Assembly Budget Subcommittee No. 3 on Education Finance

Good morning, everybody. Welcome to our Assembly Budget Subcommitee Number three on Education Finance Chairman David Alvarez here. Thank you for being here today. We have our hearing primarily on the UC, the University of California. We will focus on five specific issues and one related to the College of the Law issue.

We will not be voting on those issues today. The hearing will echo some of the issues we already discussed here in the last few weeks. I think it was earlier this month, actually. Like CSU, UC faces a significant state funding proposed cut this year.

The Governor is proposing to defer a 5% increase that was already planned for this year as part of a compact with the UC system. These cuts and deferrals are the biggest issues California higher education this year is facing. We know most of the Legislature does not want to make the cuts.

We've heard from over 50 Assembly Members who have sent in letters or sign on to letters of the Budget Committee opposing these cuts. However, we also know that the General Fund is facing some constraints this year and deficits going into the future, as the LAO has pointed out.

So we will do our best in the next few weeks to address these cuts to the UC and as well as the CSU. But I think realistically we must have a real conversation about how we can help UC do what it does best with less state funding. Flat funding may be the best case scenario this year.

That's if all goes well and the next few years look difficult as well. However, there are good news. UC and in California California enrollment at the UCS has been relatively strong. All UC campuses, as we will see in the reports today, are reporting larger enrollment this year than they have the just five years ago.

Some campuses have grown by a small amount, but we have seen strong growth at Berkeley, Los Angeles and San Diego campuses. Hope we can continue the trend with more access to UC. That has been by far a theme of this Committee for the Last Several Years.

And to do so, I think we need to think creatively about how to make that happen. So we'll have conversations about that today. We will hear specifically from UC San Diego about their plans to expand off Campus center in Southern San Diego. County.

And I'm hoping that we can also talk with UC in the next today and in the next few years about how we can creatively bring a UC education to more students who may have difficulty in getting to a traditional UC campus. Like I said earlier, we will also discuss the College of the Law budget.

This is a standalone law school in San Francisco and always faces challenges at meeting its costs. The Governor is proposing a Slight operational increase for the college and sports support the second phase of a housing project. These are the proposals.

But in a difficult year like this, with difficult choices, we will have to weigh in on these increases against the cuts that are being proposed to the UC system as a whole. We will allow public comment at the beginning. At the end. If anybody has public comment, we'll take you now for 30 seconds.

If not, we will hold off until the end. We'll give you a chance to do one minute at the end. Are there any opening comments from Members of the public? Remember, these opening Comments are for 30 seconds and we appreciate you being timely. Welcome.

Hi. Thank you. Good morning, chair and Committee Members. My name is Amy Fletcher. I'm an SRA at UC Davis and I'm here with my fellow UCD Members to respectfully urge the Subcommitee to restore the budget cuts. As an SRA, I help facilitate education and research for the Department of Food Science at UC.

And the announcement of UC's hiring freeze would worsen the short staffing crisis we've been living with since the COVID pandemic. It would have a negative impact on our ability to provide the world class education and research we pride ourselves on.

And so, on behalf of my students and research, I urge the Committee to encourage UC to end the hiring freeze and restore the cuts. Thank you.

Thank you. Good morning, chair and Subcommitee Members. My name is Nico Vincent and I'm a clinical research coordinator at UC Davis. I am here also with my fellow UP the Members to respectfully urge the Subcommitee to restore the 8% budget cut to UC.

Clinical research is sometimes a patient's only hope in the face of devastating disease or injury. Californians turn to UC researchers for answers. UC's announcement of a system wide hiring freeze will worsen the short staffing crisis. And I'm fearful for how that will impact our research.

So I call on the Subcommitee to restore UC's funding and for the UC to end the hiring freeze. Thank you. Thank you.

Chair Alvarez and Subcommitee Members. My name is Mary Champeny. I'm a pediatric dietitian at UC Davis and an UPD Member. I have the privilege of helping ensure children are nourished during critical points in their life and see firsthand how our most vulnerable patients suffer when poor staffing delays their care.

UC's hiring freeze will worsen the staffing crisis and leave us less time to provide the personalized nutrition recommendations that our patients and medical teams rely on in order to adequately care for our patients. I call on this Subcommitee to restore the budget cut to UC's funding and urge UC to end the hiring freeze.

Thank you. Good morning. I am Dr. Kendon Kurzer. I'm a continuing lecturer at UC Davis. I'm also a part time adjunct Professor at SAC State and Folsom Lake College. So I see public higher education in California across the systems. I second these recommendations that we should not. We should do our best to restore the budget for UC and CDC.

If every dollar we take away from UC at this point is going to be lost to the support that we, that our students require, the hundreds of thousands of students that we serve across the state and it's going to reduce the likelihood that we will be able to provide cutting edge research and support for the future. If you want California to be viable in the future, we need to restore that money.

Thank you. Thank you very much. For those of you who like to speak at the end of the meeting. We will who did not speak prior or in this period. We'll have an opportunity to do so at the end of the meeting. Thank you again for the public comment. So we will begin with issue number one.

I ask the panelists to please come forward. This is conversation discussion on the UC Core Operations Review and funding proposals. We have the Department of Finance, the Legislative Analyst Office and the University of California Office of the President here and also Chancellor from UC San Diego would be joining this panel. So welcome to all of you and I think we'll start off with the Department of Finance.

Good morning Chairmembers Jessica Deitchman with the Department of Finance. The Governor's Budget maintains the multi year compact with the University of California in Exchange for clear commitments to expand student access, equity and affordability and to create pathways to high demand career opportunities. The budget reflects the fourth year of the multi year compact with the University of California.

The UC will receive 240.8 million in ongoing General Fund support. Payment of the 2025-26 support has been effectively deferred to the 27-28 year in alignment with the language that was included in the 2024 Budget Act.

Additionally, the budget maintains the Plan 25-26 deferral of the $31 million to offset the revenue reductions associated with the replacement of 902 non resident undergraduates with an equivalent number of California resident undergraduates at UC Santa Barbara, UCLA and UC San Diego. This payment is deferred to the 27-28 fiscal year.

The budget maintains efficiency reductions included in the 2024 Budget act intended to address ongoing statewide budget pressures. As a result, the UC, UC should continue planning for a reduction of 7.95% in ongoing General Fund support totaling approximately $396.6 million beginning in the 2025-26 fiscal year. That ends my presentation. Happy to take any questions at the appropriate time.

Thank you. Legislative Analyst Office Please

thank you, Mr. Chair and Members Ian Klein with the LAO provide some background. Whereas many other state agencies were subject to state operations reductions in the current year, the state provided UC with a roughly 3% increase in General Fund support.

When including anticipated tuition and fee revenue, UC's 24-25 core funding is expected to increase by about 3.5%. Despite this increase, UC indicated it did not receive enough support to cover all of its budget priorities. As a result, UC has begun to take action to reduce its spending.

These actions include adopting campus level hiring freezes, consolidating administrative services, and reducing certain other discretionary operating costs such as professional development, travel and deferred maintenance spending, among other actions. And these types of actions are what UC has typically done in the past when facing budget shortfalls.

Looking to the budget year 25-26, the state budget plan for UC maintains the 7.95% base reduction, which is partially offset by a restoration of a one time cut that was applied in the current year. When accounting for the anticipated increases in tuition and fee revenue, UC's total core funding is projected to be roughly flat in 25-26.

Though UC's core funding is projected to be roughly flat, it's facing rising cost increases that it must cover in areas such as represented employee compensation as well as health and retirement benefit costs.

In total, UC has identified a 25-26 budget plan that with over half a billion in core spending increases, of which about 160 million is non discretionary and this is shown on page 11 in your agenda. Despite UC's internal budget plan, if the state's budget plan for UC is adopted, UC will need to reduce its spending.

UC indicates that campuses are planning to implement further cost reduction measures in 25-26 and many of these measures build on actions that were already being taken in the current year. For example, UC has recently implemented a University wide hiring freeze.

Some of the proposed actions, such as the hiring freeze, could result in fewer course offerings being provided to students leading to larger overall class sizes, and there could also be some impact on student support services.

Turning to the proposed deferrals, we recommend the Legislature reject the proposed deferral of a base augmentation and the proposed deferral of non resident replacement funding for UC. The State is facing projected budget deficits for the next few years and it has not identified how it would pay for those deferrals.

Given the projected budget deficits, the state would likely not be able to provide the deferrals to UC or those payments would come at the expense of other programs. So rather than instituting the deferrals, we recommend the Legislature wait until the given budget year to make changes to UC's base funding.

This would provide a more accurate funding expectation for UC that what's identified currently in the state budget plan. I'll pause my comments there, but can answer questions as needed.

Thank you. Appreciate it. Office of the President or Chancellor.

Thank you everybody and thank you Chair Alvarez and Members of the Subcommitee. I'm very pleased to be here to discuss the University of California San Diego's perspective on the Governor's Budget with you. The Governor proposes an 8% cut to our base budget and a deferral of the compact funding for the University.

I ask you to reconsider. Reconsider the magnitude and the severity of these cuts. UC San Diego share of the UC system wide state appropriation is about 500 million. The campus's budget will be reduced by 42 million as the UC San Diego share of the 8% cut.

The Governor's Budget also proposes to delay additional funding that we are counting on from the compact, including the mandated non resident student replacement. This deferral of anticipated funding creates another $31 million budget problem for UC San Diego.

So together the proposed cuts and the funding delay create a $73 million budget gap or about a 15% to our total state funds, nearly twice the 8% we at UC San Diego and UC, we upheld the compact. UC San Diego grew California undergraduate students by 10% during the compact period.

And as an aside, from 2017 to 2023 we grew 31%. We took 31% of the net growth in the UC system at UC San Diego. And each year we have not only fulfilled but exceeded our non resident replacement target. I'm very proud to expand access for California students.

But we do need the funding to provide instruction and services to these students. This significant budget reduction to the UC San Diego campus will impact services and instruction, student services and instruction.

So with either the same number of faculty or fewer faculty to teach classes, class sizes will go up and time to degree will lengthen, both of which we don't want. This will have a detrimental impact on our students. UC has put in place a staff hiring freeze and so has UC San Diego.

We have frozen all faculty hiring and and staff hiring in Non Commission critical positions. And this is to contain costs in anticipation of these budget reductions and other reductions that are coming from the rest of the country. So I'm pausing capital outlay projects where construction has not yet begun, such as the new multidisciplinary research building at Hillcrest.

I'm also preparing the campus for extensive employee layoffs. These steps are necessary to address the budget shortfall caused by the state funding cut and deferrals and not to mention the federal cuts that are coming our way. So the budget reduction campuses campuses have to undertake are significant.

They are also more severe than other state agency reductions, which I'm told took only 3%. So the cuts to UC and CSU are about 40% of the total proposed state budget cut across all state agencies. And just my feeling that this is not an equitable way to to reduce budgets and place burden.

Let me talk a little bit about what's happening on the federal landscape which we in the UC, which are large recipients of grants and support from the feds, have a very big impact. So I'd be remiss not to mention the federal budget landscape.

The severity of our budget campus campus budget shortfall is exacerbated by the federal funding cuts which have already impacted my campus. To date. Hundreds of millions of dollars in federal awards have been canceled across the UC system, which is putting brakes on life saving research and innovation.

And Certainly so for UC San Diego, which has about a $1.8 billion federal research program, of which slightly more than half or around half is federal funding. So we stand to lose a lot. The Nih and the U.S. Department of Energy have proposed reducing facilities and admin costs to 15%.

If this happens across the Federal Government, UC San Diego will lose around 250 million annually. This will result in thousands of layoffs and will have ripple effects across our regional, state and national economies. Nearly 9% of all federal funding for scientific research is awarded to the University of California at UC San Diego.

Like I said, we expend about 1.73 billion in research and more than half of which is funded by federal sources. We expect President Trump's forthcoming budget request to Congress will propose significant slashes to funding for federal scientific research, education and health services.

And we are also preparing for Congress's likely $880 billion in cuts to Medicaid and significant cuts to student financial aid provided by Department of Education. All of these issues are hitting us all at the same time and they will combine adversely impact our campus and our community and will impede our ability to fulfill our mission very significantly.

So between the proposed state cuts, UC San Diego is forecasting at a minimum 75 million, which is a state cut, and up to $500 million of annual reduction to our budget. I'm hoping we don't get to 500 million, but I'm giving you the worst case scenario of what can happen.

