services.

Okay. I'm just trying to understand if... is this like a right sizing of a program or maybe more context from the Department as to why this. It's a pretty drastic reduction in a specific program.

Sure. So, I mean, it is intended to address the shortfall which all departments across the state are being asked to do. And then the other point I would make is that it's aligning with the amount of funding that that the UC receives for these services.

You bring up a point, and I noted that. But, you know, as we sit here and discuss the two systems and the community college system. Well, let's just talk about UC. It's aligning to that. But we've seen some data on the number of students served, and the number of students served at the CSU is significantly higher than the number of students at that. You see. Do you have different data that shows that they're more similar?

No, I wouldn't dispute that.

Okay. Okay. So I guess that, you know, that that does beg the question, why do we bring it down to the same level when one system is providing more services than the other?

And if it's about right sizing, which in a year like this has to be on the table, we should look at what is the right size to serve the number of students that we know continue to have a need at the CSU system, enough to serve the students at the UC system, and enough to serve the students at the community college system.

So I think that's an issue that remains unresolved and that we need to hear more data about before we make a decision, certainly on cutting and cognizant that unspent funds could be utilized, I think that's appropriate. But to set a new precedent of such a significant reduction in a service that's being utilized, and that will definitely leave it with a shortfall in the out years, it's not, I think, the right approach. So we need to revisit that. I'll turn it over now to Mister Fong for questions.

Thank you so much, Mister Chair. And thank you for the comments and questions. In terms of the projection for when I was looking at the data, do we have data up until the end of 2023? I saw that the report data was for the first nine months of the year on page 36, which was the legal consultations, correct?

Yes, the data is until August 2023 that we have.

Okay, but do you have data up until the end of 2023? I'm just trying to see. It says 2364 and then the prior is 3078. I'm pretty sure the numbers have gone up, but really wanted to get a sense as to the need of the services. There's a tremendous need out there, I believe, right?

Yes, no, definitely. The need has only increased from our perspective, and we can definitely get that data to you all. It just takes some time for the Department to put together the data from all four organizations to then be able to provide that.

Okay. But it's a tremendously important program. The work here is tremendously important. In terms of the administration's proposal, how did it come to the 75% number?

I mean, there's no. That was just the amount that was arrived at for the. For the Governor's Budget.

And you said similar to the UC. What's the UC's proposal in terms of their cut?

Right. So it's also 1.8 million and ongoing funding at the UC?

At the UC. But at the CSU, there seems to be a much greater need in terms of the number of folks being served.

Yes.

So just get clarification, because I might be wrong, too. What is the UC current level versus proposal? Current level is 1.8 million now at UC. And that is maintained. There is no reduction to the UC, correct.

It's not through DSS.

Okay. But to Mister Chairman's point. So UC has 1.8 million. The proposed cuts would cut the CSU to 1.8 million. But there's a much greater need at the CSU, correct? I don't know who else to answer the question.

I can't speak to that.

Yes, there is. So the UC system, from our understanding, serves only nine campuses versus the CSU system. We serve all 23 campuses. There's an estimate that in terms of undocumented students, it's probably around 4000 for the UC system versus nearly 10,000 for the CSU system. Plus through this program, we're also able to serve entire households, which helps with workforce development, economic mobility. And in terms of the prior question in regards to the budget, so our understanding is that the reduction already took place.

There was 7 million of unspent funds, plus 1.8 million. That to cover half of the year. Of next year. So there's 7 million to cover one year and then 1.8 to cover half a year. A total of 8.8 million versus. For this project. It's normally been funded for a year and a half at the level of 10 million. So there's been already somewhat of a reduction.

Okay, thank you for that. And you mentioned serving the whole family, so if somebody has siblings, they might be potentially at a community college and wanting to transfer and continue their higher education journey at the CSU.

Yes. So we serve siblings whether or not they're attending the CSU system as long as their other sibling is attending. So this has really been helpful. In terms of when we've met with the student, early on in the program where I meet, where family Members were not covered, we found that a lot of the immigration relief was tied to family Members, and it was very difficult to just serve the student without serving the parent or the sibling.

So, for example, in one of the cases I mentioned, it was being able to serve the parent and getting them status was then helpful for the student, because then the parent could petition for the student. Or sometimes in terms of special immigrant juvenile status, it was the student and also the sibling that were eligible for a green card due to their personal circumstances. So it was very difficult to sort of sever it. And it's one of the reasons why it makes this project so great and unique and we're able to help so many more people.

Absolutely. So the impact is just not just the CSU. It could also be the entire family and other students attending our higher education systems in California, including our community colleges. And I believe there's over 60,000 document students in our California community colleges as well. And so the work that you're doing is impacting those students as well, possibly as well.

Exactly. And the CSU, if I'm not mistaken, has a really large number of students coming from California. So these are students and families that are in California that will remain in California, most likely. So the investment is definitely to our state's benefit.

Thank you. Thank you, Mister chair.

Thank you. You know, we'll hold the issue open, obviously. Well, actually, it's DSS issue, but I think at least 1.0 of clarification that we'll need is, if we are right, sizing or creating some equilibrium between UC. The data that I am seeing from UC put out by the UC Immigrant Legal Services center is, for example, in 2020. Let's take a year. That's. That's actually equivalent. 2022. They serve 1276 students. CSU alone had 3078 legal consultations.

I don't know if, in addition to that, this data that we have in our agenda, is your DACA data additional to the legal consultations, or is it part of the legal consultations?

It's in addition to. As well as the other forms of.

So these are all additive.

Yes.

