Assembly Budget Subcommittee No. 3 on Education Finance

Good morning, everyone. Good morning, and welcome to our subcommittee number three on education finance for the Assembly Budget Committee. Thank you all for being here. I

am chair Alvarez, and we welcome you to our hearing today. At today's hearing, we will be focusing on, the UC, issues that we previewed a little bit with the, visit from the, president of the university, mister Milliken. And so I wanna thank UC for being here to follow-up on several of the issues that we raised then and that have become important to the assembly in the last few weeks. So we have a few panels on the agenda. We will get started with panel number one.

If we can ask the UC core operations funding proposals panel to please come forward. I just wanna preface this as they come forward to the table that this is the last year of governor Newsom's compact with the UC. So I think it's important for us to reflect on how we will support the system on a going forward basis. This includes thinking about how we continue to encourage in state enrollment, which has been a key component of the legislature and ops the the assembly for sure in the last several years, and how our funding decisions will support the work of more Californians attending our UC system. We will also discuss title nine, basic needs funding as we have seen students have needs that go beyond the educational needs and in order for their success to to be effectuated, there are other needs that need to be met, whether it's housing, basic needs, nutrition, and others.

We also want to hear about the common course numbering, which has been something that has been in the works for some time, and we're hopeful that there is some progress on that. And, obviously, enrollment, which is an issue that is a priority for us as we have seen UC's enrollment, grow, making sure that California students are a part of that growth. And, obviously, we cannot avoid the conversation of the potential federal impacts that have already occurred that are on, being threatened to California, and not just California, but to other colleges and universities, whether they're Hispanic serving institutions or otherwise as some, UCs are. We know that there are impacts from research funding that is being threatened by the Trump administration. So I think it's important that we get an understanding of that long term picture for UC.

So I see that our first panel is settled. So I wanna welcome you, and we will get started with the Department of Finance. Welcome.

Good morning, Chair Alvarez, Assemblymember Fong, Alex Anaya Velasquez with the Department of Finance. As it relates to corporations for the University of California, the governor's budget proposes to delay the one time 3% based decrease payback by an additional fiscal year from 2026-27 to 2027-28. For UC, this reflects roughly 129,700,000 one time general fund. Additionally, to minimize the impacts on core academic programs, the governor's budget does authorize UC to request additional general fund cash flow loan in 2026-27 so they may repay the loans taken in 202526. Additionally, as relating to the compact funding, the governor's budget provides ongoing general fund support equal to 5% increase for the UC in 2026-27.

This represents the final year of the multiyear compact, and for UC, this totals 254,300,000.0 ongoing general fund. In addition, the governor's budget maintains ongoing general fund amounts adopted in the 2025 budget act that partially cover the fourth year compact. For you see, this reflects 96,300,000.0 ongoing general fund. Additionally, the fourth year compact deferral, consistent with the 2025 budget act, the governor's budget maintains and defers the one time fourth year compact payment from 2025-26 to 2027-28. This totals 240,800 one time general fund for UC. This concludes my remarks, and I'm happy to take any questions at the appropriate time. Thank you.

Thank you. Legislative Analyst Office. Welcome.

Good morning, Chair Alvarez. Assemlymember Fong, this is Florence Bouvet with the legislative analyst office. Regarding UC core funding, we have four recommendations and a final recommendation relating to compacts. So first, rather than the governor's proposed 7% base increase, the legislator could consider providing a smaller base increase aligned with inflation. Alternatively, the legislator could also decide to provide no base increase, and we believe that this option would do the most to help the state manage its projected out year deficit.

We also know that even though the even without a base increase, UC core funding would grow by about 3.5% as a result of tuition revenue increase this year, which is close to its historical annual growth rate of 4.3%, and that would allow UC to address some of its spending priorities. These alternatives are intended to help the state contain its ongoing spending given that it's facing large projected out years deficits. Even though revenue in the current year are coming in higher than in, were initially budgeted, the state's ongoing structural issues remain significant. Second, we recommend the legislator adopt provisional budget language, earmarking a share of any approved base increase for capital renewal. Under the current, governor's proposal, UC has total discretion on how it uses the proposed base increases.

However, UC backlogs of capital renewing projects total today around $9,000,000,000. So targeting some funds towards facility would ensure that UC undertake some capital renewal projects in the budget year, which would help prevent more costly repair in the future. Our third recommendation is that the legislature retire the, the payment deferrals as soon as one time funding becomes available. Doing so would return UC state's payment to their original schedule. It would eliminate the associated debt obligations and reduce out to your budgetary pressures.

Our fourth recommendation is to remove the out to your funding commitments for UC. Currently, the governors proposes out year commitments even though the state is being is projecting budget deficits in these years, and there's no, no specific funding plan developed showing how those commitments will be covered. Rather than making those advanced out year commitment, the legislature could revisit UC's funding level each year to determine how much it can afford to provide UC given the state's overall fiscal conditions and the state's competing fiscal priorities. And finally, we recommend the legislature avoid getting entangled with new compact moving forward. Although compacts are intended to provide, predictable funding to UC, actual appropriations are ultimately determined by, budget conditions.

Furthermore, the most recent compact has also led to some complex budget actions that reduce transparency and accountability. So instead of implicitly endorsing compacts, we recommend the legislature make its funding decision for UC annually based on the best information available at the time. That concludes my remark, and I'm happy to take any questions.

Thank you very much. I will have you UC Now.

Good morning, chair Alvarez and members of the committee. Thank you for having me here today. I'm Seija Virtanen for the University of California. The multiyear funding compact, which was signed in 2022 between the governor and the University of California, promised the university 5% annual funding increases to prioritize the advancement of student focused shared goals. These are goals that the legislature has supported through appropriations and budget bill language.

The compact based budget increases were intended to accomplish three things. Fund enrollment growth, allow the university to invest in critical student services to help improve student success, and cover core operating expenditure increases. The University of California is thankful to governor Newsom for the strong January budget introduction that funds a partial fourth year of the compact, the full fifth year of the compact, and restores the 3% base budget deferral in the current year. These funds are critical step to allowing the campuses to support operations and provide students with excellent academic quality and student services. The university is grateful for the support, and we request that the legislature approve the governor's budget and also in the budget year, provide the compact funding that is being further deferred.

Our state budget discussions are taking place during historic uncertainty for universities around The United States. Right now, the University of California is facing system systemic budget challenges due to continuously rising operating costs, state fiscal constraints, and federal actions that directly impact our mission. I'll now review rising operational costs with you. Slide two in the handouts I provided show the main campus cost categories. As the slide shows, about 71% of campus budgets are for salaries and benefits with another 13% for financial aid, 6% for bond payments, and 10% remaining for other items such as maintenance, utilities, travel, and office During the current fiscal year, core operating costs are estimated to increase by about 343,000,000, of which the majority is employee salaries and benefits.