Because as we prepare for this, we we have to prepare for the worst case. So given these extreme financial pressures from Federal Government and the fact that UC and CSU are expected to bear the burden of an inequitable share of the state's total budget cut, now is not the time to reduce our funding.

If anything, we come here seeking help and seeking support. So thank you for everything you've done. Thank you for everything you do and for your time today. Happy to answer questions. Thank you. Thank you.

Good morning Chair Alvarez and Members of the Committee. I'm Seija Virtanen for the University of California Office of the President. Thank you for having me here today and I'm hoping to provide a few comments on system wide perspective on the governor's 8% cut.

As your agenda notes, the 8% cut translates to a $396.6 million reduction to the UC system. Combined with the $125 million restoration of the cut from the current year, this means a $271.6 million reduction to campuses in the budget year.

To put this into context for our campuses and students during the compact period that's since 2022, UC campuses have incurred approximately $222 million in costs related to the new California undergraduate students that the Governor and Legislature wanted and directed the UC system to enroll.

The proposed cut would eliminate even more funding from UC than all of that enrollment related compact funding campuses have received, forcing difficult decisions on workforce management and cutting student services. This will result in real impacts on students such as fewer lectures and course options, increased wait times for key courses, increased class size and lengthening time to degree.

This will adversely impact our efforts to make certain that a UC degree remains affordable. A new student services added during the compact to ensure timely graduation for students from underserved backgrounds may need to be eliminated.

This proposed state support reduction would place the UC available core funds per student at its lowest point during the compact period and even lower than the available core funds per student in 2010 at the height of the Great Recession.

In addition to the proposed cuts, the compact funding increase campuses were anticipating to cover cost increases for the Budget year is proposed to be deferred, but campuses will have cost increases related to maintaining existing services, new enrollment growth, and student financial aid.

Even with new anticipated student fee revenues, the budget gap for campuses from the cut and the deferred compact will exceed $500 million. A budget shortfall of this magnitude cannot be absorbed by UC campuses which have very few alternative funding sources for core funds that pay for campus operations.

While the University has endowment funds, both state law and UC policy restrict the use of these funds. UC endowment withdrawals are limited to a portion of interest earnings on those funds. In addition, the University must follow donor intent, including restrictions on the use of gifts.

Just 1% of all gifts made to the University of California are unrestricted, meaning that campuses must use the overwhelming majority of the funds as required by the donor. Those interest withdrawals on the unrestricted gifts are not sufficient to replace the state funds that UC campuses rely on for day to day operating costs.

Campuses used a small and restricted portion of endowment funds for important one time expenditures such as urgent maintenance projects or emergency student aid. Campus reserves are also not sufficient to backfill for the proposed 8% reduction. Collectively, UC campuses currently have 155 million in unallocated reserves of available.

The University of California Office of the President also does not have sufficient reserves to buffer campuses against the budget reduction. UC Regents adopted a UCOP Reserve policy in 2019 at the recommendation of the State Auditor and in accordance with that policy, ucop now keeps $15 million in unallocated reserves.

At their May meeting, UC Regents will consider the ucop budget for 2025-26 and that decision will be informed by the state's proposal for the total UC budget.

The Executive Budget Committee, composed of Chancellors, Vice Chancellors of Finance, and other campus leaders who review the UCOP expenditures and programs and provide guidance to the President on the campus assessment that funds UCOP Administration. UCOP administrative budget has grown less than 1% per year for the last seven years, far less than the total UC budget.

Campuses have very limited options for outside the cuts, the campus operations and student fee increases. When dealing with a state support reduction of this magnitude, we request you reject the Governor's proposed budget reduction to the University of California. Thank you very much for your time and I'm available for questions.

Thank you. Thank you all for your presentations. Just for sake of my colleagues, particularly being able to follow my questions, I'm going to focus on page 12 in our agenda, which is the operational cut to UC and we discuss the same for CSU.

As you all might Remember, the cuts being proposed to UC and CSU are not similar in terms of how they're being applied to other state agencies.

Other state agencies, as the report points out, have received cuts at the state operations level, which was the headquarters, if you will, of state operations, whereas for UC and CSU is for the entire system. So as an example, Student Aid Commission received an operational cut in Sacramento based headquarters, but not to the services it provided to students.

Same with Community College Chancellor's Office. It was a cut to the Chancellor's office, not to all of the colleges themselves. We did not see the same application of those cuts in the proposal to UC or CSU.

And so we asked staff and the Legislative Analyst Office to come forward with some potential reduction alternatives given the severity of what it appears to be this year's budget.

And so I'll just call your attention to that table at the bottom of page 12 where the LAO and staff brought forward some potential options for us to just review and discuss and try to get more clarity on what that would mean so that the cuts stay away from serving students and stay potentially more in the administrative level.

So for the panel, maybe I'll start with the Legislative Analyst Office because I know you briefly touched it in your remarks earlier, but can you focus more specifically on walking us through these options that you've presented here on page 12?

Yes, of course, Mr. Chair. So as you mentioned, the first couple options focus specifically on UCLP's budget. There is an option to focus only on unrestricted funds and that reduction would be applied at the 7.95% level, consistent with the control section language.

Or we also provided an example of what that cut would look like if it were even greater, 10%. So some of these options that you see here, option 1 and 2, those identify UCOP's core funding and then adds additional components, one of which is funding for ucpath, for example.

Next, we looked at some areas that would have the least impact on students. So, so we focused on UC spending for institutional support.

By only focusing on institutional support, we ensured that the cuts were not being applied to academic affairs student support services, some of these areas that have higher frequency of involving direct student relations, and you can see what those cuts would be.

We also then focused on identifying as many other areas that could be included that don't touch students. So research, operation of maintenance and plants, public service in addition to the students, in addition to institutional support. And that's what provides this bottom line number.

It should be noted though that even with all of these options at that bottom line that 200 or 252 million reduction, that would still be less than what the state budget plan identifies for UC, which is 272 million.

Thank you. Can you please further explain specifically the reduction in the UC's institutional support and then follow that up with the non student areas and what exactly you identified as those cuts being? I know you mentioned generally you said research, operations, maintenance.

But how, how specific was that identified in terms of delays, plants that had been recently received, maintenance? What was the decision making there?

So this information all gets pulled from the budget, from the galley. So this is information that's identified by UC as what they plan to spend that funding on for institutional support. That includes categories such as administrative costs associated with higher level positions at the University, Deans, presidents, things of that nature.

It's also going to include areas that are more administrative in nature, so their budget offices, their HR offices, IT offices, things of that nature. However, it's not going to touch areas such as academic affairs, where it's going to be, you know, heavily faculty involved, or student support services, where there's a lot of direct interaction involved with students. So we tried to focus cuts where there would be the least impact on students.

Okay, thank you. So now I'll turn it over to. I'd actually like to hear the UC system response to that. And then at the campus level, appreciate Chancellor being here to help us understand what that means at the campus level.

Thank you, sir. We appreciate the Committee taking a look at ways to reduce the potential cut, to focus it on Administration where it might not be as disruptive to students. But let me give some context so that you have a little bit more information.

UC Office of the President is funded on an assessment from the campuses that is approved by a group of chancellors and Vice Chancellors of finance and other campus leaders. Currently, about $81 million of the UCOP administrative budget comes from campus core funds, that being state General Fund and student tuition. The remainder of those funds, the $237 million for the majority.

Administration of UCOP does not come from campus core funds. UCOP is currently under a lot of pressure to respond to the federal funding cuts and campuses are relying on the University Office of the President for those services. So I think we would need to make some of those cuts very carefully.

Staff are currently preparing a UCOP budget for 25-26 that takes into account the state funding reductions and would recommend that the regents approve a lesser amount for UCOP because we do not want to grow OP services at a time when the campuses are taking a cut. So there is intent to be proportional here. Definitely on the campuses.

Campuses are trying to protect student services to the extent possible. No one wants to harm students at a time like this.

Let me ask you a clarifying question just before you go on, because it's not in our report specifically, but of the over $1.0 billion UCOP overall budget, I think I heard you mention the figure of 237 million is what is funded through General Fund support and student tuition. Is that correct?

237 million is for what we would think of as UCOP Administration. The central Admin in Oakland. Out of that 237, 81 million is from state funds and tuition. There is also within that $1 billion UCOP budget, about $120 million in state General Fund for UC Office of Agricultural and Natural Resources, also known as UC ANR.

They have field offices in every single County of the state and work with farmers on crop management, watering, other types of agricultural research and improvements. Okay, so that is funded also with state General Fund.

Thank you. That, that helps clarify that. Let me ask Chancellor on a campus level, and every campus will obviously be different, but can you talk to me about what choices like these would mean for the campus itself?

So at the campus level the choices would be very similar to what's been outlined by the LAO and by OP. Clearly there'll be a reduction in for example, allocations to. So what I have done is I've said if the academic side of the house is cut, let's say 2%, the administrative side should be cut 2.5%.

I'm already allocating a higher cut to the administrative side, completely fully realizing that we need to cut down some of the bloat out there. But there is no way to manage this without increasing class sizes, without reducing student services. And we over the last decade have made significant progress.

So this campus San Diego, from 2012 to 2020, our four year graduation rates have gone up from 55% to 77%. This is not saying this because I'm the chancellor. This is actually a very significant increase. It's unbelievable. And my Dean of Undergrad Education has been a partner sitting in the back out there.

We don't want to backtrack the progress we have made. And I'm afraid that if we start backtracking, it's going to be hard to come back on the hill again and start uphill climb. So clearly there will be reduction. We are going to minimize the number of amount of reductions.

There'll be reduction, for example, in auxiliary services like cleaning and things like that, where we have to reduce, you know, trash pickup might go to two days a week instead of every day or something like that. So we don't know the exact impact, but we know it's coming.

What is the figure at your campus? And I'll ask the same for the entire UC system, where a cut of whatever amount it is, and I'd ask you to help me estimate or ballpark, would not impact graduation rates. The student services that you talk about, what is the number at your campus that it would take to be able to ensure that student access remains the same?

So I think if you ask the Department chairs and the Deans and my EVC, their answer will be zero. If you ask me, I understand the practical nature of life. I understand that 0 is probably the ideal answer, but not an acceptable answer. I would say in the 2% range, what we have.

So we've already taken the state cut and absorbed a lot of it at the top. So what we are transmitting down is way low than lower than what the state is giving us.

And your 2% equates to how much in terms of dollars?

So 2. So if you look at my budget, so my. The budget I get to allocate is about 1.6, $1.7 billion. So 2% would be like 32ish million in that range.

And the current number has you, I think you mentioned earlier at 73 million.Thank you. Right. Yep. Thank you. What about for the UC as a whole, and maybe if the LAO wants to provide a number here too, that'd be helpful.

In the current year, the Legislature gave the University $125 million cut. So if you were to make that cut ongoing, campuses have already absorbed most of it.

That's very helpful. You helped me visualize that very. That's very helpful. Thank you. And keep going. I just wanted to say that was a very helpful way of seeing this.

And it just happens that 125 is very close to the 2% that Chancellor Khosla mentioned absorbable cut.

Okay, that's it for me. So I'll turn over to Mr. Fong.

Thank you so much, Mr. Chair, and thank you to all our panelists here. First question is to the UC. As we heard from the LAO, the UC regents adopted a spending plan includes $500 million in increased spending.

$158 million is non discretionary, but 354 million, that's other. On page 11 of the agenda, is there a reason why the Regents adopted a budget with proposed increased spending?

Thank you for that question, Assemblymember Fong. The Regents receive information from staff about some of the cost increases that we think are necessary to keep the University functioning. These include things like our employee represented employee contracts that have a percentage increase for the staff salaries going into the future.

We receive an actuarial estimate of our retirement program of how much we should increase retirement contributions from the employer side in order to keep our retirement pool solvent and fiscally healthy for future years.

We negotiate health increases with the various insurance providers and we try to keep the rates as low as possible, but those drive the health aspect of the cost increases. Then for the more discretionary components, the Regents look at for faculty salaries, where are our faculty salaries on average compared to our comparison institutes around the country?

And how much would we need to give faculty in order to remain competitive and be able to recruit talent and ensure that talent does not leave the University? For the policy covered staff, the estimate is looking at inflation rates.