So if you just, like, were to remove the big number of education and outreach, which is important work, but let's say it's probably not what's being captured by the data point in UC, there's definitely a lot more students being served, and so there's a lack of equilibrium in the funding there, for sure. Thank you all appreciate it. We're going to move on to our next issue item. Thank you all for being here. This is a review of past appropriations from the CSU.

Again, just like in the UC. Want to talk about what's been allocated and spent and what's available as solutions going forward. So we have in this case a legislate Legislative Analyst Office will go first, followed by Department of Finance and CSU chancellor's office.

Thank you. Lisa King with the Lao this issue reveals recent appropriations to CSU, and it provides some options for the Legislature to consider if additional savings are needed to balance the budget. If you turn to page 39 of your agenda, you'll see a table that summarizes a number of recent one time appropriations to CSU over the past three budgets. Based on a data request to CSU, as of January 1 of this year, these initiatives had a combined 423 million in unspent one time funds.

In General, we are recommending reverting unspent one time funds this year, as this is among the least disruptive ways to balance the budget. In this case, there is an exception as it relates to deferred maintenance funds, which are shown in the very bottom of this table. We aren't at this time recommending reverting unspent funds for deferred maintenance, as putting off these types of projects tends to lead to higher facility costs in the long run.

In addition to the one time appropriations that are shown in this table, the state has also provided provided ongoing augmentations to CSU to support certain capital projects that are debt financed, and if you turn the page to page 40 of your agenda, you'll see a list of those debt financed projects based on data from CSU. Actual debt service costs for these projects are coming in somewhat lower than budgeted in these first couple of years for the same reason we discussed in the related UC item.

Due to the timing of bond sales, not all of the bonds have been issued and therefore not all of the debt costs have been incurred. We recommend aligning the augmentation that was provided to CSU with the most recent estimates of actual debt service costs. We estimate that that would yield approximately 75 million in one time savings for 2023 to 24 and approximately 32 million in one time savings for 2024 to 25.

In addition, you'll see in this figure that there are a few projects for which no bonds have been issued. The Legislature could consider pausing those projects at this time and removing the associated debt service for an up to 12 million in additional ongoing savings. Thank you. I'd be happy to take questions at the appropriate time.

Thank you, Lisa.

Thank you again. Ryan Storm with CSU. So for background, the CSU received one time and ongoing appropriations between 2122 and 2324 for approximately 75 different projects and programs totaling about $2 billion. About 100 million of that was ongoing. So the preponderance of it was one time funding. So in General, these appropriations are grouped as follows. First, many of the cap outlay projects are supported by one time state funding, or worse, funded by one time state funding.

These are campus specific construction projects for academic facilities as well as student housing. Another group is short term programs supported by one time funding. So these are system wide and campus specific programs. And examples are emergency grant aid to students right after the pandemic. We have startup funding for certain academic programs, among some others. And then third, the third group are several long term programs supported by ongoing funding, and these are also system wide as well as campus specific programs programs.

Examples are foster youth services, project rebound, and summer term financial aid support. So here are a couple of comments on this item. So it's important to note that these appropriations were selected by state leaders based on their priorities and commitments to their constituents. The LAO recommends pulling back some unspent one time funds, pausing some projects, and adjusting appropriations to align with debt service cost estimates estimates and the CSU does not support the LAO's recommendations for two reasons.

First, sweeping one time funds from prior budgets would negatively impact several capital and programmatic projects that support many of the state's most critical needs in science, engineering and agriculture. These projects also support CSU enrollment and provide degree pathways in important fields. The other second reason, or the second reason to be in opposition to the LAO's recommendation is pulling back funding in a fluctuating construction and bond market is really risky to the University.

Since these projects were approved, more difficult budget and cost escalation circumstances have developed, creating more risk for the University in being able to appropriately design, finance and construct these projects as originally envisioned by state leaders. So to be more direct about it, we are concerned sweeping funding would leave us with insufficient resources to fully construct these projects that are in various stages of planning and construction, and in particular, having issued bonds for many of these construction projects, both student housing and academic facilities.

So consequently, the CSU concludes that there are far too many risks and potential negative impacts for any of this funding to be returned to the state either one time or ongoing in nature, and we'd be concerned that it would upend several of the programs and projects. Thank you for allowing me to comment.

Devin Mitchell with the Department of Finance. Nothing to add at this time. The Governor's Budget does not include any actions related to the CSU appropriations outlined in the agenda.

Thank you. Again, similar questions. Maybe we'll have CSU go first the next time, but similar questions to the UC in terms of, you know, the funds that are, haven't been and what status or what state they're in. If there are matching funds that would be in jeopardy. Would be important to know. Again, very similar to UC for those projects where there has not been bond issuance.

Certainly areas for us to hold the issues open to further get clarity as we make final decisions for the June budget, as we have have more clarity in May as to where we stand. So again, very similar comments in that regard. I think that might be it for me on this issue. Go on to Mister Fong.

Thank you so much, Mister Alvarez. And somewhere in the one time programs just would love to get additional information as to where they are, the report back, and kind of like the expenditure process there and the encumbrances. Similar to what I brought up at the UC as well. And the only question I asked on this as well is when we look at page 40, the housing projects, we know student housing is critical. What is the status of the housing projects being proposed in San Jose, Sacramento, and Stanislaus in terms of the timeframe there?

San Jose is in a unique circumstance where they have actually taken advantage of an opportunity right next to its campus. Originally, that project was designed to be a brand new construction on a site that had been. That has already been identified, but now there's a partnership with a commercial real estate entity to essentially take over a tower of a hotel and convert that to dorm, dorm rooms. Essentially, it's cheaper, it's quicker, it's really great advantageous project in terms of what the goals of the project are.