The estimated core operating cost growth to 2026-27 is another 438,000,000, bringing the two year cost of sustaining core operations to $780,000,000. Financial aid obligations add approximately 200,000,000 to this cost, and California undergraduate enrollment growth adds another 92,000,000 in cost for a total two year cost of over 1,000,000,000. Slide three illustrates that the governor's budget proposal comes at when the university received no new state funding. UC had a $125,000,000 base budget funding deferral in 02/2425, and in 02/2526, all of the compact funding was deferred. To manage prior deferrals and flat funding, campuses have already implemented hiring freezes, eliminated positions, delayed projects, eliminated most travel, cut administrative expenses, and undertaken significant cost containment measures.

Campuses do not have the remaining capacity to absorb further unfunded cost growth without direct consequences for students and the compact goals. The proposed budget pushes deferrals from 02/2526 to future years, but those funds are needed to support the students who the university admitted in the 2025. While UC campuses do have reserves, the unallocated core funds reserve system wide are not enough to cover these shortfalls. UC campuses have approximately 155,000,000 in unallocated reserves, which is only enough for about four days of operations. These reserves are not significant enough to cover new campus expenditures while we wait to receive deferred compact funds.

I also want to note that the university has a tuition stability plan, which has kept tuition predictable for each incoming class with no increases for the cohort for six years after starting at UC. Moderate and predictable tuition increases are necessary to sustain the quality of education that our students reserve deserve. But keeping tuition flat for most students each year requires that the state provides sufficient funds to cover operating cost increases. Predictable tuition is dependent on the fulfillment of the compact. We are grateful for the funding we have received to date that has made progress possible.

At this time, when the university is facing serious and compounding financial pressures, we are requesting that the legislature provide all of the deferred compact funds so that we can maintain and continue that progress. Thank you for your time today.

Thank you. All three of you. Appreciate that. Let's turn it to committee member comments and questions. We will start with Mister Fong.

Thank you so much, mister chair. And thank you so much to everyone for the updates in on the University of California system. As you heard from our chair, in state enrollment and growing of the in state enrollment of in state residents, especially at our most impacted universities, are some of our top priorities. I wanna get a clarification. So either to the Department of Finance or LAO, on the $61,000,000 to replace nonresident with resident students, the governor's January budget documents indicated deferral, but the agenda in LAO indicate the funds are also provided in the budget year. Can we provide some clarification on that, please?

Yes. Alex Anaya with the Department of Finance. I can provide some context. The 61,000,000 reflects two different proposals technically in one. It's part of the 2025 budget act.

The budget act proposed to delay 31,000, one time as part of the fiscal year 2025-26. However, for that year, it provided the ongoing funding for the subsequent years. Now, the 2026-27 governor's budget is proposing the final augmentation of that program or that support for the replacement of nonresident, which is an additional 30,000,000, which gets you to that roughly 61,000,000 ongoing for a total based funding of 153,000,000 for the replacement of nonresidents.

Okay. Thank you for that Clarification. So anything we can do to continue to uplift our in state residents in that program is something that we're gonna continue to advocate for and and to push for us. We really appreciate the context there. This is more for the UC now. You mentioned the the referrals and the the impacts on students. Can you explain more about what some of those potential impacts on our students can be?

Certainly. Thank you for the question, Assemblymember Fong. The impacts on students if we don't don't receive the deferred funds would be that the student services that are currently being funded by the loan would then have to be cut. Because while we're getting a loan to repay the original loan, the funds would no longer go to the campuses. So those one time services would have to be cut at the moment.

We would also have to start scaling back on ongoing expenditures, which means that some of the services that we have started during the last several years to try to promote student success would have to be scaled back. Some of the especially expensive ones that require a lot of staff time, such as the summer start and certain duplicative services potentially on campuses. UC Davis is looking at closing down computer labs that are, at the moment, open 24 hours a day where, lower income students can print their documents. Those would, go away. There are there would have to be cuts that are no longer just focused on administration, because the current cuts have been very heavily on scaling back the UCOP assessment was scaled back by 10% this year.

We have cut travel on our campuses, and we did a hiring freeze that led to about 1,600 positions being not filled across our campuses. Those would have to be continued, and they would ultimately start impacting the services that students receive. We are not able to cut back on our faculty because of their tenured status.

K. Thank you for that context. And we know the demand and enrollment. Demand for our University of California campuses continues to grow. Is that correct?

That is correct. We receive many more applications than we can admit students.

And especially at the most impacted universities like San Diego, LA, and Berkeley?

That is correct. LA, UCLA is at this point the most selective university in all of The United States.

Okay. And one thing we wanna continue to uplift is I know that there's the LAO recommendations on different issues with the compact going forward, and so I hear those comments as well. But at the same time, you know, the demand for the university continues to grow. And so anything we can do to continue to uplift the referrals and then also on the the fourth year of the compact as well to make the use University of California whole is something that's critical and something that we need to continue to uplift for our students and for our University of California system. And finally, just also wanna uplift the retirement of the emergency loans at the both systems tech, the University of California tech to preserve student services in 25-26.

Do you want anything to that as well?

You you're asking me to add to the reserves?

Not to the reserves, but to the impact of the emergency loans and the extension due to backlog.

Oh, the 3% loan. Yes. So in the current year, 3% of our base budget funding was deferred, and we took out a loan, to cover those costs. The governor's budget offers us another loan to repay the state treasury for that loan, which would carry the loan forward, for us, but then we wouldn't we wouldn't necessarily have the cash to to we would have a loan obligation for the books as well, which would have to be repaid at some future time. The campuses have developed structural deficits across the UC system, so we have across our system almost $300,000,000 in structural deficits for our campuses.

And if we do not receive additional funding, we would have to find that amount of cuts in this coming fiscal year.

And thank you for the context, Kim, that the University of California has grown enrollment by nearly 19,000 students in the past, since fiscal year 21-22. So really appreciate the context and the urgency of continuing to fully fund, the University of California. Thank you, mister chair.

Thank you. Let me ask a couple of questions that are more technical, and then I'll get into my commentary because I I I have some, for today. On UC's revenue chart or bar graph, I should say, we see the three components general fund, which the legislature appropriates, student tuition fees, and then UC general funds. I'm interested in what the UC general funds, what what are the sources of revenue, and not all of them because I'm sure it's a long list. What are some of the, maybe, the top three sources of revenue there?

The the biggest one is nonresident supplemental tuition at, 1,350,000,000 for this last year. So nonresident

I heard you say 1,000,000

No. One bill sorry. 1,350,000,000. So 1,350,000,000.00, for nonresident supplemental tuition. The next largest one is some of the what's called the federal FNA rate, also known as indirect cost recovery on federal grants. K. Some of that helps campus operations, and those are currently what we would consider threatened funds. We also have some undergraduate application fee revenue that goes to campuses through there and a little bit of lottery funds.