We look at how much of an increase did state employees receive and what has been the average of the last several years of increases for policy covered employees. I will note that while we have a dollar amount in the agenda, the regions have not actually approved yet salary increase for our policy covered staff.

That and given the fiscal conditions, we'll see where the regions end up on that. But that is an item of more flexibility.

Great, thank you so much for that context to you and UCOP for that context. My next question is to the Department of Finance. As we just heard from our Chancellor, the impact to our students would be really critical in terms of our class sizes, the student success, student services.

We just heard from our Chancellor Khosla that graduation rates have gone up in a four year timeframe from 55% to 77%. And so those are critical services. I want to commend UC San Diego for your leadership and efforts there to the Department of Finance and you heard from our chairperson as well.

When we look at the cuts to the UC system, the proposed $397 million cut, the impact to our students, to our UC system. Can you explain the approach that was made in determining the cuts? And then is this comparable to other state agencies?

Yeah. So Jessica Deitchman, Department of Finance the Administration implemented the reductions as agreed upon by the in the with the Legislature as described in the 2024 Budget Act. So there's no changes from the 2024 Budget Act.

However, we recognize the Governor's Budget is just in the start for the 2025 budget and we look forward to working with the Legislature to accurately reflect the needs of Legislature. So just to reiterate, this was as it was included in the 2024 Budget Act. We made no changes to that.

Okay, thank you for that context. But it just seems so much larger than the rest of the state agencies as you hear from the cuts, the California Student Aid Commission and other state agencies that are taking a 2 or 3% cut in their operational services.

So I think anything we can do to continue to push back against these cuts. I'm grateful to my colleagues.

We let a letter with over 61, with 61 Members, over 50 Assembly Members, bipartisan support and including over 10 Senators and with anything we can do to continue to push back on these cuts to the UC system that is a jewel for California, a jewel for the next generation of leaders here in our community and to continue the economic development of California.

This is critical. And so I just want to uplift the work and efforts of my colleagues and efforts to continue to push back against these proposed cuts. My last question is to the UC system in terms of the Reserve policy. We saw on the chart that there's different levels of reserves from each for each of the campuses. Should there be a system wide Reserve policy?

UC currently does not have a system wide Reserve policy for our campuses. We require that campuses think about their financial needs and try to set funding aside for those projects that are important to them. But on our unallocated reserves we do not currently have system wide policy.

I definitely hear you that we perhaps should have more consistency between our campuses. It is always a struggle between immediate financial needs and requests from students for more services. Other needs on campuses like deferred maintenance versus putting money aside for a future year. But thank you for your comments sir.

I appreciate that. Thank you so much for the context. Thank you Mr. Chair. Thank you.

And I don't want to over state, but I think it's important to restate and it's in our agenda. Staff did a great job of reminding us of the Budget Act that Department of Finance Just responded to your question, Mr. Fong. Of the the assumed savings were of 3.6 billion overall in General Fund.

It came in only at 1.5 billion because other agencies, other cuts were made differently. And I don't think, I don't believe, and you and I were here and Mr. Muratsuchi was here, that when we made that decision that it was clear that people, that different agencies are going to be treated differently.

And so that's the point I'm trying to make is that I think it's a little bit of a not surprised, but definitely not what was expected. And so I think that's why you're getting the questions finance as to why this number is different and disproportionate.

So appreciate you responding and letting us know that we've got a work together to figure this out going forward. And I think, I think we do have to focus on that. With that, Ms Patel.

Thank you for. Being here and these presentations. We've been hearing a lot from constituents as well as students and staff of the UC system that these cuts are just simply unbearable, especially at this deep level. My question, I want to start with one around deferrals.

Having been a school board trustee, deferrals are a horrible way to budget. They just, it's just not practical. And the question around the deferrals, I think our Legislative Analyst Office said that we don't know whether that those dollars will actually come through to help honor those deferrals.

So looking at deferrals, how does the budgeting process work with deferrals for the UC system? And how does that impact labor negotiations, recruitment, retention? There's this promise of money coming in. It's not guaranteed. It may come in, it may not come in. How does that impact the ability of the UC system to plan for the future?

Thank you for that question, Assemblymember. In many ways, campuses have to look at their budget for the following year as being flat or decreasing and not really assume that we're going to get the money. That's what makes it so hard, is we hire faculty six months in advance before the year starts.

But before the money is there, it's really hard to make those offers. And it's also difficult to hire staff when we don't actually know that the money is going to be there for our enrollment growth.

We are letting students in now and we are hoping that the money shows up a year from now to help pay for the classes and increase faculty for those students. If the future payments are eliminated now, we'll still have the students.

So that makes it very difficult to say don't do the deferral, or just eliminate all promises of the money in the future.

The promise of the money is still a little bit better than not getting it at all, because a year from now, if we get the money, it'll help pay for the enrollment that we have, if you want. And so I'll leave it there.

In terms of labor negotiations, obviously the negotiators are looking at that promise of the money, and they have to assume that it's going to show up. So those who are requesting salary increases are saying, well, look at this. There's going to be an additional amount of money coming.

Therefore, the University can afford to offer staff greater salaries that would go up. But then if that money doesn't show up during that year when we've offered the salary increase, we would have to do a steeper cut to the campus. So that complicates matters for us.

Yeah. I can tell you what happens at UC San Diego. I think from a personal point of view, using deferred allocations and allocating them to operational budgets is an irresponsible way to create a budget. It would lead to bankruptcy. So for me, at UC San Diego, the deferral doesn't count.

So we only count the money we have in the bank that comes with a promise that we know is going to be in the bank and not deferral a year or two out. And it puts us in a bad situation. We.

Because as my colleague was saying, the other side, the faculty, the staff, said, wait a second, that money is coming. Why don't you just allocate it? But I can tell you that we've learned lessons both on the positive and the negative side, and that would lead to bad outcomes that we don't want to do. We want to be responsible stewards of the state asset.

So what I'm hearing is there's uncertainty with deferrals, there's uncertainty with the Federal Government when it comes to student loans, would impact student enrollment. Uncertainty with NIH funding, uncertainty with Medicare, non resident, nonresident. The certainty you're asking for is state budget.

That's right. And the certainty is what I use to budget, to plan, to allocate, because when there's an uncertainty, we convert that to a certainty with likelihood 0 of funding.

I do want to highlight also we talk about cuts that are furthest away from students. Again, drawing from my experience as a school board trustee, I know we've tried to run lean in really tough budget years.

But when we start cutting into those ancillary departments, when we start cutting into it, when we start cutting into hr, that definitely long term will impact student outcomes. It's impacting the staff and the faculty on campus and it will impact students. So I just caution against trying to throw all the cuts to that side of the house when long term, I mean, it just will.

So can I offer an example? So right now, like starting last year, we're investing in AI based enhancements to course delivery and learning outcomes. It comes primarily out of the IT Department which is implementing IT costs associated with building a little data center, renting out Amazon computational space.

Without that, we would be backtracking the advances we are making in bringing more computation, more AI to the students and getting them more skills and job ready as they get out and also creating efficiencies in the system.

And sometimes that takes a little bit of time.

No, it does. And it's easy to blame the Administration as fad that you don't need. But the regulatory burden of the Federal Government, it's only going up every time. So right now, when we were running normal operations, life was okay.

But now I have like three or four FTEs allocated to just counting the Executive orders that are being passed, their impact on us and their impact that will make us become illegal in terms of following the federal regulation. So it is just without adding bureaucracy. We have to add more manpower or people power to really deal with this.

Thank you for that. I am the new Member on this Committee, so I'm still digesting the budget commitments from last year, the commitment around the compact, whether that's actually a contract or just a compact.

And I'm trying to just grasp the disproportional cuts between what we're asking the UCs to take on, the CSUs to take on versus other departments. Is there room, and maybe this is an offline question to my chair as I try to come up to speed. Is there room to rebalance that so that all the cuts, this disproportionality is reduced? .

Jessica Deitchman, Department of Finance so the cuts to other agencies aren't public yet. Once the JLBC letters are issued, then we can discuss those openly. But certainly I'll take your feedback back as we're working May revise.

Just one final clarifying question. I did a little bit of math, the125 because I'm now going to be like for better or for worse Focused on this number of what does it take to not to impact at least amount possible students in student support services and student success and access. Excuse me.

So the 125 out of the 125 million that you suggested is potentially the right number to try to preserve as much as possible. I'll say out of the 4.5 billion General Fund budget is about a 2.7% reduction.

I know it's only 0.7% more than you said, but I just want to make sure we're talking about the same numbers here. Is that. Are you, is that the accurate number that you, you think is again the figure that could be absorbable, if you will? I'm not saying it's ideal, but.

For the record, let me state again that the University of California is requesting no cut. So are we. Thank you for that quick math that you did there, sir. Then I think $100 million might be closer to 2%.

I was reiterating the 125 because that was a current year cut and campuses and restoration started developing strategies to absorb it and have done some activities already to absorb that particular cut. I do want to note two things about the way the UC cut was calculated that's a little different for other state agencies.

One, it was much bigger than most agencies, but the University of California has bond funds within our state General Fund allocation, which is very unique for state agencies. That's because of our placement in the constitution. And in 2013, the Legislature took the state's GO Bond debt for the University and placed it into our budget.

And we had the payments for that to pay it off in our budget. We also have lease revenue for UC Merced and all the new buildings that we built since 2013. All that debt is in our budget in the state General Fund payments. There is now $665 million out of that 4.6 billion allocation to UC.

That goes only to bond debt. And we cannot not pay it. It's a payment that must be made each year. It was included in the calculation of the 7%. And what that does is it pushes the amount of the cut actually more onto campuses.

When you take that and you take the legislative earmarks that we have to pay for, which are very significant, we honor all legislative earmarks going back to the 80s. We have now over $438 million in mandatory legislative earmarks as part of our budget. When you take those out, the cut to campuses is actually closer to 11%.

In addition to those two items, the UC cut was calculated by taking the current year $125 million cut, adding it back into our base and then calculating the 7.95% from that. What that does is because we didn't get those funds this year, it slightly inflates that cut just a little bit more. So our cut was calculated in a slightly different way than other state agencies because of these factors.

Thank you for that clarification. Thank you to the panel. I think most of you are sticking around for the next issue. We will hold this issue open and go to the enrollment review and proposals in this budget.

So we have Department of Finance, Legislative Analyst Office and the UC Office of the President will be here for this item. I believe we will review and discuss the enrollment trends and future enrollment plans. To the question of what do these proposals mean for enrollment of California students and all students? So we'll start with the Department of Finance proposal.

Jessica Deitchman, Department of Finance I don't have a formal proposal for this, but I'm happy to answer questions.

Thank you. Does the Legislative Analyst have some comments?

Yes. Ian Klein with the LAO so to provide a little background and is shown on page 16 of your agenda, UC's resident undergraduate enrollment has generally increased over the last several years, with the exception of the 21-22 academic year where there were some lingering Covid effects. Recent budget acts have established resident enrollment growth targets for UC.

In 24-25, UC is anticipating exceeding that target by about 3,000 new resident undergraduate students. For 25-26, UC expects to exceed that year's target by about 1,500 resident undergraduate students and for 26-27, UC is also expected to grow but is evaluating its ability to meet the growth targets depending on the level of funding that the state provides.

The growth targets are inclusive of non resident students being replaced with resident students at three high demand campuses, which I'll speak briefly about now. Over the past several years, the state has acted to reduce the number of non resident undergraduate students enrolling at three high demand campuses.

It's the Berkeley, Los Angeles and San Diego campuses such that more slots would be available to resident students. The state budget plan identifies that these campuses are to continue reducing their non resident student population in 25-26 and again in 26-27.

UC expects to achieve the 25-26 replacement target, but is reluctant on continuing the replacement plan into 26-27 if no state funding is provided to do so.

As we discussed in issue one, under the state's budget plan, UC will not be provided with a base augmentation in the budget year to support resident enrollment growth, nor will the state be providing non resident replacement funding.

Under the state budget plan, funding for these purposes is deferred to 27-28 with an expectation that one time back payments will be provided in 26-27 and 27-28. Despite funding not being provided for these purposes, the state budget plan maintains the resident undergraduate enrollment growth targets and the non resident reduction targets.

Given the state's multi year budget condition, funding will likely not be available to continue to support enrollment growth and to replace non resident students. With that in mind, we have the following recommendations. First, we Recommend Revisiting the 26-27 resident undergraduate enrollment target. With 25-26 admissions decisions already being made, modifying that year's level would have little effect.