So that's a very limited. It's a very limited term lease to begin with, but then with the option to buy later. And the goal would be for us to issue bonds and be able to take that project over. So we think it's a really good project in terms of those other two projects. They're a little bit behind because they were in kind of the third wave of those student housing projects. Thank you for bringing up the issue about student housing.

One thing that dovetails in with what the chair was mentioning was the kind of the matching funds or other money that's involved in these projects. Many of these student housing projects are tied in with our system wide revenue bond project to provide more beds at large. So a project where the affordable student housing maybe made 300 beds, we would build a project at 500 beds and use our own revenue source, our own bonds to do that.

So in a way, if you were to pull back money for any of the affordable student housing projects, it would jeopardize the totality of the project, both the unsubsidized beds versus subsidized. So many of our housing projects are situated in that way where they're combined. They're not just all affordable student housing beds, if that makes any sense.

Thank you so much. Thank you, Mister Chair.

Thank you again. We'll hold the issue open and we'll revisit and look forward to the responses. Thank you very much. Final item, issue eight, our graduation initiative 2025 update. Really looking forward to this. I really want to thank CSU system for being here and talking about this.

It is, it is a very important issue as we've made, made commitments over the last several years to particularly the CSU system, certainly with the not just hope, but really expectation that we see the gaps close among some of our student groups that have not been as successful in achieving graduation. So I'm personally very pleased and thank you for being here to specifically.

Good afternoon now, and thank you, Chair Alvarez and Member Fong, for the opportunity to appear before you today. My name is Jennifer Bazile and I serve as Associate Vice Chancellor for Student Success and Inclusive Excellence at the California State University Division of Academic and Student Affairs, Office of the Chancellor. Graduation Initiative 2025 has contributed to record high graduation rates and number of degrees awarded, resulting in enhanced earnings and improved socioeconomic outcomes for thousands of students.

I'll briefly update you on our ongoing work and the progress that we've made to date. Graduation Initiative 2025 set out bold and ambitious graduation goals with its launch in 2015, and since then, the CSU has made significant progress in reaching those targets. The CSU has nearly doubled the four year graduation rate for first year students, and most CSUs have achieved all time highs and graduation rates for students of all backgrounds.

GI 2025 has delivered substantial economic advantages for students, significantly reducing their educational financial burdens and enhancing their future earning potential. At the same time, we recognize that critical work remains to be done and we are committed to achieving even greater results for our students and the state. Educational achievement gaps persist for historically underserved students, meaning these students are graduating at lower rates, progressing more slowly, or not completing their degrees. We can and must narrow and eventually close these gaps.

We are working diligently to remove barriers for all students. While these gaps existed before the pandemic nationwide, they have widened since COVID-19 as underserved students have been disproportionately affected by interrupted learning, financial hardships, and social and community impacts. The CSU is leveraging the identified strategies for student success across its 23 campuses and is seeking to scale up those practices that have the greatest impact on recruiting and retaining students from underserved communities. We are also looking ahead to boldly reimagine the work of student success moving forward.

The CSU is engaging in the year of engagement and unprecedented consultation process that will include a comprehensive spectrum of stakeholders, including faculty, students, alumni, industry, and communities of our University serve to develop the successor to Graduation Initiative 2025. The CSU continues to make progress in increasing graduation rates for first time, first year students and transfer students and in realizing its Graduation Initiative 2025 goals. Despite a challenging landscape and higher education enrollment and retention, to maintain a positive trajectory, sustained, predictable, and sufficient state funding is essential.

However, increasing graduation rates is only part of the equation. Meeting California's future workforce needs also requires investment to expand access to the CSU, providing the life changing benefits of a college degree to more Californians. The CSU's role in California's higher education framework has never been more important than it is today. In the current global economy, more students need a degree or credential beyond high school as a necessary entry point to a career.

This shift coincides with an increase in the diversity of the state's college going population. The CSU is uniquely positioned to meet these challenges due to the breadth and depth of our expertise in offering bachelor's degrees and applied graduate degrees to help create a more thriving and prosperous future for California. This concludes my opening remarks, and I'm pleased to take any questions that you may have.

Thank you. Appreciate you being here. The first question I'd ask is, when will the 2023 data. We have table four on page 44. Is the 2023 data available yet on the system wide graduation rates?

The 23 data was released in October. It was publicly released in October of 2023 at our Graduation Initiative 2025 symposium. It's available on our dashboards. Yes.

Thank you. How different than just, you don't have to give me all the numbers, but how different is it from 2022? Does it hold pretty steady, or is there, in the first time students and transfer student graduation rates, have those gone up?

So, in the first time, four year graduation rates for 2023, the number was 35.5%.

For four years?

For four years, yes. The six year goal was 70%. In 2023, we were at 62.2%. Transfer students, the goal was 45%, and we were at the two year graduation rate of 41.5%. And the four year transfer goal is 85%, and the 2023 rate was 79.4%. Probably the place where you're most interested actually has to do with our equity gap. And our equity gap actually was at 13.4%. So we saw an unfortunate increase of 1.5% .

For students of color and also for Pell Grant?

For Pell Grants, the gap was at 12.3%.

Okay. Yeah. Really sobering, right?

Indeed.

10 years since this data has been measured and the commitment, though, began. Remind me of when, because I obviously was not - in 2015?

Yes.

So we're 10 years in, so it's gonna be, you know, very real here. And 10 years in, we're graduating people at a much better rate in some regards, like first time students. I mean, you're doing pretty well. Probably going to hit the goal, even with transfer students, you know, doing better and certainly on target. So that only means if the equity gap is what it is that some students are doing great and we're successful with them.