Okay. Thank you. Our medical school's revenue, is that held in a different account and none of that gets used for any of the UCs?

That that is held in a different account. It is technically University of California revenue. I have a slide on that actually when we get to item three today. But, yes, medical centers are part of the total UC operations. We have, at the moment, as of February, our operations are about $61,000,000,000 annually, and our 20 licensed hospitals are part of that.

The that revenue has to be held separate from the campus state general fund. There is a little bit of that medical center revenue that can be used to supplement our medical health professional schools But not other schools.

Okay. How much of well, we'll we'll talk about it and we get to number three. You mentioned that the UC UCOP assessment, which the UC office of the president charges fee to the campuses, I would the best way to describe it is, like, a franchise fee. If you have a campus, you gotta pay to the UC office of the president. It was cut by 10%. What is the total UCOP assessment that's generated?

I believe we're at about $237,000,000 for UCOP assessment.

So then if it was cut 10%, it was cut roughly about $25,000,000?

Yes. That is correct.

If you find a different figure, just let me know. But I think we're gonna assume that's roughly the ballpark.

Actually, we're even lower than that, sir. We are at 298,600,000.0.

Okay. So you had said $2.37, but it's $2.96. Million. Okay. So probably about a 30,000,000 is was was it reduced 30,000,000 from the prior year from '24, '25? Or what was the 2425 number?

The, 24-25 number was about I'm going to have to get back to you on on those specifics.

Okay. But the 25-26 number is 296,000,000?

Yes. For the budget excluding the pass throughs and fee for service funding.

That's the assessment to the campuses.

Yes. That's correct.

What is the total, UC office of the president budget?

Total UC office of the president budget, is over, one it is $1,180,000,000. So 1,180,000,000.00.

$1.08. K. Thank you. Appreciate that. Let me ask you, Department of Finance, and I think I know what the answer is going to be because that's typically what happens at these hearings. The recommended LAO comments on in our agenda on the reduction of base increase, is there any response to that at the moment?

Is it relating to the nonresident d 61,000,000?

No. This is, governor proposes 351,000,000. It's on page seven of our, agenda. Yeah.

Oh, yeah. Yeah. The governor's budget maintains the commitment to the University of California by proposing the augmentations reflected in this governor's budget. We are aware of the proposal, but the administration remains committed to providing the programmatic support to students and residents of the University of California.

Okay. Even and to the LAO, your comment here is that even without the base increase, the core funding would grow already by three and a half percent.

Yes. That's from tuition revenue increase. UC expects to receive around $273,000,000 in additional tuition revenue.

Okay. There was a comment made, and I totally appreciate it from UC about any potential reductions. This is where my commentary from my colleagues comes in, would, would be reductions on ongoing expenditures. I wanna start to channel to this committee as we start to talk to all of the segments and all of the different programs of the budget. I it is my belief, having spent a lot of time reviewing our budget, that we are in a much more delicate situation long term than I think, perhaps we may be acknowledging as, as as California and and perhaps even as as a body.

And so, you know, when we hear phrases like this would require ongoing expenditure reductions, I I would ask that we all think about that and try to think about what are the least harmful of those. Because what I see long term, the LAO said it, I don't it's not coming from me, But is the out years, we will have some very difficult decisions to make given the projections all around. Even the governor's budget talks about a massive budget structural deficit, which if we continue that status quo, we're talking about cuts to everyone. And so if at some point, and I fear that we likely will be getting to the some point, we have to talk about cuts. It is gonna be a very, very much not fun conversation to be having in this committee, certainly as a chair who, you know, we've we've we rallied together to fund education at all levels, to the extent possible.

But I I want us to start thinking a little bit more delicately about what do reductions what can what might reductions look like? So I'm hoping, and I should have said this before, that as you ask questions, whether it's in these hearings or on, in other other, briefings that you receive, that we start to ask questions about specific programs and where we think the harm can be furthest away from this people we wanna serve, which in this case is is students. And so a lot of my questions will be focused on that. I hope that you can help me and help us as an assembly figure out what those things can be because, again, I think I I'm I'm not fearful, but likely that in the next couple of years, we're gonna be talking about some very difficult decisions. And I'd rather be making less difficult decisions now than more difficult decisions later as I hope to continue to serve in this body and in this role.

So I I ask for all of your help in that, and some of these questions are in that, spirit. On the issue of the reduction of that the LAO is is proposing removing the out year commitments for 27-28. So we're not even talking about this year's budget, but to the deficit question. Finance is projecting are you in agreement that the projected budget identifies $202,141,000 in back one time back payments in 27-28 and another 144,000,000 in 28-29, which means this legislature would have to identify almost $400,000,000 of revenue to pay for these commitments in not the budget year, but in future years? Is that what's being asked of us?

Correct. The governor's budget proposes a variety of deferrals. Some include out your payments, and some of those are reflected in 2027-28, and 2028-29 as some of the compacts are on an ongoing basis. K.

To the LAO, given your recommendation, which is to, to maybe not make those commitments, what would you say to a department, in this case, to the University of California, that because you have communicated very clearly to us that those years may be very challenging, and this could be very realistically something that is not funded by a future governor in their budget and potentially beyond the reach of our revenue. What would you suggest that you see, office of the president and the UC system to do to address a potential shortage, if you will, of funding by 241,000,000 in 2728 and a 144,000,000 in 2829? What are the sorts of things we could see happening today that will prevent those difficult decisions in the future?

Well, we'll we might come to this when we turn to issue two when we discuss enrollment. I think one recommendation might be to consider the number of students they enroll and make sure that we maintain a level of enrollment that's sustainable based on the the support that the state Can provide.

Okay. We'll we'll get into that then. K. So you see, if this were your reality and look again, chair Fong, myself, this committee, we fought tooth and nail to make sure that the funding was there for you, this year in an ongoing basis, and that the cuts that were proposed last year in the governor's budget were not in the final budget. I think we were, you know, very, loud and clear about that advocacy and support.

We are talking now about out years, which very different difficult and different circumstances. Are you having conversations about potentially a new governor, revenue not existing in the future, a governor who may not be as committed to the same type of compact, who may say, no. Those that agreement in '25 to 2627, was really unrealistic, and you shouldn't have assumed everything was just gonna be rosy. What are you what are the conversations you're having internally to deal with you already said a $300,000,000 structural deficit, which should be getting addressed by your regions, I assume, but then a potential another $400,000,000 potential, commitment that is only a commitment stay, but not perhaps not being able to be effectuated in the next couple of years. What are the conversations you're having about that?