At this point, the Legislature can still influence the 26-27 enrollment level. Given the projected budget deficit in 26-27, the Legislature could consider a couple of options. The Legislature could hold UC's enrollment level flat or reduce it depending on programmatic impact.

If the Legislature hold UC's resident enrollment target flat at the 25-26 level, UC would likely continue to implement cost saving measures that were adopted in that year, meaning larger class sizes and fewer course offerings. Alternatively, the Legislature could lower UC's resident enrollment target to one that's deemed appropriate given changes to UC's total core funding.

The next recommendation concerns the non resident replacement plan. Again, in light of the state's projected deficit, we recommend the Legislature pause the non resident replacement plan for 26-27. The Legislature could revisit this plan at a later date if the state's fiscal condition improves.

And lastly, we recommend the Legislature adopt provisional budget language that directs UC to maintain the existing progress that campuses have already made in replacing non resident students with resident students at its high demand campuses.

The provisional language would stipulate that campuses exceeding the 18% non resident undergraduate threshold shall not increase the percentage of non resident undergraduate students above their 2425 levels and this is shown on page 19 of your agenda.

Adopting this language would ensure that these campuses do not undo the progress that has been made over the last three years in implementing the non resident replacement plan. So I'll pause my comments there, but can take questions as needed.

Thank you, UC Office of the President.

Thank you Chair Alvarez and Members of the Subcommitee. My name is Katherine Newman. I've met many of you before. I'm pleased to serve as the Provost or Chief Academic Officer of the UC system. While nationally you have all read about demographic cliffs and declining enrollments, UC has been growing at a very steady pace.

Over the past five years, the University has added more than 16,000 full time equivalent California undergraduate students, a record we're very proud of. This strength suggests that students agree that a UC degree is a life changing opportunity.

Ensuring that this education is more accessible to talented young people across this state is a key mission which translates into many positive consequences for our students and for the State of California overall.

The funding that you have provided the University over the last three years has been critical in enabling our steady progress toward fulfilling the commitments we made in the multi year Budget Compact and that the Legislature has articulated in budget bills.

As noted, already we exceeded our California undergraduate enrollment target with over 12,700 FTE students added since the Compact was signed. We exceeded the non resident student replacement targets at Berkeley, UCLA and San Diego during each year of the Compact. As of fall 2024, the University had record breaking California undergraduate enrollment at 60,600644 new students.

While the full time equivalent student number is not yet final, we estimate that we will see 6,209 FTE California students increase for the current academic year of 2024-25. This level of enrollment growth is significant enough to meet our Compact goal of growing California undergraduates by 1% for not only this academic year, but for 2025-26 as well.

We are serving more students from historically underserved populations. In the fall of 24, the University admitted its largest and most diverse class of undergraduates from California. 45% of first year students are from underrepresented groups. We continue to enroll more community college transfer students than any other University system of our caliber in the nation.

This is reflective of our very strong partnership with the community college system, one that we're very proud of and our continued efforts to streamline the transfer process. The UC will increase enrollment further for fall of 2025. We've already admitted those students to provide opportunity and access for California students.

Even though we have already met California's undergraduate enrollment goal for the College for the Coming Fall, we do intend to grow by an additional 1500 students for the fall of 2025.

At the same time and in alignment with the Compact, the University has decreased non resident undergraduate students at Berkeley, Los Angeles and San Diego and replaced them as asked with California undergraduates. We've now done this successfully for three years of the Compact, exceeding each time the targets required by the Legislature.

The University's continued growth in California students reinforces our dedication to expanding student access and fulfilling the Compact with the Governor and the Legislature to grow in state enrollment. This is all good news. It represents a great deal of work. But I must express a caution going forward.

The University of California cannot afford to continue increasing enrollment with less funds. It just can't. As discussed during the previous item, the Governor's Budget proposals to defer the compact funding from 2025-26 to 2026-27 and envisions cutting the University's ongoing General Fund budget by 8%. This proposed cut will make increasing enrollment unaffordable.

If the state cuts the University by 8%, we will be forced to decrease enrollment for the fall of 2026 admission cycle, which has not yet occurred. This is not something that we want to do, but in fairness to our students, maintaining the quality of the education we provide them is a paramount responsibility.

It simply isn't possible to do that with less funding. Since this is a discussion on the proposed budget, I'd like to quickly review three specific requests for your consideration. First, we are requesting that $4.3 million for three new health equity programs modeled after the PRIME program which educates physicians to provide services to medically underserved communities, be considered.

Examples of the prime program locations are the San Joaquin Valley and the Inland Empire. The new programs would increase our output of new professionals in dentistry, pharmacy and veterinary medicine who once again would be working with underserved populations.

Second, the University requests that the Assembly approve budget Bill Language to allow UC to count non resident students replaced above the Budget act target toward a future year replacement requirement.

Third, the University requests changes to the budget Bill language that penalize the University with removal of all non resident replacement funding from the three campuses if they fall even one student short of the 902 FTE non resident replacement goal. Our staff have offered the Committee staff alternative legislation language that we hope you will seriously consider.

I'll close by reiterating how much we appreciate, even in these very tough times, the strong partnership we have with the state Legislature. We're grateful for your recognition of our importance to public higher education and to the future of the state.

Thank you. Appreciate you. Okay, we'll turn it to the Committee for Comments and questions. Maybe I'll just briefly start by most importantly acknowledging the growth at all campuses. I think that's important. As far as California resident students, as was mentioned, over 16,000 in the last five years I think is impressive.

I have to not just because he's here, but UC San Diego seems to have done exceptionally well compared to the other two campuses which are part of the targeted enrollment growth for Californians, growing by 4,600. Even though starting off roughly about the same as Berkeley and La.

I think certainly interested in how that has been accomplished because that's probably what we want to see more of. So follow up with that with the chancellor. I'm sure soon. I would also say that I not necessarily a fan and thou shall not speak ill of those who are no longer in the Legislature.

But the approach of the 31 million augmentation from state budget does exactly what Chancellor Khosla earlier was concerned about. When the money's not there, the uncertainty is not good.

And I thought a better approach would be and I know that the regents did adopt a new non resident tuition rate last year, but I thought a better approach to give that certainty to make sure we had funding from non residents to help Fund California residents would be to increase non non resident tuition rates.

I made that point pretty clearly last year. It was not something that was followed up entirely as I suggested. But again, there was a non resident tuition increase and I'm just curious where that is now and whether there's a potential to do more of that selectively, particularly at the campuses where there is large non resident interest.

Berkeley, Louisiana, San Diego, even Irvine seems to have a lot of interest from non resident students and whether that's being analyzed for the May Revise conversation on budget.

Yes, it is, Mr. Chairman. I don't think we have exact dollar figures, but we are certainly looking very carefully at that. I will say that to the extent that that non resident enrollment is coming from international students, I think we're going to face a very difficult.

I was going to ask about that.

Yeah. This is not a climate in which international students are feeling particularly welcome. And even though we have extraordinarily high brand reputation all around the world, I think their personal security situation is going to be quite challenging.

Yeah.

So fortunately, you know, our campuses have very, very high demand from around the United States as well. But I did want to mention that I think this is going to be a loss to the State of California and to our campuses.

Yeah. I would also say with sort of those other comments in mind that I do think that the investment made could be considered relatively modest for the type of.

And so I think I'm interested in how investments like in the, in the amount of $30 million, $31 million is what it is for the non resident replacement could lead to outcomes as have been demonstrated again particularly and specifically certainly at San Diego.

But overall in the system we've seen that growth and I think from certainly from my perspective, more growth obviously aided with growth in funding is the course we should sort of be on as we know that the UC system and our other system as well have been leading our growth in our economy for decades.

And we can't Un Undervalue and Underappreciate what that has meant to creating the economy that we have in California. So I think continuing to invest is the right thing to do. So again, appreciate that so far. And with that I'll turn it over to Mr. Fong.

Thank you so much, Mr. Chair, and thank you to all the panelists for the context on enrollment. And I also want to uplift the working efforts of the UC system to really grow the in state residents, especially at our major, at our impacted campuses for enrollment, including UCLA, Berkeley and San Diego.

So thank you for the work and efforts there to intentionally grow. I read in a report yesterday, I know that it's like over 1,000 students and so it's greater than the 900 that was allocated for the $31 million.

But when we look at community college transfers and the growth at our campuses, I also want to uplift the chair's comments about the non resident tuition rate to really make sure that we could look at all those opportunities to.

We know that the UC education is such a tremendous value and there's such demand for the UC education at that non resident tuition rates are something to continue to look at going forward.

The question I had is for the 26-27 year, if state funds happen to be are reduced and funds to replace non resident with resident students are deferred, how would that impact the UC system?

It would not be good news. I think we would. We simply wouldn't be able to accept as many students as we'd like to be able to. It will limit everyone's opportunities to get a UC education. We don't want to blow out the quality of what we do. We do have to protect that.

That's the seed corn of our prestige and justly so. So blowing up class sizes, reducing advising, limiting opportunities for our students. This is not a recipe for the continued success of the University of California. And we would not want to go in that direction. And that is surely what it will mean.

Because if we get to the point where these increases would be at the cost of quality, we do have to consider that.

Absolutely. Thank you for that context. Everything we can do to continue to provide the support to the EC system for enrollment growth and for, especially for in state residents is something I'm keen on. And so I really appreciate your comments and thank you so much, Mr. Chair. Thank you.

Thank you, Mr. Muratsuchi.

Thank you very much. Let me first, you know, talk about how this is a very difficult conversation for me.

I mean, I've been in the Legislature for 11 years and so I got to see the progress that we have made not only in enrolling more California kids into our University of California, but to specifically address that desire that we all hear from our constituents that we want our kids, our California kids to get in and expressing their concerns about the out of state, international students crowding out, you know, those coveted spots.

And you know, I also want to say that, you know, I'm a father of a sophomore in high school now and I'm, you know, thinking about these numbers and projecting out when my daughter is going to be applying for college in 2027.

And you know, I see how hard these kids are working and you know, their hopes and aspirations to, to attend our University of California.

And it just, yeah, so it's, you know, I want to make sure that we're connecting these budget numbers to, you know, to the real people that, you know, are dreaming of being able to attend our University of California.

And that's why, you know, I mean, I just implore the Department of Finance to look for whatever ways possible to protect the University of California funding because again, it's not just dollars and figures, but it's the hopes and aspirations of our California kids. Our kids. I wanted to follow up on the Chair's questions about the non resident.

And you know, I was wondering if like for example, at Berkeley, I'm just looking at the page 16 of our staff report, the undergraduate non resident full time enrollment..

Well, taking the actual numbers from 2023-24 do you have like a, you know, a rough idea or actual percentages of like how many of those almost 7,000 non resident students at Berkeley are international versus from other states.

Roughly 60% of our a system wide non resident students are international students.

Okay. And have we seen any early indications? I know that the Trump Administration, although it seems much longer than it has been, but it's only been a couple months. But I mean, have we seen any early indications of the impact on the interest level of international students applying to our University of California?

I don't think we'll be able to see that just yet, but it's coming that I think you can depend on. And we will see it probably first in our master's programs, which are very important parts of the revenue model for our campuses. The undergraduates are very important, but they are a small number.

We have 36,000 international students in the UC system right now. I would not want to hazard a guess of what that graph is going to look like in a year's time, but it's not going to look good.

I don't think you talked about the. Master's program, but I just want to clarify the 60% system wide international figure that is for undergraduates.

That is for undergraduates. That's correct.

Okay. And so given the, the hard math that we have to engage in in terms of the student tuition being a significant part of the core Fund budget, that is clearly going to have an impact. I wanted to hear from the University of California.

I mean, what is your, what is the General University, you know, philosophical underpinning as to, you know, beyond the, you know, the higher tuition revenue generating function of our non resident students? I mean, you know, what, you know, educational benefits do our out of state or international students add to our University of California?

Let me begin by saying I share your perspective about the importance of keeping real people in mind. I am one of those real people. 10 people in my family were among those real people who had the opportunity to go to the University of California. I'm very aware that there are real people behind those numbers.

I think we are here to serve the State of California, principal and primary. But the State of California has voracious needs for talent from all over the world.

And if we look at where the founders of our startup companies come from, very often they started as international students who came to the University of California, stayed in California, became Californians, raised their kids here and contributed to the state's economy.