And the students we really want to focus on, because that gap exists just. Just are not. That's the reality. So, 10 years in, the Legislature has made a commitment, but also acknowledge that the CSU system as a whole makes a commitment above and beyond what the Legislature has done. Yet we're not seeing that gap close. So that is a large number of our students as well, right? It's not just that it's subgroups. It's that it is a large percentage of our total number of students that are in those subgroups. So that just means it is proportionately even higher.

And so the question is, 10 years in, with essentially one year to go, what are the drastic measures that are being taken now to try and do something that now almost appears miraculous in the next year or two, to hit the goal, or what has happened that is very different than what's happened in the last nine years or eight years where this has not been as successful as expected.

So, at the risk of stating the obvious, but maybe not the obvious, I would offer the following context. When this initiative started and when you look at the demographic composition of the CSU student population when the initiative started. And the demographics of the CSU population. For the last year that we released our data, the number, the percentage of the CSU population that was either underserved or Pell eligible increased by 15%. The student population is changing, and it is changing significantly.

Typically, what we see for those student populations is that the services and supports that we know work to help those students succeed. Those services and supports are particular, and they do need to grow. So that's one set of context that I would offer. And the other actually also does have to do with the pandemic and the learning loss and the other kinds of impacts that students had in terms of caregiving, in terms of work, in terms of hours that we are going to see play out.

So that's the context. The answer to the question about what we are doing is, I will offer two specific examples. One has to do with the work around black student success. The Chancellor Commission, the Interim Chancellor, Koester, commissioned a workgroup around black student success. That workgroup has created a report, and the CSU has been been working to implement 13 recommendations to improve black student success. For the overall student population, we are engaged in a project now called Finish Strong and graduate 365 that does two things.

One, it puts in the hands of campus leaders and decision makers real time and near time data about students who are eligible to graduate up to a semester early, and we can disaggregate that data, and we can identify that data down to the student record level.

The other thing that we are doing is we are supporting a community of practice where leaders, decision makers, and administrators are coming together on a monthly and routine basis to evaluate that information, apply it in their context, and leverage best practices or promising practices from other campuses that they are implementing now, today. So we are still focused on as strong a finish to the current initiative as we can. We are disaggregating the data in order to be able to put it in the hands of people who can impact change on campuses, and we're actively working to find solutions.

My response will just be that, you know, those all sound like worthwhile initiatives to take on. I am concerned that we will continue to. The gaps will continue to persist. None of those initiatives are as intense as I think they need to be. We know students after their second year, third year, where they're headed in terms of how much completion has occurred, heard with credits.

It should be when you talk about desegregating data, like identifying individuals, and someone needs to find those individuals, and those individuals need to be brought in to be provided with the resources, with the counseling, with the support systems, that is like the level of, I think, intensity that is required for us to even make a dent in this persistent and, unfortunately, growing gap. And that doesn't really sound like it's in any of those initiatives.

So I would just ask that as you're reviewing, what are the potential solutions that we get to that level and that you give us some proof of concept of something that actually is. I'm just gonna say it this way. That's actually gonna work, because it has not been working. And, you know, at some point, with. As a father of two at elementary and middle school, and learning loss is real. It happens to every kid. But at some point, we're gonna have to not.

We will not have that available as a reason as to why some of these issues, particularly among our students of color, continue to persist. And we've got to get to that sooner than later. I also believe that we need to. People took on a lot of responsibilities. I get that. I like to see whether. Was that disproportionately the same students? Was it the students of color who were the ones who were having to become the caregivers?

I think from an anecdotal perspective, I would say, yes, that's what I see in my community, but that's the case. And if that's not the case. And there were other students of other subgroups who are also taking on additional responsibilities, yet they are graduating at higher levels. Then that's not the answer either. That's not the reason why we had this agenda. Because it is significant. It is the future. As you said, more of your students are students of color.

And so that means proportionately we are being less successful, even more with more of your students. That is not acceptable. I know it's not acceptable to you, certainly is not acceptable to the state. So there is definitely more work to be done on this initiative. And we should probably try to spend some more time hearing from you on the precise initiatives, the almost surgical level initiatives that need to take place in order to really reduce this gap. I'll turn it over to Mister Fong for questions and comments.

Thank you so much, Mister Chair. And thank you for this presentation. I think when we look at, as Mister Chairman said, a future presentation, I think highlighting the best practices from the campuses. When we look at the data, and you might have the data here, campus by campus, but I'm not sure if it was in, I didn't see it in a report which campuses are doing it better. You mentioned sharing best practices.

That intentionality that I hear from the Chair, myself is really looking at how we meet this goal. 40%, 70%, 45/85 and literally around the corner. Yes, pandemic happened. Yes, learning loss happened. But at the same time, the intentionality of this program is so critical to helping our underserved students of color.

Meet these goals and to really embrace their hopes and aspirations here in higher education, here at the CSU. So I think it sounds like there will be a future presentation on this, but how we can share those best practices to address and close that go to gap is something that would be very interested in hearing. But also the campus by campus scenario, because I assume some campuses are hopefully meeting the threshold now or very close to it.

And other campuses, as we heard, the gaps have increased. So really getting that campus by campus analysis and seeing what is being done at those campuses that make those programs and how we can replicate those best practices. I just wanted to make that comment. Thank you, Mister Chair.

Thank you. Again, thank you for the work you do. We want you to succeed, obviously. So we are hopeful to hear from you. What are those things? What are the best practices at campuses? What are the new initiatives? What are the, again, surgical level on the ground, helping students individually. Conversations are important among educational leaders, don't get me wrong, but we are now at the state where like, we need to get into the weeds with these kids. So I'll let you make a final comment.