And thank you to you, Chair Alvarez and this committee, for all of your support. I know you're all believe in higher education very much. We think that is very uncertain that the next governor would want to fulfill any funding commitments made by the current governor. So we cannot assume that those funds would be coming to us later. So we will have to start preparing.

If we do not get those funds, we'll have to start preparing for, cuts on our campuses. The campuses with deficits would see them, grow potentially a little more, and we'll have to have plans to, downscale their operations to match their existing revenue, even though we might be getting a little bit more money for the overall system. So that will be very disappointing for, the staff and students and prospective students of those campuses. We would have to revisit our enrollment plans for 27-28 and look at, can we continue to increase enrollment? Do we have to downscale enrollment?

We would never kick out any of the students that we currently have, but it would mean that the incoming class would be smaller than the prior incoming class. At the moment, we have been increasing our incoming classes year over year. And, we may have to start scaling that back down again and bring the enrollment down to where we can afford to instruct the students and provide them services. We are very committed to ensuring that, our students have an excellent experience, that our, instruction continues to be of high quality and that the students who are enrolled are helped to graduate, that we get them through. And so if we have to help fewer students, then that would be where that discussion needs to go.

Okay. But we would try to deal with many things before we get there. We have tried to do some things behind the scenes that don't really touch on students. For example, we have been refinancing very old bonds, trying to get better rates for them. Trying to restructure that debts.

Our annual payments are a little bit smaller. That frees up money on our campuses. You may recall I said, we spend 6% of our campus budgets on old debt service right now. So the more we can get that under control, the better. We have an initiative with CSU right now, where we are combining our purchasing power across our campuses to purchase equipment and supplies together.

And by combining our purchase power, we are getting discounts across the systems. So we're trying to save money in those ways. Because we're trying to think a little bit what can we do that doesn't touch the students, but could help us save some

money. Thank you. I appreciate that response. I think I I would say that that last part of your response, the intersight mental collaboration is likely where we need to see, more action in, in in different ways. I I envision the outcomes of our committee, which is to serve more students in two different ways.

One, you have a you have a mathematical equation, which certainly you give certain amounts of money and you can serve x number of students and, and that's the outcome. I also, though, given the constraints and the limitations of funding, maybe it's because I grew up poor and I always had to be creative about how to make things happen. I think that the same goes for us with limited resources. We've gotta think from a policy equation on how are we reaching the outcome of serving students. And so what I would say, which is no no surprise to you or to anyone who's followed some of my policy, ideas of this year, we need to start thinking differently on how we educate kids and how we provide them with a UC education.

And perhaps, you know, we don't have to reduce the excellence of our UC system and our CSU system just because we partner more with community colleges to see kids have direct pathways, perhaps that are transfer pathways, perhaps two plus two programs, perhaps accelerated degree programs. Not everybody has to go to school, in my opinion, for four years to achieve mastery of some sort of skill set. Those are the sorts of things that I think we need to start thinking about as an education system to provide the outcomes, which is to serve more students, prepare more students for the workforce. That isn't always a formulaic approach if it costs $25,000 to educate a student at a UC. So that's my commentary for today, but I hope that we start to talk and see more of the intersegmental working types of activity that you just described so we can achieve those outcomes of serving more Californians. I think doctor Patel had some questions and comments.

Yeah. I appreciate your presentations today. A couple questions, getting to some specific topics of core functions versus non core functions. Understanding school budgets and university budgets, I I it's my understanding that some of the non core components of the budget actually enhance the student experience and also the recruitment retention experience of faculty members. Can you talk to me a little bit about what some of these noncore functions are and how they impact the budget?

Yes. We have a lot of noncore functions. So noncore and one non core function that touches on the student experience would be student housing and dining. That is considered a that's in our budget as a sales and service high slice. They have to be their auxiliaries.

They have to be self supporting, but the availability of student housing and the availability of food on campus can impact the student experience tremendously. How comfortable is it to get to class? How safe is living near campus? All these things can impact the student experience. We also have parking facilities, which for those who have to commute to campus and especially our staff, very important having available parking.

Many of our campuses have transit options for students, whether it's a transit that goes within or around the campus or a contract with the local city for transit passes for students so that they can get to classes or do the campus easier. Our medical centers are six academic health and medical centers are the largest component of our budget, and we'll get to that later. But we are a large provider of medical care within the state. Also, our research functions are incredibly important to our graduate students. Our graduate students get employment and work experience by being graduate research assistants, and that is largely funded from the federal grants that we received that are not considered core funds budget.

So there are many components. We also have, agricultural extension stations. We have operations in every single county of the state in one way or another. So University of California is touching on lives of Californians in many different ways. We run a program called four h, which, brings, elementary school kids and, k through 12 kids to, experience, what farms are like and also do, you know, get to grow some vegetables and the cities.

And we do a lot of training of k through 12 teachers, especially high school teachers, for AP courses, for helping to advise students and so forth through our what are called safe up programs, student academic preparation and educational partnership, where we help, high school and community college instructors prepare students for four year universities. So we're very involved in various ways that are not necessarily our core funds budget.

So when I hear this response and I think about housing, parking, food, I I would think many students would think those are core functions of them attaining academic success. And yet, some of our fiscal constraints might put pressure on those systems. So I certainly support fully funding the UCs, and I don't see how we can separate, food and shelter and transportation from the academic experience when we look at core versus noncore. My concern would be around some sort of negative feedback loop that would be created if we start to pare down some of these noncore functions and their indirect experience for the student. Maybe then a student might consider, well, if I'm not gonna get sufficient housing or the food quality goes down, I might choose to go out of state or I might choose to to delay accessing higher education.

So I I would love to see us get back to where we're removing all those deferrals and fully funding the UCs to make sure that our students and our faculty can have the and our staff can have the best experience possible within the UC system. Another question I have is regarding the the six year and this is might be a delicate one. This the six year tuition guarantee. My understanding was that for most students, we would like to see them graduate in four years. And to our chair's comment, maybe there's even an opportunity for us to look at ways we can streamline processes towards earning a bachelor's degree.

What percentage of our students need to stay for six years in order to complete their degree programs? And what are those what what are the barriers causing them to extend their degrees for 46 years?

The barriers for students to graduate on time has a lot to do with what there are multiple schedules? A lot of it has to do with course availability. So what we call bottleneck courses, courses that are necessary for graduation within a particular major that the student might not be able to get into, that's maybe offered only once or twice a year. So we've tried to increase the number of those courses and make more sections available so that students can get into those courses. One is advising.