The technology fields, bio fields, these are all areas that benefit from having the very best talent in the world. As the fifth largest economy in the world, of course California itself is the source of much of that talent.

But I think we do benefit from being at least as much as we can be a door to the talent of the world. So this is not just a matter of what it does for the University. This is a matter of what it does for California itself.

Most of us can trace our roots to someone who came from somewhere. And so we like to maintain that view of ourselves as a door to the world.

I appreciate that.

All right, thank you. Thank you. Appreciate all of you. Thank you for being here for this panel. We will move on.

We'll hold the issue open and move on to issue number three, Student housing update, where UC will talk about student housing and projects funded in the Higher education Student Housing Grant program approved by the Legislature a Few Years Ago. So we will have Office of the President, Legislative Analyst Office and Department of Finance.

We have you in that order, if that makes sense for you. We'll start with the Office of the President.

Thank you, Chair Alvarez and Members of the Committee. For the record, I'm Seija Virtanen for the University of California. The University of California views student housing as a key component of an affordable education.

By providing students with campus housing, we can ensure that rents remain stable and provide students with an option to the private rental market near campus. Providing campus student housing is even more important now that recent rapid increases in private rental market costs.

The high cost of construction coupled with limited availability of undeveloped land have made the development of low cost student housing projects a challenge. Many of our campuses are largely built out with available sites only on the campus priority parameter or in the surrounding community.

Still, the University has successfully added significant capacity to our student housing stock during the last decade. Given the complexity of our student housing projects, there is no one size fits all for developing housing. The University has utilized multiple financing mechanisms to support new student housing projects, including reorganizing auxiliary debt and partnerships with private developers and P3 projects.

President Drake prioritized student housing completion and during the last five years, UC campuses have added over 25,000 new student housing beds. Across our campuses on average, we currently offer housing to 43% of undergraduates and 28% of graduate students.

Right now, there are an additional 5,400 student housing beds under construction that will open by fall of 2026, adding even more capacity for students. The state's Higher Education Student Housing Grant program helped by providing funding that covered significant portions of the construction costs.

The state funds allow for a smaller share of the project costs to be passed on to students as rent, though these subsidies are possible. Through these subsidies, it is possible for campuses to offer student housing beds a drastically reduced rate rate. The Legislature approved five student housing grant program bond funded projects for the University of California.

Of these, the one at San Diego is already housing students and two more will open this fall at Santa Cruz and Irvine. The UCLA project will be completed by fall of 2026, and after some delays, the Berkeley People's park is set to open in fall of 27.

Together, these projects will provide about 2,388 affordable student housing beds for UC students. The University was able to sell the bonds for these projects at a lower than anticipated rate, and there are now savings that could be used to expand the number of affordable student beds to all undergraduates serving UC campuses.

We are requesting that the Subcommitee approve affordable student housing projects at UC Davis and UC Santa Barbara at no additional cost to the state.

The UC Davis project would provide 216 affordable student housing beds that would become available in fall of 2027, and the UC Santa Barbara project would provide 240 affordable housing beds and become available in the fall of 2029. Neither UC Davis or UC Santa Barbara currently have any affordable student housing beds.

In addition, in the budget act of 2024, the state shifted the funding for three community college student housing projects into the UC budget. These projects are underway and the one at Riverside will open this fall. The other two, Merced and Cabrillo, will open in the fall of 2027.

Despite these significant efforts to expand student housing demand far outpaces availability. At the start of the fall 2023 term, UC campuses had over 16,000 students on the wait list for campus housing. UC campuses are also adding new freshman students faster than we are able to add new student housing beds.

Additional state support for student housing construction would help in developing more affordable housing. One option would be including the University of California and a housing bond that would allow for expansion of housing options. Another option would be a revolving loan Fund that would make student housing construction funding available for the higher education segments in perpetuity.

Affordable on campus housing aids in the recruitment and retention of students. It also expands opportunities to fully integrate new students into the academic and social life of the campus. The University will continue to prioritize new student housing, and we look forward to discussions of how the State can partner with us in these efforts. Thank you for your time.

Thank you. Legislative Analyst Office Comments

Thank you, Mr. Chair Ian Klein with the LAO. So, to provide some context, the State provided UC with 51 million ongoing General Fund support for eight projects, five UC standalone projects, and three intersegmental projects between UC and the community colleges.

As you may recall, the State provided UC with the ongoing state General funds appropriation before UC actually sold its bonds. At the time, we had expressed concern that state funding was being provided before the actual costs were known and incurred.

Since the bonds have been sold, UC has identified some debt service savings and with these savings, UC decided to Fund one new student housing project at the Davis campus.

The issue here is that the debt savings, debt service savings associated with those original eight projects didn't immediately revert back to the state and UC subsequently took it upon themselves to Fund the Davis project before asking for legislative approval to do so. UC has since provided our office some documentation concerning this project.

In addition to the Davis project, UC is now seeking legislative support to Fund another student housing project that was not initially approved by the Legislature at the Santa Barbara campus.

In total, for the eight original projects that were approved by the Legislature, the annual debt service costs as shown on page 23 of your agenda totals 44.5 million or 6.2 million below the ongoing General Fund support that the state is providing UC for those projects.

So at this point the Legislature needs to decide what it wants to do with that 6.2 million differential. We don't have recommendations with this issue, but would like the Legislature to be aware of the trade offs associated with providing more General Fund support than is necessary to Fund the original eight projects.

As noted, UC has plans to Fund one additional student housing project and would like for permission to Fund another. These actions should be considered with respect to the Legislature's desire to support affordable student housing projects and in light of the state's greater budget condition. So I'll pause there but can stand for questions.

Thank you. Does the Department of Finance have any comments on this item?

Good morning Chairmembers Alex Anaya Velasquez with the Department of Finance. Just echoing the comments made by UC and the lao, the Governor's Budget does not propose any changes or new investments to the program and continues providing the 50.7 million ongoing journal Fund Debt Service Finance does note that the University of California recently did inform Finance, the Legislature and the LAO of the request to add two additional projects to the program, specifically at UC Davis and UC Santa Barbara to utilize the ongoing 6.2 million in savings of the General Fund debt service item Finance notes that this will need to be need to be considered as part of the overall budget and would be part of the continuous discussions and negotiations between the Administration and the Legislature.

This concludes my remarks and I can take any questions at the appropriate time.

Thank you. My questions are going to be from perspective of the cost per bed because these projects seem to be kind of, to be blunt, all over the map in terms of how Many beds get built or created, I should say, with the funding being varied from campus to campus.

So you have a $100 million expenditure giving you over 1,000 beds. Another $100.0 million expenditure at Merced giving you only 500 beds, half as many beds for more funding. So I want to better understand how these decisions were made on funding this. And then I have a follow up question on affordability.

So can somebody walk through decisions to Fund these specific projects at different costs? So a, you know, for twice the amount of funding it's going to cost to build 500 at Merced than it cost at Berkeley to build to create a bed. These are not all units. I assume they're dorm spaces with multiple beds in some cases.

I assume the cost of building a new student housing unit varies dramatically from region to region and the location of the site. Things like needing to replace or add utilities can add a great deal of cost to the project.

Also, if the project is apartment style houses with Wood frame, you know, two stories, that's much cheaper than a concrete apartment building. Also, the availability of kitchens will dramatically change the cost of a building.

So some of the student housing is apartment style where students might have their own bedroom, a General living area and a small kitchenette versus no rooms with two beds, no plumbing within that room, and a General bathroom for all the entire floor down the hall. The cost will vary dramatically.

The original legislation authorizing the Higher Education Student Housing Fund program included a set of metrics by which the Legislature would evaluate all of the housing projects. The cost per bed was one of those, but it included others as well.

Including the total amount of student beds available at the campus, geographic availability of affordable beds in that area, how many, the percentage of students in that campus who are housed in campus housing versus off campus private rental market locations. So there were a set of metrics that the Legislature used to evaluate these projects.

So, and I understand that different costs associated, like you mentioned, you know, utilities is a quite an expensive undertaking. So I can see potentially places like, you know, Merced which are less developed than Los Angeles and Berkeley, perhaps some savings there.

I still, that's a quite a large discrepancy in terms of, for the same essentially funding get twice the number of, of beds in a different location. So let me ask now about the, the percentage requirement in the metrics or if there were none, please, you know, let us know.

In terms of affordable, I assume when you restrict some beds to affordable, the rest of them are at some market rate, Is that what is happening?

That is correct. The remaining beds have to pay for the market rate bond on that project. So basically what the Legislature is doing is we have a total cost for the project. Let's take for example, the Santa Barbara proposed project is $640 million.

For that project, by providing the state subsidy, the Legislature sort of purchases away a cost of that construction portion of that and those become then affordable beds.

The remainder of the beds are sold are rented out at a rate that allows the University to pay back the market rate bond that we have to take out for the remainder of the construction. We take out what's called lease revenue bonds, which are bonds that are repaid with the student rental rates.

And those rental rates then have to be set at a higher amount than the affordable beds.

So is, is the amount of subsidy from the state proportionate to the amount of required affordable beds?

I would think so. The cost of the state cost per bed for the two proposed projects for the UC Davis project is 199,000. For the state subsidized bed, the non state subsidized bed is for construction cost is 271,000 per bed. And on the Santa Barbara project it's much the distinction is far greater.

The subsidized beds are 179,000 each to construct very close to the UC Davis rate. But then the non subsidized beds are at 411,000 per bed. And that in part is the difference between that concrete high rise building and the new utilities and all of those things.

Also, the Santa Barbara project includes the cost of knocking down existing, very old, one story student housing that is taking up some of that land.

What is the total cost of the Davis project? You gave me the total of Santa Barbara.

What's the total cost for the Davis project is $93 million, of which 43 million would come from the state.

And that's 400 total beds.

Yes, that's correct.

How many of the total beds are going to be set at affordable for low income students at Davis?

216. So just over half the project.

And at Santa Barbara It 's 240.

240 subsidized beds, but the total project is 1,690 beds because we're talking about a much larger building.

Yeah. And again, I think this is where you see the or the same amount of subsidy that you're requesting, which we'll get into that issue in a minute because Legislature has not approved these and I want to make sure that we establish that here. But for the same amount of subsidy at least per bed.

It sounds like your. The cost is the same, which I think is, in my mind anyway, an appropriate way to identify what we're getting for what we're paying. In the case of the others, I'm not sure that those are proportionate. I do want to talk about the fact that these two projects. One is already.

Tell me how far a project is in terms of obligations and are you requesting at this point approval or has that project already been approved and you're assuming that the Legislature will approve the cost for the Davis project?

We are requesting your approval for these two projects. We're requesting legislative approval. The UC Davis project is currently under construction and yes, to date we are using the higher education student housing Bond Fund savings that we acquired from the other projects to towards the UC Davis project.

If the Legislature does not approve of that, we would have to go back and resell some bonds to replace those funds. That will create some delays and it will obviously eliminate all of the affordable beds in the project. I would appeal to you. I understand the Legislature's frustration that the University moved forward with the project without appropriate approval from the Legislature.

There was some misunderstanding that as long as the project met all of the criteria specified in the legislation and the funds were being used for students to create affordable beds, that it would be all right for the University to manage that process without reapproval. And I apologize for that.

I do hope that you allow this project to move forward so that the students can receive the affordable beds. Because at this point the ones who lose out are the students.

If we reverse course, what are the Laos or Department of Finance recommendations so that the Legislature is not put in a position like this going forward?

Yeah, we don't have any set recommendations with this. We do want to, as said before, want to make you aware that this has occurred and that the option now is to consider what to do with that 6.2 differential. 6.0.

Point 2 million differential Department of Finance. And then just from the Department of Finance, the Administration does note the importance of providing affordable rates. However, at this time we were notified post gb, so this is something we're still reviewing.

However, as noted in the opening remarks, any new additional proposals, whether approved, denied or reverted, would be part of negotiations and conversations between the Administration and the Legislature.

So the Administration is still assuming a roughly 51 million annual appropriation in this budget? Correct.

The Governor's Budget did not pull back any remaining savings as the permanent finance was notified after the Governor's Budget was released of these ongoing savings and on.

A going forward basis. As a lesson learned, when programs like this get implemented, what would be one way to ensure that this does not occur again? Maybe from another program that exists out there?