Just two brief observations. One to the observation around the COVID-19 impacts. In fact, the data does show that there was disproportionate impact both in terms of health and in terms of family responsibility for precisely the students who are we are talking about.

So there was a correlation between the underserved students who are at the CSU and the impacts that they experienced during COVID-19 and to your point, and your questions and observations about tactical implementation and specific outreach and engagement, that is exactly what is happening in the community of practice. It is to the record level, the individual student level, where then the outreach and the engagement can be made on the campuses, a student at a time. So absolutely that is happening and we continue to work on that and take your points about deepening that work. So thank you.

Thank you. Again, we'll hold the issue open and we will likely discuss this in the future. So thank you very much. Thank you. With that, we will now open up to public comments. We ask you to please line up at the microphone here and we'll give you a minute. Please give us your name, who you represent, and brief remarks on an item that you'd like to share your comments on. Let's begin.

Thank you, Mister. Thank you very much, Mister Chair. Meagan Subers on behalf of the California Professional Firefighters. And I would just like to briefly touch on item number three. Under the UC budget. CPF worked with Assemblymember Grayson last year on AB 700, which set up the Firefighter Cancer Research Program at the UC's. And it came with it, a budget allocation of $7 million last year to go to the UC's. We are very grateful, very supportive of this program.

Cancer is the number one killer of our members, both active and retired right now. And so since the Chair had asked about a status update and why maybe some of those dollars have not been spent yet, we would just like to point out that the UC's have been very diligent about implementing this program. An RFP went out in January, requests, intentions to apply were due in March.

And as we understand it, applications are due in June for money to roll out before the end of the year. So we are very supportive of that program and hope to see it continue. And then just very briefly, on behalf of the CSU Employees Union, just want to stress the importance of maintaining the compact in the long term. We recognize the need for the deferral in 2024 and 2025, but want to support CSU's bargain agreement to increase wages and establish merit salary set.

Thank you.

Hi, I'm Molly Maguire with the Campaign for College Opportunity. We appreciate the rich discussion here today regarding state support for the UC and CSU systems, and we agree that there's great value in reliable, sustained funding for the systems. But in the current environment, a deferral is the best option.

And while we appreciate the timely reporting included in the UC and CSU progress reports, as you noted, Chair Alvarez, what's missing is an objective analysis of the system's progress in meeting compact goals, which is critical to the Legislature's ability to understand how and whether compact goals are being met. We stand ready to assist the Legislature to design tools for accountability to ensure the compacts, as a tool for incentivizing and improving outcomes for students, are better understood and evaluated. Thank you.

Thank you.

Thank you, Chair. My name is Andrea Terry, and I'm a Professor at Sacramento State in Communication Studies. I'm also a double alumna of the CSU system. Each dollar that you spend to support students, staff and faculty at the CSU has drastic multiplier effects as the CSU educates and equips our teachers, nurses, farmers, engineers, and, yes, even future legislators in our increasingly diverse state.

The CSU is vital to providing higher education for some of our most marginalized communities, and it is in support of those students and those communities. I speak advising you to fund the compact. The CSU serves first generation college students, student parents, student veterans and more, and they need this funding. Although this is a difficult budget year, multiple studies have shown that during tough economic times, people are more likely to enroll in college to improve their job prospects. Fully funding the CSU is therefore even more important.

Thank you very much. Thank you.

That a minute?

Yes.

Okay. Well, if you want to talk about the work that we are doing to decrease achievement gaps, I'm doing some of that work right now, and I am happy to share more with you. Thank you.

I look forward to hearing. Thank you very much.

Thank you, Chair and Members who are here, Tiffany Mok with CFT - A Union of Educators and Classified Professionals. Thank you so much for this hearing. I want to just echo the points that UC made about fully funding the compact and those importances. I want to point that efficiencies, while they sound great, do not come free and are most often borne by students and staff.

For instance, when ... mentioned that this UC encouraged healthcare plans, what that actually meant was ensuring that the other plan options were increased in fees to ensure that the UC plan, which was previously more expensive was now the same price as other plans. This meant that UC staff is now paying more for their health insurance than previous years. And over the past 20 years, or since 2000, UC tuition for undergrads has increased 109% while the amount spent on undergrad students has decreased 49%.

While the ... chart in the Committee analysis on page three, I believe, indicated that per pupil funding has increased 7% this year. Includes debt service payments, retirement and other costs that don't directly board on actual costs for the students. Thank you so much.

Thank you. I know the minute goes by fast.

Yes, it does. Thank you so much. My name is David Colnic. I'm a Professor and Department Chair at Stan State. I'm also a CFA campus President and Officer of California Faculty Association. Thank you so much for the opportunity to speak today on the achievement gaps on graduation 25 the immigration support as well. Those are important issues, but I'd like to just reiterate what's been stated.

Urge full funding of the CSU with the governor's proposal regarding the compact deferral for one year. That's essential for us to be able to do our jobs to help students meet the those graduation goals, have success. You can see it happening on our campus. When we don't have those resources, it moves in the wrong direction. Thank you so much.

Thank you.

Good afternoon, Chair and Members. My name is Aarthi Sekar. I'm an international representative for UAW, working in Region Six, which represents over 60,000 workers in California's public higher education sector and the UC and CSU systems. UAW members perform cutting edge research and carry out the educational missions of California's public universities. Workers rely on California's public education system in order to get a world class education and are essential ways for workers and their families to gain the education they need to enter the middle class.

The compact between the Governor and UC and CSU guarantees 5% annual increases to the University's General Funds for the 2026 to 2027 school year. History has shown us when the UC and CSU face financial challenges, those burdens are pushed onto students and workers. Reducing or eliminating the compacts would be a step backwards for achieving California's equity goals. Workers and students cannot wait. We urge the Legislature to stand with workers and students and prioritize maintaining UC and CSU scheduled funding levels.