The students maybe didn't understand, that they have to take a certain a set of courses prior to being eligible to enroll in another set that are required for the major. I'll talk about this later, during this hearing, but there is now we've discovered a rather strong link between, food insecurity and graduating on time. It's a correlation, that doesn't mean it's causation, but it is a very strong correlation that's been discovered. And some of it is belonging. Feeling like they are accepted by their peers, and the faculty on the campus, and feeling like they're part of that campus community.

Those are, important factors to students graduating on time. The university is now putting an effort to try to get more students to graduate in four years. We have a lot of students graduating in five years. And if we can get that amount of time down, then we could also open up more seats for first time entrance to the university. We are finding that making online courses available during the summer is helping students graduate on time.

Many students don't necessarily want to stay on campus and go to class during the summer, or they have to work and they have a schedule that doesn't allow them to take a course during the day. But by participating in online courses and making progress towards their degree, we are finding that that is helping tremendously. And that was one of the compact goals that we have at this point fulfilled is increasing our online course availability for students.

So this is an exact, example of how I think some of the non core and the core areas intersect. Certainly, if if we can get our students out on time in four years, if we can fund those core competencies of class availability, then that does create a new student generation to come in possibly at the higher fee structure and increase revenues for those same increasing costs.

Exactly. And offers more seats available for the new cohort of California undergraduates.

Yeah. So please keep making progress towards that goal. I would love to see us, make sure that our students get the courses required, that they have a sense of belonging, and they have food and housing security, which are, as you said, non core comp functions, but they clearly impact graduation timelines. So keep working towards those goals and, wanna echo thoughts of, my committee colleagues here around fully supporting funding EUCs.

Yeah. So please keep making progress towards that goal. I would love to see us, make sure that our students get the courses required, that they have a sense of belonging, and they have food and housing security, which are, as you said, non core comp functions, but they clearly impact graduation timelines. So keep working towards those goals and, wanna echo thoughts of, my committee colleagues here around fully supporting funding EUCs.

Thank you.

Thank you. Thank you all. We will go on to panel number two. I think we have the same panelist here. This is the UC enrollment trends, and I think we're gonna get into some of the other questions that I think a couple of us had as it relates to the budget. So, Department of Finance will kick us off.

Yes. Alex and I have Velasquez with the Department of Finance. As it relates to enrollment, the 202627 governor's budget does not make any changes to the 2025 budget act actions adopted as it relates to the 202627 academic year enrollment target. The governor's budget also does not propose any 202728 academic year enrollment targets for the University of California. This concludes my remarks, and I'm happy to take any questions at the appropriate time. Thank you.

Thank you. We'll have the legislative analyst office.

Florence Bouvet with the Legislative Analyst Office. So we have four recommendation regarding UC enrollment. And, to provide a brief context, the 2526 budget act set target enrollment for 2526 and 2627, and UC expects to exceed its current year enrollment target of roughly 210,000 full time equivalent students by over 5,000 students. It also estimates that it will surpass the budget year, enrollment target of roughly 213,000 students. So our first recommendation is that despite UC exceeding its current year enrollment target, the legislature maintained it the original enrollment target for 2627, which, as I said, was roughly 213 students.

And our recommendation is based on a few key factors. So first, over the past ten years, we note that UC enrollment growth has has surpassed the underlying demographic trend, such as high school graduate transfer rates. We also note that there are signs that enrollment pressure has weakened. As I was noted, earlier, the number of of applications received by UC have increased, yet at the same time, the admission rates for most UC campuses have increased significantly. UC is also currently enrolling a much higher percentage of high school graduate, around four point 8.4% than it did ten years ago when that share was 7%.

Also, exceeding the state target, so notably in 2526, while at the same time instituting a hiring freeze appears to have contributed to some programmatic impacts such as larger class sizes. And lastly, when the state set its enrollment targets last June, it was indicated indicating what level of enrollment it believed it could afford on an ongoing basis. Our second recommendation is to fund enrollment separately and on top of any base increase for UC. Currently, we believe that funding separately enrollment would provide additional transparency, accountability, and legislative oversight as the funding would be directly linked to an enrollment expectation. As the state has traditionally done, we recommend funding enrollment using the marginal cost formula.

And under this methodology, funding the enrollment for the same enrollment growth of roughly two hun 2,968 students would cost the state just under $43,000,000. Our third recommendation is to pause the nonresident reduction plan. We believe that the nonresident replacement plan is based on the questionable assumption that at the high demand campuses, Berkeley, Los Angeles, and San Diego, those campuses can only accommodate additional resident undergraduate student by replacing nonresident student. And, the evidence doesn't really bear this out. So first, we know that during the first four years of the plan implementation, those three campuses have enrolled 4,500 additional resident student on top of the 31 nonresident student that were replaced.

Also, given, data provided by UC, there's doesn't seem to be, strong evidence that those campuses are facing instructional space constraint in terms of classroom or labs or that they are facing, housing capacity constraints. Second, the nonresident replacement plan is a relatively expensive way of adding non of adding resident students to these campuses. The state is currently paying more than $33,000, per student to replace a nonresident with a resident student. Yet by comparison, under the marginal cost formula, adding an additional resident student cost $14,000. And the difference between those two rates has to do with the fact that the state has to backfill UC for the nonresident supplemental tuition that UC is losing when they're not admitting those nonresident student.

So an alternative to this nonresident reduction plan would be for this legislature and the state to fund directly enrollment of resident student on those three campuses. And if we use the same marginal cost formula, funding the exact same number of resident student would cost around $25,000,000, which is much less than the current $61,000,000 that's included in the current budget proposal for the current the current the current year. And, the $36,000,000 that would be saved, under this alternative, enrollment plan, could be used for the to help the state address its, its structural deficit. We also know that as we let resident enrollment increase under this alternative plan, the the campuses will eventually reach the statutory goal of maintaining nonresident enrollment at no more than 18% of total undergraduate enrollment. You know, it might take a bit longer for the three high demand campuses to reach the 18%, but eventually, they they will reach that that that percent.

And our final recommendation is to hold UC enrollment flat for 2728. As we've discussed earlier, the state is projected to run a substantial budget deficit in that fiscal year. And having UC enroll additional student while, you know, potentially the, you know, the state might not provide additional support could led to could lead to adverse programmatic impacts such as larger class size, fewer course offering, or, less academic support. That concludes my remark, and I'm happy to take any questions.

Thank you. We'll hear from the UC now.

Alright. Thank you, Assembly Members. For the record, I'm Seija Virtanen for the University of California. The compact set a goal of increasing California undergraduate enrollment by 1% annually. The legislature reinforced this goal with annual budget bill language included in the budget act, directing the university to increase enrollment by specified full time equivalent student numbers.