I would say that the affordable student housing is first of its kind. So the statutory requirements that were put in place were agreements made between the Legislature and the Administration. So this is something that was first in time.

So I think moving forward, if the Legislature, the Administration would like some additional reporting requirements can be inputted in the statutory language.

Usually when there are savings and something that gets allocated, departments don't just go and spend them. Right? So what, what, what happens typically?

May I?

Oh no, you can respond. But I'm asking what happens with other state agencies?

Typical for some projects or other departments, we reconcile their General Fund savings or their ongoing General Fund. And at the time the departments reflect those in their pasture reconciliation programs. But each Fund and each program is different or differs depending the Department.

So had you known, because you didn't know, had you known prior to the budget, the proposed budget, you may have reallocated those savings in a different way.

Correct. If the Department was notified or new of the 6.2, we could have provided further recommendations maybe to extend or approve new programs. Or also given the budget outlook, we could also choose to pull back at the time of the Governor's Budget.

In terms of the process currently for approving University of California projects, the Legislature has not approved specific projects for us in a very long time. The last time we got a go bond was 2006.

Since 2013, the way the process has worked is the University of California comes up with the projects that we want to construct September 1st, we send a five year report to the Legislature and Department of Finance that includes all the projects we're thinking about.

And then when it comes time for us to issue a bond, we use our state General Fund allocation and send a 30 day letter to the Joint Legislative Budget Committee as a notification that we are funding the project. And so we have not come to the Legislature for a long time for specific projects.

That's authorization currently in statute.

Yeah, thank you. Appreciate that. Okay. Do you have any other questions? Mr. Fong?

Thank you so much, Mr. Chair. Thank you for the presentation here today. When we look at University housing, we know there's such high demand on our campuses. And I believe that UCLA promises four years of University housing to undergraduates right now, so it's tremendous. Are other campuses working towards the same goal, providing University housing for four years?

Yes, some other campuses are working on being able to provide that, but no campus has as much student housing as Los Angeles does at the moment. So the San Diego campus is now able to house 41% of its undergraduates and Merced is at 50%. So they're both doing quite well.

But at the low end of the spectrum, we have Berkeley at 27% of undergraduates being able to receive campus housing. So they are unable to provide guarantees for anyone other than a freshman.

And thank you for that context with UC San Diego as well. I know they do open up just in the last year or so two 20 story plus towers there. It's tremendous to see that student housing there on campus. But we know there's still a lot more demand to build student housing.

And so any efforts to look at off campus housing, I've introduced Assembly Bill 893 to look at how we can increase the supply of units off campus as well and to alleviate some of the pressure on our students.

Lastly to the UC system as well, Similar to the Chair is that in terms of the UC Davis and UC Santa Barbara projects, what would the UC do if they're unable to use the bond savings for these two projects?

If we are unable to use the bond savings for those projects, we would cancel the affordable housing component in those projects and we would sell additional lease revenue bonds to cover the full cost of the construction.

Okay, thank you for that context. We know that affordable housing is critical for us, so appreciate that context. Thank you, Mr. Chair.

Thank you. Okay, we have no other questions or comments on this item. We will hold this issue open. Thank you to all the panelists on this. We will next take up title nine, update issue number four.

If I can please ask the University of California Office of the President to come forward to provide the update to this report on Title 9 issues and activities from the University of California. Welcome.

Thank you. Good morning, Chair Alvarez and other Members of the Committee. My name is Catherine Criswell Spear and I'm the Executive Director for the System Wide Office of Civil Rights and the University of California Office of the President, which includes the system wide Title IX office that is commonly referred to as stxo.

Thank you for the opportunity to provide this Committee with an overview regarding how the University is preventing and addressing discrimination harassment based on sexual in compliance with both state and federal law, including Title IX. Each of the University's 10 campuses, the Lawrence Berkeley National Laboratory and the Office of the President has a dedicated Title IX Officer.

These Title IX Officers and their teams are responsible for responding to all reports of discrimination based on sex, including sexual harassment and sexual violence, as at their campus or location.

Stxo, the System wide Office, is the policy owner for the comprehensive System Wide Sexual Violence and Sexual Harassment or SVSH Policy, which prohibits all forms of harassment based on sex and applies to all faculty, staff, students and third parties.

The SVSH Policy also has implementation frameworks that clearly outline the investigation and adjudication processes under the SVSH Policy, including remedial measures for a complainant and potential disciplinary or corrective actions for a respondent, depending on the outcome of a matter. The SVSH Policy serves as the cornerstone of UC's Title IX compliance program circumstances.

Some key provisions of that policy include specific definitions of prohibited conduct, responsible employee reporting obligations, alternative resolution, as well as formal investigative options and supportive measures available to assist or protect parties in the broader community even if an individual does not elect to participate in a formal resolution process.

The SVSH Policy also contains at the end answers to frequently asked questions from UC community Members. A key responsibility of STXO is to provide guidance and support to the campus and location Title IX officers to ensure consistent implementation of the SBSH policy across the system.

For example, STXO leads a monthly check in meeting with the Title IX officers who also separately have monthly one on one meetings with a system wide Title IX Director to whom they have a reporting line.

STXO also regularly provides written guidance and training to the campus Title IX Officers and is responsible for managing the system wide required online SVSH training for all faculty, staff and students as well as overseeing the system wide case management system to track SBSH reports.

Each UC campus has a Center for Advocacy Resources and Education or CARE office to support complainants as well as Respondent Support Services coordinators to support respondents in SVSH matters.

In addition to these efforts, UC has made great strides in the prevention, detection and responses to reports of sexual misconduct arising out of the clinical setting, particularly at our academic medical centers The University has issued system wide guidance on investigating prohibited conduct in the patient care setting and enhanced chaperone standards for sensitive exams.

As well, UC has introduced boundaries training requirements for health care providers like physicians and advanced practice nurses. We are proud of the collective commitment to this significant effort and to our ongoing work to protect patient safety and continuously improve patient experience and outcomes.

I would like to end by emphasizing that at the University of California we are committed to full compliance with state and federal law while also keeping at the forefront the well being of our community, our commitment to both fairness and compassion, and the University's culture of safety, respect and accountability.

We strive to build best practices informed by the law, the data and feedback from our community Members. Thank you for your time and attention and I welcome any questions.

Thank you for your presentation he's not here, but still would like to acknowledge Mr. Fong for all the work that was done on this last year. Appreciate that you're here to provide the update as we requested. I co authored that and presented some bills myself. Thank you for outlining.

I think the one thing in the report that caught my attention is the 1d question, 1d which was or at least in the report, it's the way it's labeled. 36% of students thought reporting to Title IX was confidential, meaning that the coordinator was not required to act upon the information provided.

What do you make of that and what is the sort of appropriate response to that? Roughly a little over a third of students who reported this.

Thank you for that question. I think the key response that we've had to that is the need for more education to make that our students as well as other community Members protected by the policy understand who are the confidential resources that they can go to and who are those that are not confidential.

Our Title IX officers supported by the STXO office have done additional training to ensure that people that are meeting with them understand up front before they may share personal details of their story and experience that the Title IX officer and those that work in that office are not confidential employees and then also making sure that they know who are the confidential employees like the CARE advocate or an ombuds on the campus or counselors that they can go to, perhaps first to process their experience to consider their options and the information they've been given by the Title IX officer and then hopefully return in order to get additional assistance and to perhaps exercise those options.

So education has been critically important in those in person meetings as well as on websites and other training that we've provided to students and

Just to better understand this, 36% is of all students surveyed, not just those that were seeking or submitting a complaint.

I am not certain about that. I don't want to assume that it was all students. That that would, that would be my speculation, but I don't know that for certain.

And what was the timeline of when the results were received and these implemented sort of changes that you've just described?

The changes this report. So I will have my first anniversary at UC in May. So that's one caveat. But as my understanding, as soon as the results of these were received in 2024, there was enhanced efforts to respond to many of those items. The confidential versus non confidential resource being one of those.

The SVSH policy I mentioned in my opening comments has an faq and part of that, you know, identifies who's confidential, who's not confidential. That's one of the topics that's covered. So it would have been almost immediately that there were enhancements and places looked at. Where can we increase information to clarify that?

Yeah, I guess maybe I said the only thing. But the other one that at least in the reports says that survivors reported negative experiences, the lengthy process and found it confusing. What are some of the changes that you've seen happen since the results came out to address that issue?

We have continued to highlight and thank you for that question because I think that's often seen as a barrier the length and time a process, a formal process in particular might take.

So we have continued to focus and amplify efforts to streamline that process, to provide periodic updates and so that individuals going through a process have realistic expectation for how long it might take and then ensuring that there are support resources offered along the way.

We continue to look at ways of ensuring extensions are implemented for only for due cause, good cause. And there is an extension process by which a Title IX officer must approve an extension. And then at certain points we've implemented policy that it also then at certain points has to come up to the system wide Title IX office.

So putting in those checks and measures and being clear with communication is one way we've addressed that that.

Appreciate the response, Dr. Patel.

Thank you, Ms. Spear, for being here and presenting on this very important topic of Title 9 in keeping our students safe on campus. There are a few things that also popped out to me in our agenda. Our report, our, our staff's report on page 28, item number question number two.

It said students are not comfortable reporting to the UC Police Department. The one that stuck out was a 70% of students who identified as LGBTQ felt uncomfortable reporting an incident to the UC Police Department.

What is being done to help provide assurance to our students that they can approach our on campus law enforcement for support in the crisis moment?

Thank you so much for that question. So at the system wide level, I'll start there first. We often, as I mentioned, we have regular check ins with the Title IX officers and the local campus and elevate issues we are often looking at who are the vulnerable populations in particular.

And LGBTQ is one of those, not only for this statistic in terms of how comfortable they felt reporting to UC police, but also to other partners. So we have modeled ways through training, education and outreach that that number can be improved.

And then the local campuses as well do dedicated training with the UC Police Department officers to work with them on ways that this number for this population and many others can be decreased as a barrier and increase the comfortability of individuals reporting one way the system wide office.

Because as you might imagine, we know that we are isolated being located in Oakland, but we have a student advisory board and they're critically important and one of their campaigns is always to raise awareness and they are particularly attuned to the vulnerable populations like LGBTQ as well as others.

But it is again, education outreach really distilling and demystifying the support resources available from various partners, whether that's the Title IX officer, the UC Police Department, or student affairs. But that becomes very important, that engagement.

Thank you for that. I'd love to see continual improvement and I know the UCs are great at identifying their own challenges and working through them. Another question I have is on page 27 there's a chart and the first question was, overall, I feel comfortable with the campus climate for diversity and inclusion in my major.

If you look at the combined categories of not feeling comfortable, it's over 15% of the campus feel safe with their diversity inclusion within their major. Have we identified whether there are hotspot majors that are particularly. And these are average numbers. Right.

So when you disaggregate the data, are there any particular hotspot majors that pop out as being more lacking that comfortability with inclusion?

Thank you, Dr. Patel. That is an excellent question. I don't have that information with me, but we can certainly get that information and bring it back to you because that is very important to make sure that we're targeting those areas for that education and outreach.

And when we talk about inclusion, are we also talking about our students with disabilities?

Yes, when we ever use the term inclusion. And that's why I'm very proud to be leading the system wide office of Civil Rights. But we're including all protected groups and all people that are coming to and engaging in the services of the University. But disability is definitely part of that as well.

And we're very excited at the system wide office that our new disability rights Director will be starting next month.

Well, congratulations on that, on that placement. My final question is more of a broad General overreaching question. When as adults, when we enter into a workplace, we take a mandatory harassment training that identifies the process that we approach Title IX complaints. Students may go through that as student employees on campus.

I'm not sure things have changed over the years from when I was at the UC. Do we have any kind of formal training for students as they come on campus that they. I mean not just in a memo, because students aren't reading memos. Right. We know they absorb information differently than perhaps a Gen Xer might have.

How are we approaching our students with sharing what their rights are? Are we doing it through peer to peer to students or is it more formal?

So thank you again for that question because as you can hear, training and education in this area is incredibly important. So all of our incoming, all of our students, and now on an annual basis do receive training. We have a baseline system wide online training that all of our students as well as our faculty and staff take.

If you are a student to your one question, who is also a student employee, you are taking both of the modules, both for the student and for the student employee because the student employee will have an additional section that really focuses on your responsible employee obligation.