Thank you very much.

Good afternoon. My name is Christina Lee. I'm a Managing Attorney at Immigrant Legal Defense, and I'm just here to discuss the project of the CSU Immigration Legal Service project regarding how many students I've met who are CSU students who have come to me and said that they don't know if they can continue with their education because of their immigration status.

And for me to tell them that there's options for them to look into and to give them hope to continue with their education has been really just profound. And that they can continue to help their families has been really impactful. And the tenacity of just young students here in California who really have overcome their immigration status to really fight for their education, has been really inspiring. And I hope that this Committee will help oppose the Government's budget cuts to the CSU immigration.

Thank you very much.

Good afternoon. My name is Ilyce Shugall, and I'm a Managing Attorney at Immigrant Legal Defense. I oppose the budget cuts to the CSU immigration legal services funding. I represent dozens of crime victims through our CSU program. The funding allows our clients to continue their higher education, contribute to the economy, working in their fields, while also getting the support they need to gain stability and recover from jobs trauma. For example, today we are filing a UVSA application for a Fresno State student and his parents, which will provide stability to the entire family. The student is studying biology at Fresno State, plans to go to medical school, and hopes to work as a doctor in Fresno. Thank you.

Thank you.

Hello. My name is Siobhan Waldron. I'm a Co Founder and a Managing Attorney at Immigrant Legal Defense. I'm here to state my opposition to the Governor's proposed budget cuts to the funding for the CSU Immigrant Legal Services program and ask that the program be fully funded.

Like my colleagues, Ilyce and Christina, I regularly work not just with students, staff, and faculty, but their entire families to help provide that not only immigration stability, but the ability to keep studying and then later put their studies to use. To stay in California and help the entire workforce and the entire community thrive. For example, I recently just filed green card applications for four sisters who, unfortunately, when they were very young, just infants, their parents worked with unscrupulous attorneys at the time.

They had outstanding immigration orders, deportation orders against them. But they have DACA. We assisted them in traveling outside the United States. They have returned. They're seeking their green cards, and they're connected to the CSU Monterey Bay campus. Some of them have master's degrees in engineering, and one is currently working on drugs to fight cancer. Thank you.

Thank you very much.

Thank you.

Hello. My name is .... Same opposition. And I am a former undocumented student and a student that benefited from these services. These services helped my parents and I obtain legal status after 27 years. I then immediately joined the California National Guard and serve this great state during COVID and wildfire state missions. Today, I stand before you, a proud Californian and as an immigration attorney, providing these legal services that are crucial for the continued growth of California. Thank you.

Thank you.

Good afternoon, Mister Chair and Members Cynthia Gomez, Deputy Director of State Policy and Advocacy for the Coalition for Humane Immigrant Rights, CHIRLA. Here to speak on the CSU Legal services funding the proposed cuts to the CSU legal services would be detrimental for students, faculty, and staff at CSU campuses. This funding allows for a partnership between CSUs and nonprofits to provide quality legal services and resources to students, faculty, alumni, and their families. And oftentimes, these services are the only affordable legal options available to students and their families.

Reducing this funding would have a critical impact on students and would have negative repercussions for the immigrant and undocumented community in California. We understand difficult decisions must be made during our deficit, but we urge the state Legislature to reject this reduction in the funding.

Thank you.

Hello. My name is Alex Freitag. I'm a DOJ accredited representative at CHIRLA, or Coalition of Human Immigrant Rights. I work within CHIRLA's legal department, specifically supporting legal services at the northern CSU campuses of Sacramento, Chico, Sonoma, and Humboldt. And very briefly, I want to touch on the critical nature of our services. Why would it be counterproductive to the priorities of the Assembly to implement the proposed cut to our grant, from $7 million to $1.8 million.

Immigration status is a massive barrier to equal opportunity in the United States, and thanks to this grant, we can offer free immigration legal services to all students, staff, and faculty of recent alumni and their family members. The legal applications we prepare would normally cost thousands of dollars for the private attorney, a cost that many of our CSU community members cannot afford.

Over the course of our programs existence, we have not only assisted thousands of CSU students, staff, and faculty to obtain immigration status, we've also developed critical organizational infrastructure in neglected areas of California, specifically counties in the eastern and northern portions where there are often no immigration lawyers or immigration nonprofits at all, leaving residents without any resources at all to navigate the immigration system. These cuts would drastically reduce access to legal services and often underserved areas. The proposed cut would address approximately 0.01% of the shortfall, but would cripple the services we provide by removing 75% of our funding.

Thank you for your testimony.

Thank you.

My name is Jenny Hernandez. I work at the Sacramento State Dreamer Resource Center as an Outreach Fellow and a Peer Mentor, which means that I work very closely with the students that benefit from the legal services that the CSU provides. Getting rid of these services would be a detrimental effect to their mental health and their educational careers. Many of them are fighting just to be able to work here in the United States, so providing this relief would be a huge help to their educational goals.

Thank you for your testimony.

Good afternoon. My name is Sharon. I am a transfer student and a senior at Cal Poly Pomona. I have been undocumented and without a path to citizenship since I first came to California when I was nine years old. I am in the process of applying to law school, and I'm encountering high fees at every turn. The law school admissions council offers financial help for low income students, but not for fully undocumented students like myself, unless they have a DACA application in the system. I am counting on the Cal State University legal services to help me with this process so that I can meet the eligibility. I urge you to please reject the Governor's proposal. Thank you.

Thank you.