The university has met and exceeded the compact goal for California and resident enrollment growth. In fact, not only did we meet the 02/2526 compact goal with the 2025 enrollment, we have already met the 02/2627 compact goal for California undergraduate enrollment growth. Slide four in the handout I provided shows the undergraduate enrollment growth during the compact. The university has grown California undergraduates by about 18,800 full time equivalent students since the start of the compact. This is a major achievement in providing access and one that was made possible by the certainty of the annual base budget support through the compact.

Looking at this enrollment growth more closely, we can see that the success story is even better. Latinx students make up 60% of this California undergraduate student growth. Native American student enrollment increased by 50% during the compact. Having our student body more closely reflect the population of California is a win made possible by the compact funding increases. Access to the University of California and the world class education we offer students is important to the UC regents and to president Milliken.

We are proud to increase the entering class of UC students and to have that class more closely reflect California's population than any other class in the university's history. For 02/2627, the university is planning to continue growing California undergraduates. The current plan for 02/2627 includes 2,721 new California students. This enrollment level would exceed the compact enrollment goal. The university's ability to sustain these levels will depend in part on the availability of ongoing state support for campus operations.

All enrollment growth costs money. The instructors to teach courses, the staff to provide student services, and additional financial aid provided are all costs tied to enrollment. As I mentioned in the previous item, core funds support our campus operations. Core funds include the state general fund, the student tuition and fees, the nonresident supplemental tuition, as well as some other federal f and a funds and few smaller fund sources. Slide five in the handouts provided showed the available core funds per student over time.

And when we discuss core funds, we subtract funds that were not spent

on campus operations, When we discuss available core funds, we're taking out things like financial aid, bond payments, and payments to the UC retirement program. So those aren't funds that are getting spent on the campuses on students. But so we take them out when we're talking about what's available per student. And over the last 26 years, the university has seen significant increases in our available core funds. But at the same time, we've also grown enrollment substantially.

And what this means is that our available dollars per student have been declining over the last quarter century. And in order to avoid further erosions, it's important that the university have sufficient funding to cover inflationary cost increases. Slide six in the handouts highlights the compact goals that have been achieved and which are threatened if the university cannot cover enrollment compact also set a goal for three UC campuses that are in high demands, Berkeley, UCLA, and San Diego, to replace their undergraduate nonresident enrollment with California undergraduates until each of those campuses reaches a nonresident level equal to 18% of the total undergraduate student body. The compact further specifies that the state would provide funding to backfill revenue losses from the nonresident supplemental tuition, to the campuses and that the goal of replacing nonresidents with California undergraduate is contingent upon provision of these funds. Receiving funding to replace lost nonresident supplemental tuition is imperative as nonresident supplemental tuition is now a significant part of campus budgets.

In fact, each nonresident student funds not only their own cost of attendance, but also provides enough funding to support 2.7 California undergraduates. The 1,350,000,000.00 paid annually by our nonresident students is a critical support funding for campuses. Also, under the tuition stability plan, nonresident supplemental tuition grows with each incoming cohort. The funding provided by the state is fixed and does not grow over time. This means that over time, the replacement nonresidents also represent an opportunity cost for the incremental fee increases that were never collected.

The legislature further defined the compact goal of nonresident replacement with California undergraduates in the budget bill language as 902 students annually for all three campuses combined. This goal was funded for the first three years of the compact with 02/2425 being the last year the funding was provided. During these three years, the university exceeded the nonresident replacement goal specified in the budget bill language. Across the UC system, nonresident undergraduate students are now at 15.2% of the total undergraduate student body. This is far below the goal of 18% for the system.

Admissions for the 02/2526 year took place in the 2025. At that time, the Federal Government was making rapid changes to international student visas and even halted all visa processing for a time. These changes created uncertainty in international nonresident admissions, and campuses made more offers with the expectation that yield would be lower. This was a miscalculation, and while there were non resident students replaced at the three campuses, it was not the full 902 students. For graduate students, I want to mention that the University of California is also requesting 5,500,000.0 in ongoing funding to expand for health professional programs.

These are dentistry, optometry, pharmacy, and veterinary medicine. Each of these programs serves an important function in California health care. Unfortunately, many areas of the state are lacking sufficient health professionals to ensure services can be delivered in a timely way. Expanding the UC health professional programs with an emphasis on serving underserved populations would help alleviate the state's health care workforce shortages in the long term. Thank you for your time.

Thank you very much. Okay. On this one, I wanna say a couple of things for colleagues. I think the two themes that I'm gonna take with the questions here, two different things, two different approaches. There was a governor's compact with the UC promising a number of things which have happened, some cases have not.

That's the big picture item, which I'm gonna get into. And then my understanding before my time, there was also an agreement on this nonresident replacement idea, which is we'll give you the cost that it cost us to educate that that you would charge an out of state student, international student, whatever, we will pay the equivalent cost of that if you just take that student now becomes a Californian. Those were two deals that were reached before, I think, all of our times, and we are now living with those decisions. And we need to decide whether those are decisions we wanna stand by still or perhaps there is another approach. So I'll just put that out there so that we understand why, again, these questions are being asked, at least coming from me, and hopefully, we'll hear more from our our colleagues.

Let me ask this question about the cost. Again, outcomes, number of students served. I'm looking at the UC issue two graph here. 18,000 more FTE students. I think no one can deny there's been more Californians served, more students served.

Good things happening. There's there was a cost to that. I'd like the LAO, and it this might be an unfair question to ask you on the spot or even UC or finance. How much funding did it take to grow by about 18 almost 19,000 students? How much more funding does the state provide to the UC system in order to grow by this number of students?

So excuse me. The state share of the marginal cost formula for for the for 202627 is around $14,000, and it it did grow over time. So if we were to look at the the the five years you have on the graph, the state share would have been slightly smaller, closer to 12,000 for some of the earlier year. But so we've actually, yeah. Could

do that. So so that's the the cost per student, which you calculated by dividing the number of students or dividing the increase in in the base funding that was in the compact by the number of students? Is that how you calculated that?

Yeah. So if yes. So you you would have to basically look at the state share in the marginal cost formula, so roughly $14,000 per student, and you would multiply by the number of students that you would like to enroll. So that's how for the, you know, our proposition to fund a re resident enrollment separately, we we we estimated $43,000,000 for just 11 budget year. Yeah.

So let me make sure I'm understanding what you are saying because I I wanna be very clear. What you're trying to communicate to us is that if we wanted to fund the growth of 819,000 students at the marginal cost of $14,000 per student, we would actually be funding an additional $43,000,000.

That's sorry. That's for just one specific budget year. That was for the the budget year where the the target is to enroll and then show

You can come to the table. Yeah. Your colleague from

Yeah. Thank you. So for 3,000 students, roughly, the cost would be $43,000,000. So if we do 818,000 instead of

3,000 would be six roughly six times that much.

Times six.

Okay.

So 25.