And whereas the student module has a healthy relationships portion targeted more for the student population. So it's important for them they get two training modules in that area. But we know that online training is just a baseline. It's the floor, not the ceiling.

Our campuses and locations do a phenomenal job of doing orientation and other forms of engagement both virtually. And they have the opportunity to do that in person. And they do train student leaders at various the different campuses have different programs.

Happy to come back and offer campus spotlights, but they do a really excellent job across the system of that more personal touch in terms of the training and support.

Excellent. Thank you so much. I look forward to seeing improvements in these areas in the coming years. Thank you.

Thank you. And again, thank you for the work that you're doing.

Thank you.

Appreciate you being here.

Thank you very much for your time.

With that, we will move on. This was an oversight item we will move on to issue number five. Update on Chula Vista University now. Initiative and multi segmental partnerships. We discussed the CSU component of this a few weeks back and now we have the UC's perspective.

And again, as we are hoping to discuss the issue of enrollment, as we're hoping to enroll more students into our campuses, this might be a way which we may be able to do that that is maybe not centralized to main campuses in our UC system in this case, but potentially still provide that opportunity of a UC education.

So appreciate Chancellor of UC San Diego being here in addition to the UC Office of the President. And I'll turn it over to whoever is going to go first. Welcome.

Thank you. Good afternoon everybody. And thank you, Chair Alvarez and Members of the Committee. I want to begin by thanking you, Mr. Chair, for your leadership in support of California's institutions of higher education. And I think UC qualifies to be in that list. Thank you. Thank you very much.

I also want to thank you for your commitment to bringing higher education to those in underserved communities. It is truly an honor to testify today in support of Chair Alvarez's vision of expanding higher education to South San Diego community. And as I go through the testimony, I just want to acknowledge my colleague,

Dr. John Moore, who's the Dean of Undergraduate Education, who was instrumental in representing me in all the Committee meetings and leading the writing of the report that led to this conversation out here.

So our mission at UC San Diego is to transform California in a diverse global society by educating, generating and disseminating knowledge and creative works and providing healthcare and engaging in public service.

As UC San Diego grows its undergraduate body, which has increased by 9,500 students in the last 10 years, we are excited to expand the opportunities we can provide to South San Diego. County.

Last year's supplemental report of the 2024-25 Budget act, which is SB108, required UC to report to the Legislature on opportunities for programming at Chula Vista or Southwestern College site and should include information on potential bachelor's or other degrees or other programs. So UC San Diego submitted that report titled A Vision for Expanding Education in South Bay.

And we did this on January 31, assuming an appropriate level of new funding from the State of California. UC San Diego proposes two new programs in Chula Vista. The first is a B.S. degree in public Health.

Through our Herbert Wertheim School of Public Health, UC San Diego proposes a two plus two transfer programs in collaboration with Southwestern College in Chula Vista. We will Collaborate with Southwestern to identify students who complete the ...C and transfer major preparation requirements before transferring to UC San Diego. BS In Public Health program.

UC San Diego courses will be taught by UC San Diego faculty at Southwestern College's University Center. In addition to UC San Diego faculty, dedicated UC San Diego student support staff will be based out of Southwestern College.

They will provide orientation and transition support, academic advising, tutoring and supplemental instruction, health and wellbeing services, cultural, student leadership and community engagement opportunities. In short, in a mini level, what we do at UC San Diego for our programs.

They will also offer disability and accommodation services, basic needs, case management support, financial aid, scholarship programs, and career research and internship placements. So this initial pilot will run for a period of four years for the first graduating class.

We anticipate an initial cohort of 30 students in the first year, with the size increasing as the pilot progresses and subject to availability of funding. The second proposed program is a certificate program through our Division of Extended Studies.

And UC San Diego will launch four certificate programs based on market research that will determine which programs are best suited for the pilot. Possible programs include those tied to health care, business and education. The required lead time, including market research, is about nine months.

So if we start today, by next academic year, we will be ready to unveil this. We believe that these programs are the beginning of an important partnership in South San Diego. County.

And this partnership, I believe, will serve California students in a way that aligns our teaching and research priorities with the needs of the Cali Baja Board region.

We at UC San Diego are committed to working with elected officials on both sides of the border, community partners and other leaders to ensure success to a high quality UC education in South San Diego. County. And I want to iterate. It is part of San Diego County and we are UC San Diego.

So thank you and I'm happy to answer any questions.

Thank you, Chancellor. Does the Office of the President want to add anything, too?

Oh, I have a whole bunch to add.

Okay.

But would you like to ask Chancellor questions first or you want me to?

No, let's have you go forward. And then maybe Dean may want to add something as well.

Well, first I just want to say how honored I am to be alongside Chancellor Khosla. I am an alumna of UCSD myself. Way back then, there were only 9,000 students in total on that campus.

But I'm familiar with the reach and the impact of the campus on the entire region as a result of my own very happy stay there through the dynamic partnerships that the Chancellor's already talked about with Southwestern College and UCSD's Division of Extension Studies.

The campus is very well positioned to provide new opportunities to students in Chula Vista interested in high demand fields with very good occupational prospects in healthcare and education.

Partnerships of this kind are representative of one way that the University of California approaches intersegmental collaboration in General with the CSU and the community colleges, and I understand that this Committee wanted to hear a little bit more about that, so I'll take just a minute to highlight some of the programs in our intersegmental repertoire, all of which will make a difference in Chula Vista as well as other parts of California.

So UC's Student Academic Preparation and Educational Partnership, also known as SACPEP, provides transfer preparation services for students up and down the state.

In recent years, we have expanded the academic preparation and advising support, streamlined transfer information, developed curriculum maps and coherent curricular pathways to help students move from the community colleges to our campuses, and we are developing transferable UC courses offered online to students across the State beginning in 2025-26 Calgetc is the new singular General education pathway for community college students, which was developed collaboratively by UC, CSU, and the CCC faculty, and it prepares both UC and prepares them for both UC and CSU.

The transition to CALGETC is a major step forward in simplifying the transfer process, which I know is something the Legislature cares about deeply. To help students transfer to UC, we've also developed transfer pathways.

Those are roadmaps for courses needed in the 30 highest demand majors that include STEM programs that allows students to keep their options open by providing a clear roadmap to prepare for transfer to any UC campus offering that major.

UCLA is also launching an innovative Associate's Degree for Transfer, or adt, pilot that will prioritize admission of students completing the ADT from select community colleges with lower UC transfer rates in at least eight majors. Beginning in 26-27.

By 2028-29 UC will expand that pilot to at least four additional campuses with the intent of expanding expanding it to all of our campuses depending on the outcome of the pilot.

In addition to all of these collaborations, we're also seeking out ways we can serve students in regions of the state that do not have a nearby UC campus.

As part of the 2030 capacity plan, we seek to enroll over 23,000 students without building new campuses, which includes things like a satellite operation of the kind we're just talking about.

We engage in regional activities like the K16 educational collaborative grants Program, which expands access into underserved areas and in 1976, as you probably remember, we established UC's early academic outreach program that assists middle and high school students from disadvantaged backgrounds with academic preparation, with admissions and financial aid information for higher education.

Finally, we're experimenting now, this is one of my favorites, with providing UC courses online for community college students taught by UC instructors, especially in mathematics, that will help them transfer into STEM degrees. I want to say just briefly, these programs are all administered by ucop.

So when people talk about what happens at UCOP and its role in supporting students, understand there is a lot of student programming going on in UCOP. And when the UCOP budget goes down, these programs will be impacted. I promise you. They're all administered through Academic affairs, which is my own division. And we will have no choice.

This includes the very important programs we do with HBCUs, all of these transfer programs. So just remember that UCOP itself actually performs a very important role in sustaining student oriented programs, especially our efforts to increase our impact on underrepresented regions. That's it. Mr. Chairman

Thank you. Dr. Moore, anything you want to add?

Thank you, Chair Alvarez. I don't have anything prepared. I just want to say though, that this, the Chula Vista project that Chancellor Khosla described is something that came out of a long process of collaboration between our campus and the City of Chula Vista and Southwestern College.

As you know, there was the University Now Initiative Committee that met for about a year and released a white paper about a year ago. There was also a study that was commissioned to look at what are some of the growth areas in the South Bay and what types of degrees. Would.

Fit into that plan and with the goal of eventually creating a campus in Chula Vista. And we know we have the land and there are conversations now about creating an intersectmental University in Chula Vista. So this is really a step in the direction of all of this.

The pilot is informed very much by the UNI white paper and by the study that was done. And we are piloting with Public Health partly because our public health school has very deep research ties to the South Bay.

Our public health school was instrumental in vaccinating the people of the South County of San Diego during the pandemic and does original research in that area. And they're very excited about having partnerships in Southwestern College and being able to engage students in the UC in Southwestern College in their research.

So this is, this is a, this is a really very organic pairing, but we think of this as the first step.

And Dr. Moore is a resident of South Bay.

Thank you. Thank you all three of you. Appreciate you coming forward. Appreciate you submitting the report as requested by the Legislature on requested February 1st, but as stated by Chancellor by before that I think, you know, we've talked a lot about access. We talk about enrollment difficulties.

I think we all want to see more students have access to our universities educational systems. And this is one way where without building new campuses because that's not really where we, where we are being more creative and thoughtful about how to do so. And as Dr.

Morse mentioned, through a very intentional process, not just identifying some random program to offer a four year degree, but rather a program that is in high demand and high need so that we can ensure that students from a what I refer to as a college desert area, even though we do have Southwestern College, still some limitations, a lot of place bound students, students who may not go to other parts of California and we have a lot of parts in California, as was identified by the provost like that, with those same challenges that we can have access in places like Chula Vista.

So I want to thank Dr. Khosla for your leadership and support for really leaning into this. You are, I can say this, I think the first chancellor at UC San Diego who's really decided to invest your time and effort and your team's effort in identifying how to make this possible.

It's been something that's been talked about for decades, yet we, we, we hadn't been to where we are today in terms of progress.

And you have been very pragmatic as well, understanding the limitations that are upon you in terms of growth, but finding a way to potentially make this happen in partnership with our institution of higher education today, which is Southwestern College, who is a great partner.

And as was mentioned by the provost with the transfer, transfer changes continues to grow the possibility of accelerating the potential for our students at community college to enter our UC system. So I want to thank you for all the effort being put there.

Provost mentioned by 2030 a vision to grow capacity by I think you said over 20,000 students without, you know, building a new campus is 20,000 students is the size of some of your campuses. So it's quite a large number of students.

So identifying creative ways intersegmental in a time where we have budget constraints, this is one way that we can potentially model to the rest of the state to do this. So again I want to thank all of you for the effort and the time being put into this. With that, Dr. Patel, would you like to?

Thank you for looking at creative ways to bring a University education to college deserts or University deserts.

We know that at least old data show that the difference between a high school degree and a college degree can be over $1.0 million in lifetime income, which is quite substantial in a state like California where the cost of living is increasingly increasing. So appreciate that effort of my colleague,

Ms. Hadwick, Assemblymember Hadwick, were here, she would probably be very excited to hear that there is a possibility of bringing a four year University program to her college desert areas without building a campus. I mean, that is a remarkable feat to show and I'm looking forward to seeing the progress of this through the years. Thank you.

Thank you. And again to all of you for the effort being placed on this. There's a lot of people who are have been dedicated to this, as you all know. We appreciate all the work that they've done. And this is not the end of the road by any means.

This is the beginning of what is a different model than what we're used to. An intersegmental campus is going to have its challenges. We're going to have to have conversations about how to ensure that we all can figure out to work within our systems, but also with our colleague systems, CSU, the community college system.

And so we're here to support that kind of collaborative work. And I'd ask you if you have any other comments you'd like to make or close with. I just want to make one comment.

I think, and this is not, I make this with all sincerity. I think there are unsung heroes in this. I think Office of the President's support is really important. So as much as we think we can do without, the answer is it's important. Secondly, the Academic Senate also is important.

And I think my team, led by John has done a great job of lining up support. And thank you to the Provost also for offering support because I think this is one of those it takes a village type of situation to get it done. And I think in this case the village is ready and able and capable.

And ready to work. Thank you all for being part of that. And again, yeah, for bringing along the team of it takes the Academic Senate being on board as well and appreciate that they're focused on this as well and that they're interested. And I think. And our Senate chair is from Chula Vista too, Olivia. That's right. That's right. Yeah. So things have lined up.