Good afternoon. My name is Gloria Vallin. I'm the Central Valley organizer for the Coalition of Human Immigrant Rights, CHIRLA. I'm also a CSU Stanislaus alumni, and I oppose the proposed budget cuts.

Thank you.

Hello. Hello. My name is Cesar Salinas. I'm a second year mechanical engineer at San Diego State, and then I reject the proposal to cut budgets to legal services.

Thank you.

Hello. My name is Natalia Medrano, and I'm a student from Bakersfield College, and I oppose the 5.2 million budget cut. So, seeing as how some of these families. The only way we ever get legal services is from these programs. Thank you.

Thank you.

Hello. My name is Jesus Torres. I attend Bakersfield College, and I oppose a 5.2 million budget cut.

Thank you.

Good afternoon. I attend ..., and I opposed a Bill cut.

Thank you.

What? The budget cuts.

Yes. Thank you.

Hi, my name is Alison Pennington. I'm a Managing Attorney with Immigrant Legal Defense. In opposition - here in opposition to the funding cuts, I wanted to share with you a story of one of my clients. We, as attorneys, we have a front row seat to the impact of this program. And one of my CSU Bakersfield clients, who was studying to be a nurse and on the verge of graduating, found herself all of a sudden with an expired U Visa.

Because she didn't have legal services in the area, she had turned to a notario who had let her U Visa expire without applying for a green card. She came to us. We assisted her with her green card. She's now working as a nurse. Her younger brother was in the same situation. We assisted him. He now is fully employed and working, and we're also helping her petition for her undocumented husband. Thank you.

Thank you.

Good afternoon. My name is Laura Polstein. I'm a Managing Attorney with Immigrant Legal Defense, and I'm speaking in opposition of the Governor's proposed budget cuts to the CSU immigration legal services. Like many of the folks who also spoke, I have clients. I've worked with one in particular, who was a former farm worker, obtained a special scholarship, merit based for farmworkers, to attend Fresno State. When we met him, he had DACA. We helped him identify that he was able to get a green card through his spouse. Assisted him with that, and he was able to pursue a graduate degree and ultimately is working himself in the field of education. And because we do serve the entire family, we also represent his brother, who's not a student, in his DACA renewal applications. Thank you.

Thank you.

Good afternoon. My name is Misha Seay. I'm also a Managing Attorney at Immigrant Legal Defense, and I wanted to share one quick anecdote of a client of mine. She grew up most of her life in California. After having been brought here as a young child, she started her education educational career in the community college system. She was able to transfer to CSU in Stanislaus, where she obtained her bachelor's degree, but she didn't stop there.

She went on to become a staff person and continues to work at CSU Stanislaus today. It was through her that we met her husband, who ended up being her ticket to getting legal status in the United States. We helped her husband with his green card application, later his US citizenship. He then petitioned for her. The alumni. Now staff member of CSU Stanislaus. We expect her green card to be proved quite literally any day or week now. She is one of the students served under this project, and we urge you to reject the budget cuts. Thank you.

Thank you.

Hi. Good afternoon. My name is Adhemir Romero, also a Managing Attorney at Immigrant Legal Defense, and I reject, or I ask you to reject the proposed budget cuts to CSU Immigrant legal Services project. I currently represent hundreds of our applicants who are renewing their DACA application, many of whom are speaking to an attorney for the very first time. Many of them are very surprised that I asked them so many questions and wondering why I just don't do their application like everybody else.

The current available services that they usually go to. It's through meeting these clients that we discover that they actually have or that they discover that they have relief for something else. I do want to share a client's story. A sibling of a staff member at CSU Monterey Bay came to us, and I had to share with her the bad news that she actually missed a deadline because she had already turned 21 for the ability to get a green card. But in speaking to her, discovered another form of relief that was also available to her sister, who was a CSU staff member, and the, and actually her mother. So we currently represent the entire family.

Thank you for sharing. Thank you.

Good evening. Chair Alvarez. Steven filling. I'm Professor of Accounting at Stanislaus State. We ask the Assembly to concur with the Governor's proposal for CSU to defer $240 million in compact funding. Given the state's financial situation, we feel that's a measured and reasoned approach.

The LAO recommendation to reject that deferral is a case of cut now so you don't have to cut later. Their approach fails to recognize the very real difference those resources can make to students. Faculty and staff provide the support our most at risk students need to succeed, programs that open new possibilities and classes that enable them to make progress toward degree, in other words, the very success that the LAO seeks to measure our efforts on. Again, we ask you to concur with the Governor's proposal. Thank you.

Thank you.

Good afternoon. My name is Reno Santiago. I'm the Statewide Organizer for the California Dream Network with CHIRLA, and I'm here to ask you all to deny the proposed budget cuts by the Governor. My organized and documented student at the CSU, UC, and Community College level, and understanding that CSU makes up one of the largest population of undocumented students throughout the statewide, and a budget cut to them would lead drastic measures, leaving them abandoned without the support and need that they need for their personal future, academic future, and overall success as human beings. All right, thank you.

Thank you.

Hello. My name is Fernando Lorenzana. I'm a student at Cal State Dominguez Hills, and I'm also a Fellow at the Immigrant Justice Center, which is a Dream Center on my campus. Based on the budget cut, I can tell you that many students are going to be impacted by it. Therefore, oppose the proposed budget cut. Thank you.

Thank you.

Good afternoon. My name is Genaro Cruz. I'm a Senior Legal Assistant with Immigrant Legal Defense, and I'm here in opposition to the Government's budget cut of the CSU Immigrant Legal Services project. Before my role in immigrant legal defense, I was a college advisor with different organizations from 2012 to 2018, and some of those conversations that I had with those students were undocumented, were really difficult until 2019, where I was able to basically be able to advise them to go to their campus and be able to be connected to some resources. Now, as a senior assistant, I'm super happy to be able to see those students come to our doors and be able to help them, not only them, but their families. Thank you.