Okay. So what I'm trying let me let me try to ask what I'm trying to get clarity on If I may you may be able to you, you know, may know where I'm going, which is what is the cost that we've what is that investment that we've made? What has been the the cost of that investment to this number of students?

Jennifer, Pinhella, Elio. If the question is as I understand it, it cost about 270 I'm gonna round it up. 275,000,000 to fund 19,000 students at the marginal cost rate.

K.

So if you're just ballparking it, it's hundreds of millions of dollars to get that many students. That's like a midsize sort of small midsize campus.

Right. So in the latest, number, which is 2526 it'd be a 275. $75,000,000. Okay. And what was the increase, again knowing that there was deferrals and that that confuses it all, but what is the actual increase in base funding? Because I think that's what your colleague is trying to share with us is that we're we're funding these increases with some number, but it's not tied to the number of students. It's just funding to the system, just generally.

Yeah. Yes. Under the compact, the governor is giving or the state the state has been giving UC base increases and it's apart from 2526, apart from last year where there was no base increase. So up until from 2122 through 2425, the state provided General Fund Augmentations, which were more than enough to cover the cost of enrollment. Mhmm. The issue in 2526 is the state did establish targets, didn't provide resources, and so they fell short that year.

Sure.

Interestingly, even without that, they exceeded the target.

Sure.

I don't know if that answers.

That that does. I think the point was the funding provided exceeded the marginal cost of a student for several years Yes. Substantially. Now granted, when you so when you calculate the marginal cost of a student, is that the is that like a does that include the increase in cost associated with the cost of living, with CPI, with obviously, you know, there's some agreements with employees that require increases. Is that are you baking the full cost in or is it just a number taken at a point in time?

Effectively, it builds in. So it looks at actual cost from the previous year. Suppose there was an inflate a base increase provided the previous year, so that spending was higher. It takes that actual spending, still adjusts it for projected colas moving forward. So it is an effort to keep, like, the value constant over time.

Okay.

Well, I'm sorry. To to reflect whatever actuals is and then At

the time. Okay. So I asked those questions for my colleagues just because we can approach this differently. We can say we'd like to see UC grow by x number of students and calculate using multiple talents that we have before us here and others, and say, what is it going to take to fund that growth as opposed to, here you go, 5% just because we think it sounds great and get us some more students, which has been, in my opinion, what appears to have happened over the last several years. Do you have a comment?

Thank you, chair Alvarez. Yes. I have two comments. One, just wanted to provide specificity on the marginal cost of instruction is about 14,400. So if you think about every thousand students added would be about 14,400,000 as maybe a a more doable metric to think about for the future.

And then the other comment I want to make is because the university does have continual inflationary cost increases. If we only fund incoming enrollment, the students that we currently have, we wouldn't have enough money to continue to look after that.

You for interjecting because I thought I had asked that question, and I maybe I did not. I thought that's what I had asked when I asked, did you bake in all of the costs? We're hearing now that there are other inflationary costs and pressures that you see faces that you did not calculate in your figure.

The the marginal cost of instruction was not really meant to take into account the inflationary pressures on the, existing student population. It was a metric, developed four decades ago by the LAO and Department of Finance to try to reach a a reasonable way to calculate how much it would cost to add a new student at either the UC or CSU. And we use the same formula, but we come to different costs

for certain testimony is here is that the LAO is missing other costs that you have that are born onto the UC with that figure. So maybe it's time to recalculate how we or reassess the formula is what you're suggesting?

In the past, the way the legislature would fund us, you would give us a cola for the base and then additional funding for, new enrollment. So you gave us two different amounts. Governor Newsom's compact combined those amounts and said, he didn't wanna really discuss, annual, amounts for enrollment. Just here's 5%. Go figure it out.

Yeah. Do you have some comments to that?

So so actually, yes. I I my understanding is the same as you see just shared. So when it comes to adding students on the margin and the marginal cost rate, I think you I think you see would believe that it's a fine rate to add them on the margin. When it comes to looking at their base, how do you want to grow that separately from enrollment growth? Again, we're saying you think about both of those issues. What cola, if any, do you wanna provide?

Mhmm.

And do you wanna maybe have some strings attached with that? We're saying Capa and renewal might be a string you wanna attach, but it's effectively a cola. It allows them to go and do wage increases, benefits, etcetera. But separately, think about what you want with access and enrollment growth and pay for that separately. So I think that rate we're talking about is deemed the best rate we have going for us right now.

You maybe wanna change the formula moving forward, but right now there's no huge concern with it. So then it's just on the rest of their budget. We often in in in budgeting, right, talk about growth and COLA, enrollment growth, caseload changes, and a COLA. And so you have both of those issues before you.

Right. And we see that definitely in the community college budgeting issues where we haven't sometimes done the growth, but we've done the COLA. So, again, something for us to think about if we want to be able to determine, especially in the times of limited resources, how much to grow and to ensure that it's growth of students and not growth in other ways too, which I'm not implying that that's happened. We've seen the numbers show that there's been growth, but on a going forward basis to make sure that the growth goes to serving more students, then we may wanna identify funding differently than what is being proposed to us. So the second issue I wanna ask is about the nonresident replacement.

Again, it seems like that was something that was, I think, negotiated by some parties, and that was where we buy out the out of state students. Whereas now I will acknowledge two things. One, the cost of a student has grown, but the figure has remained the same. But the question to us is, should we still continue to do so to buy out that to to the cost of $60,000,000 per year when all signs indicate that the intent of that lever, if you will, carrot and stick approach was to get more Californians enrolled, and that has actually occurred and our expectation is that that continues on a going forward basis given the fact that UC has responded in that way. So that's the decision point for us.

The LAO says we can serve still the same number of students with the marginal cost at just 25,000,000 as opposed to 61,000,000 and still fund. Now, again, acknowledging that it's not a growth, although it is the marginal cost, so there is some associated growth per student. And so am I capturing that correctly from the LAO's perspective?

Yes. Our recommendation is based on the idea that to grow access to of these campuses for resident student, you don't need to actually decrease the number of non resident student because the the the campuses have demonstrated that they have the capacity to accommodate more than the additional 902 resident student as is expected in the plan. So if we can add more resident student without decreasing the number of non resident students, there's no need to compensate UC for any losses of non resident supplemental tuition, and that's why the alternative we propose has a cost of 25,000,000 instead of 61,000,000.

And so UC would say that the marginal cost of student is not enough. We need the additional $36,000,000 because we.

The only so it is much cheaper to add resident students rather than go through the process of replacing nonresidents. We do think the state is at the moment compensating us at a slightly lower rate than those new nonresidents are costing us. Nonresident supplemental tuition for 02/2627 is going to be over 39,000 per student, and the state's reimbursing us at 33,000 per student. So there's a little bit of lost money there. The other thing I would point out is that if we freeze nonresidents and try to get to a lower percentage, we are there's an opportunity cost to the campuses that if we had kept the nonresidents at the current percentage level that the state has funded us down to, that differential there is a lot of money as those students begin to, as we lose nonresidents students and can't add revenue to our campuses.