State, I have to tell you, at this moment of extraordinary stress nationally, it is such a boon to be in California, where we know people share these values and these ambitions and goals and respect the role of higher education and all that it does for the economy and for its people. That that clearly is not a universal sentiment right now.

Well, we want to double down on that and keep it going here with all the other items we previously discussed, and this one. And thank you again, and I'm sure we'll hear from you again soon. Thank you very much. Thank you. This is an oversight item, so thank you for being here and presenting.

We will now move on to issue six, which is the UC College of the Law, San Francisco. There are proposals from the Governor's Budget on this, and we want to hear those proposals from Department of Finance and the UC College of the Law. So as soon as you get settled, we'll get you started.

Hello and welcome. For this final. Welcome to this final item. We're on 6600, UC College of the Law, San Francisco. We have issue number six, College of the Law proposals. I am guessing that we'll just go through. You can start. Department of Finance. Would you like to start? Sure. Yeah.

Yeah. Still. Good morning. Good morning. I'm Jessica Deitchman with Department of Finance. We had Devin Mitchell, so that's why I was confused. It's me. The Governor's Budget maintains the multi year compact with the University of California. I'm sorry, this is the wrong talking points. My apologies. It's like. Wait a second. This is a. Sorry, must have gotten me switched.

Take your time. No problem.

I'll let the LAO go first.

Yes. Thank you very much. Ian Klein with the LAO. So the Governor's Budget includes an unrestricted 2.4 million ongoing General Fund base augmentation. In addition to the base augmentation, the school is also subject to a 7.95% operating reduction in 25-26 pursuant to control section 4.05 of the 2425 Budget Act. So this equates to about 1.8 million.

The net impact of these two actions is that the school would receive a base increase of just over $500,000 or a little over 2%. We recommend the Legislature reject the base augmentation proposal given the fiscal condition of the state.

Now, unlike UC or CSU, which had its 25-26 base augmentations deferred under the state budget plan, the College of the Laws was not. It was explained to us that the college was provided a base augmentation as it's a smaller agency that currently has an operating deficit.

However, the state typically acts to reduce funding when facing budget deficits as it's risky to commit to an increase in base funding that may not be sustained sustainable.

Furthermore, even without a base augmentation, the school would still be able to cover some components of its 25-26 spending plan from revenue that's generated from other sources, primarily tuition and fee revenue. So given these factors, we recommend rejecting the proposed base augmentation. And I can move to the McAllister Tower proposal as well. Yes.

So the Governor's Budget includes a 10.1 million ongoing General Fund support for the second phase of a project to renovate the McAllister Tower student housing facility. The proposed funding would support the debt service associated with the project and allow the school to provide below market rents across its entire housing portfolio. We have some concerns regarding this proposal.

First, the 22-23 Budget act allocated 90 million in one time General Fund support toward this project to seismically retrofit the facility. The school indicated that the majority of the remaining project costs were to be financed through conventional debt that would be funded by student housing fees. At that time, the College indicated that 90 million.

That the 90 million provided would be sufficient to allow it to offer up to 257 beds at below market price. Since 2022, the project's costs have increased. The school indicates that the previous one time support already provided is now insufficient for it to be able to provide below market rents.

With this proposal, the school now wants the state to cover the majority of the remaining project costs. This is 151 million. Now, there's some differences when comparing this project to UC student housing projects that recently received state support, some of which we just spoke about.

For instance, the state share of the project cost for the Mcalester Tower facility would be substantially greater than what was provided to UC for its five standalone student housing projects.

For those projects, UC's state share was about one third of the total project costs, while for this project, the College of the Law San Francisco state share would be about 85%. So in sum, the state did not expect that the college would require additional state funds to complete this project.

And when comparing this project to other UC student housing projects, those required a much smaller state share of total project costs than this proposal, and those are generally being delivered on time and on budget. So given these points, we recommend that the Legislature reject this proposal and I can answer questions as needed.

Yeah. Thank you. Hi. Jessica Deitchman, Department of Finance. The Governor's Budget maintains the statewide efficiency reductions included in the 2024 Budget Act. As a result, College of the Law San Francisco should continue planning for a reduction of 7.95% in ongoing General Fund support, totaling approximately $1.8 million beginning in the 25-26 fiscal year.

The budget also includes 2.4 million in ongoing General Fund support to support operating costs. This represents a 3% increase to base funding. Additionally, the budget provides $10.1 million in ongoing General Fund to support the debt service associated with the second phase of the McAllister Tower renovation. Those are my comments. Happy to answer any questions.

Please proceed. Thank you very much. Good morning, Dr. Patel. Thank you, all. It's a great pleasure to be here with you. I am David Faigman. I'm the Chancellor and Dean at UCL San Francisco, and I'm joined by my CFO, David Seward.

Let me Begin by expressing my deep gratitude to the California Legislature and the Administration for the strong support we've received over the years. I have been a faculty Member at UC Law San Francisco, former UC Hastings since 1987 and Dean since 2016.

The state has been an extraordinary supporter, indeed partner of our institution throughout my time at the school. Since I became Dean, we have initiated an expansion of our footprint in the heart of San Francisco which has primarily involved the building of student housing.

In August of 2023, we opened our new 14 story building with 656 units of student housing at 198 McAllister street that that housing is not just for UC law students, but it's open to graduate students from Bay Area colleges and universities, with a third of the units reserved for UCSF learners.

As you know, we are in the process of developing our 27 story tower at 100 McAllister street which would create an additional 280 beds for our students and partner institutions. In particular, we look forward to partnering with our community college neighbors to provide below market housing for their students.

The seismic retrofit and renovation of 100 McAllister is an integral part of our commitment to higher education generally and the Tenderloin in San Francisco specifically. The Tenderloin is a richly diverse community that has struggled over the years and our efforts to build more student housing and academic buildings have helped re energize this historic neighborhood.

Beyond the concrete and steel of the campus, we have built a robust academic program that well serves the diverse population of California and the Nation. For over 50 years, our admissions policies have assured access to underrepresented groups.

That work has been led by our Legal Education Opportunity program begun in 1970, through which approximately 20% of our class is dedicated to students who have successful successfully overcome systemic and personal disadvantages.

Over the last five years, we have expanded that commitment in our first gen program and now about 24% of our class for the first time in their families to go to college. Not just law school, but college. When students enroll, they benefit from rich and diverse course offerings and opportunities.

For example, our law school centers range from the Business Law center to to the Center for Racial and Economic Justice. Our clinics range from the Immigrants Rights Clinic to the Medical Legal Partnership for Seniors which is a collaboration with ucsf. We have celebrated partnerships with a multitude of universities including ucsf, UC Davis and San Francisco State.

And our partnership arrangements include three plus three programs with Cal Poly, San Luis Obispo and Spelman College. And we are currently exploring additional UC and CSU partnerships including with UC San Diego and Cal Poly Humboldt.

We will understand the budget challenges faced by the State of California and appreciate the LAO's recommendation seeking avenues to reduce spending, including in regard to UC law this year. However, now is not the time to reduce support for higher education. California's universities and colleges have long been leaders in the intellectual life of the nation.

At a time when academic freedom and free speech are under severe pressure, our centers of higher education and very much including the state's law schools are essential to the health of our constitutional democracy. Thank you for your time. I look forward to answering your questions.

Thank you. Do you have any additional comments?

Yes. I would like to note that in the discussions the LAO is correctly, you know, analyzing the 100 McAllister project in isolation because that's the proposal in Farmview. I'd like to note, and this particularly relates to the discussion earlier about cost per unit in terms of housing development.

Our first project, which was completed in 2023656 units of housing was completed without state support. The project was 100% full, funded by debt issued by UC Law College of Law that required us to set rents at levels to support that debt.

So when you look at our housing portfolio, with assuming approval of our tower renovation, our seismic upgrade project and modernization, we'll have roughly 950 beds of housing.

So when you look at our production on a portfolio wide basis, when you blend in the first project completed without state support and the second project completed that we hope to complete with state support, and if you blend those portfolios together, the mix of state support to UC law contribution is comparable to the UC benchmarks that the LAO cited.

We will be able to offer affordable rents at between 50 to 55% of AMI to not just graduates undergraduates, but also to community college students on a regional basis that's made possible by our transportation location.

So I just think it's important to look at the academic village, our concept going forward and look at what we've delivered in aggregate and what has cost the state. So if you look at the total package and there are different ways of treating the seismic upgrade, the seismic upgrade is to a 1929 building.

If you include that state support into the computation, our cost per unit is $254,000 spread across the entire portfolio funded by the state.

If you accept that a seismic upgrade is really independent of housing development and you look at the hundred the debt to support $150 million, our cost per unit on a blended portfolio basis to the state is $159,000.

So for $10 million in debt service, the state is getting an aggregate almost 940 units of housing for students from across the Bay Area at a cost, depending how you measure it, of either $159,000 bed or 254,000 per bed, again on a blended basis. So I just want to put that out there because I think it is a relevant comparison.

Yeah, thank you for that. And I do have a few questions to follow up with all of you today. I am the only Committee Member left standing, so I think I get you all to myself. Having been on a community planning board, I do understand about taking projects in aggregate.

I think that's very important to have that view. But I am concerned what is unique about what is going on with your construction program that there are significant cost overruns and we can't deliver on the affordable housing component because I think we can't for our student population. We can't look at average median incomes.

That's just not realistic towards our students income profile to say that's what is defining affordable. And also additionally, are we looking at it in aggregate with declining enrollment at our community colleges, declining enrollment at our local universities within that geographic area?

Well, first question, College of the law San Francisco was not eligible, did not receive the benefit of the state housing grant programs. The first project we commenced, the 656 unit began well before that legislation was enacted. So we didn't have that that recourse.

We did apply for the housing ramp program for the 100 McAllister project, but were deemed ineligible because of the building renovation aspects. The housing grant program was really intended for new construction. So we provide housing at the lowest cost we can.

And with this state support not having the debt service burden imposed on the student residents, the best we can do is to hit that 50 to 55% AMI. We could make it lower if additional funding was provided, but I don't think that's likely in terms of the enrollment. Enrollment, our enrollment is strong. UCSF is strong.

San Francisco State has suffered enrollment declines. Community colleges San Francisco have not been able to develop new housing. So we would be a, an outlet for their needs. So I don't see the. Because the enrollment declines have been uneven. I don't believe UC in General has seen that trend.

And the hits are primarily in the Northern California CSU systems. But we're not seeing it in San Francisco.

And I would simply add, Dr. Patel, that we are also a housing opportunity for Berkeley which has one of the greatest challenges. We are literally half a block from BART, which brings them to Berkeley. So it's not just ucsf, San Francisco State, the community colleges, but more generally the Bay Area, because we're right on the BART line.

I would ask the Committee to consider the sort of backside of it to not provide the funding for the tower because it's a 27 story building that if we can't finance, will be a 27 story paperweight. We already in the seismic retrofit.

And it's really the question of whether the investment that the state would be making, which is not insubstantial at $10 million a year, but also what the benefit is that the state is getting and that is more housing and housing that's shared across the graduate, undergraduate and community colleges of the Bay Area.

So from our perspective, it's an investment more than worth making in order to support the students in a extraordinarily high city for housing costs. But also I'd add to that the Tenderloin, as I mentioned, is a historically challenged neighborhood. Our back door is the Tenderloin. Our front door is the Civic Center, Edmond Market.

Everything we do by adding students supports small businesses for pizza shops and restaurants. Whole Foods closed down last year. We are hoping that San Francisco brings back, literally one block from our campus, a supermarket. And so we're part of this, I think, very important corner that is part of the rejuvenation that San Francisco needs.

So you mentioned that one third of the housing actually goes to students at the College of the Law. To UCSF.

UCSF has a dedicated one third of the housing stock. And UCLA, Berkeley, San Francisco State, UC Davis runs a graduate master's of science program and business analytics on our campus. So they have 100 students that are full time in San Francisco. The only time they go to Davis is for graduation commencement exercises.

So those students also are part of our campus. So the idea of the academic village is to integrate having UCSF learners on our campus with UC Wall graduates, with UC Davis business analytic folks.

And to the benefit that this provides is really the opportunity for organic partnerships and collaborations to develop the Medical Legal Partnership for Seniors, which is a legal clinic that operates at Working Medical Clinics that operated because we put doctors and lawyers together in a room and they started talking about what their patients needed and what lawyers might be able to provide them.