Thank you.

Hi, my name is Rosa Luna, student at Bakersfield Community College, and I oppose the budget cut because as a student planning to transfer to a UC, I depend a lot on the financial assistance that they give us. So I oppose the budget cut. Thank you.

Thank you.

Good morning. My name is Anna Luna. I go to Bakersfield Community College and I'm an undocumented student. I oppose the budget cut funding for CSUs. Even though I go to community college right now, it will affect me a lot once I transfer to a CSU, especially because I'm an undocumented student and like me and other students, we rely on these budget funds. So I oppose.

Thank you.

Good afternoon. My name is Ceria Fautazar and I go to California State University, Bakersfield. I oppose a budget cutting as it will affect many undocumented students as myself and benefit for these services that allow us opportunities to help them.

Thank you.

My name is Fatima Zafarino and I am a student at Cal State Long Beach. My family and I have benefited from these services as an immigrant household, and I also serve as the Guidance Legal Advocacy Fellow at CSU LB, where I have recognized how crucial the CSU immigration legal services is for students. I work with ... to help these students at the CSU and the budget cut will hurt thousands of students CSU wide. To cut the CSU budget so that it matches the UC is unjust because the CSU has more undocumented students than the UC. I oppose the budget cuts and urge you all to help save all the funding so that these services can continue to support students, staff, faculty and alumni of Cal State universities.

Thank you.

Good afternoon, Mister Chair and Members. Christopher Sanchez with the Mesa Veda Group representing CARECEN, the Central American Resource Center of California, one of the recipients of this funding, who also provide services from CSU Channel Islands in the Los Angeles region, Orange County and the San Bernardino region.

I would just like to make, you know, echo all the comments of my colleagues and make a fine point that California's infrastructure that we've built for undocumented students at the campuses is now being replicated across the nation in States like Illinois and others, and it would be detrimental to national movement to have these services cut at the CSU. Thank you.

Thank you.

My name is Sergio Martin. I'm a current student at CSU East Bay. So I'm here to support the Legal Defense. So I'm here as an undocumented student. I was very worried what I have to do with my degree after graduate. So thanks to this project that I'm able to work and to overcome myself and be someone in life because I'm here to this country, but with all the honestly, thanks to this country, I'm having a good education. And I'm here to asking you guys, please. I'm here asking you guys to reject the budget cuts because many dreams are taken away, and we just want a single opportunity to be in this country and to able to be someone iIn the future. Thank you.

Thank you.

My name is William Martin Pablo. I'm a freshman student at CSU East Bay. I'm here in support of the CSU Immigration Legal Services project. Throughout this project, I was able to get legal help, and now I'm a special immigrant juvenile applicant. I was able to get to a work permit, and in a few years, I'll be able to apply for to become a permanent resident. I'm very thankful for this service. I ask you to continue supporting this project. Thank you.

Thank you.

Hello. My name is Guadalupe De Leon. I am from Bakersfield College. I go to Bakersfield College. I'm also part of CHIRLA as a CDN Steering Leader. I am a part of a group called LUPE at Bakersfield College, which is Latinos Unidos Por Educacion. We have lots of students that would benefit, that have benefited. We have students that have gone to Berkeley. They've gone to, like, all kinds of different schools. Their dream schools that if this was cut, they wouldn't be able to have that opportunity, be the first in their families to go to school, to go to universities that they dreamed of since they was little. I just urge you to deny the budget cuts for this. Thank you.

Thank you.

Hi, my name is Eleni. I'm the Co Executive Director at immigrant Legal Defense, obviously here to ask you to support us in opposing the Governor's proposed cuts. This project has reached parts of California that we never before expected we could reach as legal service providers and that have been legal deserts for immigrants for years. I'll share with you just one brief story. The first client we ever intaked under this project was at CSU Fresno. She had worked in the fields as a child for years.

Her whole family had. Today she is a US citizen. Her mom and siblings are on their way to being granted asylum. And a cousin who got inspired by her now also is a CSU student who's graduating this year. This project works, and it holds true our values as Californians. So please help us in supporting it.

Thank you.

Good afternoon. My name is Yoshira Mendez, and I also work at immigrant legal defense. I'm asking you to please support the CSU Immigrant Legal Services project, it really makes a difference. Hopefully, we won't have that other person in the White House. But if we do, now we have the system that is working, that is helping immigrants. We don't want to just react to what happens. Hopefully, we don't have to. But now we have the system. And I ask you to please support the CSU program.

Thank you.

Hi, Jackie Gonzalez, Policy Director at Immigrant Defense Advocates. Two points. The first, to cut back to 1.8 to align with the UC system, is a very basic way to cut back in a tough funding year. The CSU campuses, 23 campuses across the state. The UC nine, the undocumented population, is 4000 at the UC's, it's about 10,000 at the CSUs.

Just to build on the prior comment, if there is a change in Presidential Administration, the most effective way to be proactive in protecting immigrant communities is to have an infrastructure in place. If you look at the map of where the 23 CSU campuses are located, it's perhaps one of the best ways to provide coverage over a really vast state. Coincidentally, it also reaches legal deserts, which isn't just places where people don't have access to information. It's the place where enforcement begins. Because ICE and people who want to harm immigrant communities know that people don't have access to. Thanks to the infrastructure of the system and the money California is invested, it would be irresponsible to cut back, considering that we really don't know what's coming down from a federal perspective. Thank you.

Thank you. Thank you all for your public testimony. We will adjourn to our next meeting.