Right. So your your argument, which I I think I understand well, because we've talked about this before, is this was a source of revenue for you that we no longer, you say we no longer made available and that we bought out that option.

Mhmm.

But the truth is is you could grow the number of nonresident students, and you could also grow and this is where my direct question I asked president Milliken this, and I'm hoping that you come you came prepared for this conversation. You could also allow those three campuses, which are very sought after, to increase the cost for an out of state student that can help them soften this this decision to perhaps not fully fund at the cost of us buying it out. Meaning, instead of charging them the $39,000 that you charge them today at UCSD, UCLA, UC Berkeley, you could charge them 45,000, and they probably would still go to those campuses. But it's my understanding that the regions do not allow for this to occur.

You you are correct. The current university policy does not permit differential fees on our campuses. We charge every student the same regardless what campus they attend. We did begin to look into what it would take to have differential non resident tuition at our most sought after campuses in order to fund a downward trend in those non resident students. And because the the amount of students we would have to decrease was so high and our non resident tuition is bringing in a lot of revenue, we were actually closer to, like, $52,000 just for the non resident piece.

At which campuses?

At Berkeley, LA, and San Diego to get down to, at low below 18%. And what we worry about is that would make us the most expensive university in The United States for nonresidents. While our campuses are amazing, there are others that rank a little higher than we do if you look at all privates and, publics together. So we are obviously among the best for the publics. And what we worry about is then losing a student interest in actually coming to our campuses or even further skewing our non resident population towards extremely wealthy international students.

So what was the point of which you felt comfortable that would not occur, that students wouldn't walk away? You're telling me at 52,000, they're not gonna wanna come to UCLA, UC Berkeley, or San Diego. I believe that's probably that's probably not true. I think people will still come to those of the campuses, but let's just say that's the case. What is the what is the the price point where it's no longer really a competitive price to attract students to those campuses?

I would think that the competitive, so that the price point would be about equal to some of our competitor institutions rather than ranking above them in cost.

Which is what amount?

I don't have that in front of me. Okay. It would be it would be a lot of the private universities on the East Coast.

Yeah. So this is the second time UC comes before us. I've asked to try to figure this out in some way. Mhmm. The next time we see you, I think we're we're my expectation is that we have those data points so that we can make informed decisions as to whether if we reduce you to 25,000,000, can you make the other 36,000,000 up by these new revenues that would be coming in from the, competitive, equal level playing field campuses?

Okay.

Like, I we we have to see that. I asked the president for that. I'm not asking you for that. I expect, if we don't get it, ahead of time in writing, then, whenever we see each other again, I'll be asking once again. So appreciate that. Mister, doctor Patel first.

Thank you for your presentation. I would like to get granular with a specific student population. Our students that come in as residents when they are on their parents' visa status or refugee status or something like that. They're coming in with resident status. But then perhaps on a certain visa, they may graduate off of or age out of that visa, then shift over to a non resident status and end up paying nonresident tuition despite their families being residents of California is my understanding.

Is that correct? When they age out of their parents' visa, they become nonresidents.

Current United States immigration policy allows individuals to stay on their parents' immigration status until the age of 21. If those individuals are still enrolled at the University of California, that would be called aging out of that parental immigration status, and they would have a new immigration status. Students can choose to seek international student status at that point. We have current law here in California that states that if a student attended high school for at least three years in California or three years of community college, they would have their non resident supplemental tuition fee waived. However, that law also states that it does not apply to individuals who have international student status.

Exactly. So there is a small potential gap there Mhmm. For individuals who have come legally to California, who have been here for at least, I would think, six years, you know, three years of high school, three years of university, and who have aged out of their parental visa, who then would not eligible for this waiver. I don't know how large that population is. It is good for us to become aware of them because we do try to use our financial aid policies to ensure that students receive fair treatment, that they have the opportunity to attend the university.

And if we as we become aware of those students, there may be, the necessity to state change state law in order to assist them and ensure that they benefit from the policy that was intended to benefit students in that category of individuals. That is people who attended high school in California. They should not be penalized for maintaining legal immigration status. So I I hear you on this issue, Assembly Member Patel, and we're happy to work with your office to ensure that students receive fair treatment.

Thank you. I appreciate that follow-up. I did express this directly with my meeting with the office of the president in my office. He knows that I'm very concerned about this loophole and wanna make sure that students don't feel the pressure to somehow lose status, which I am hearing that students feel the familial cost pressure that might make them make really terrible decisions. So I I've been approached by students that are very concerned about this amongst their peers, and I would like to see that loophole closed, certainly, especially if we are gonna consider changing the cost structures for nonresident tuition.

Mhmm. Yes.

So thank you for that. So thank you for that.

Thank you, doctor Patel. Mister Fong.

Thank you so much, mister chair. Thank you, everyone. Just to follow-up on the chair's comments and, remember, we just as the chair said, we had this robust conversation last year on the replacement of nonresidents and and the tuition cost there. And I heard in your comments to DC system that sounds like there was a UC regents committee that's working on these issues. that the possibility of raising the nonresident student fees?

Currently, nonresident student fees are under handled under our tuition stability plan.

Okay.

So we are until 2032 going to raise those fees, up to 5% annually. The regions can could reconsider that policy at any time. And I want to acknowledge that I hear chair Alvarez. He wants us to consider differential tuition on our campuses in order to fund this issue and wants an analysis of that. So I wanna just publicly acknowledge that I have heard the chair on this issue.

And I second those comments as well. So definitely wanna look at that analysis. I and the the chair mentioned it, but I do believe that the demand at the three most sought after campuses will continue to be there. The numbers are there. I here's a story anecdotally when traveling around the district and everywhere that whether its UCLA, Berkeley, San Diego, the the demand is very, very strong.

And I you know, with the Olympics coming to Los Angeles in a couple years, it's just a lot of different things. California continues to to lead as a public higher education institution, and the University of California is that system. And so whether it's 39,52,000, or numbers in between, or just looking at different cost studies, maybe do a study or a poll just to see what students' appetite are for different fees. But I think when we look at trying to continue to increase the number of in state residents at our most adept demand campuses, I think that's something that as a legislature, as a body, we're gonna continue to highlight. And so I just really wanna highlight that point once more.

And so I think anything we can do to continue to increase the number of in state residents at our campuses and then possibly with differential fees that are most in demand campuses to offset. As you mentioned, when you look at any decrease of out of state residents in our most in demand campuses, how do we make sure that we continue to grow in state residents at those campuses? I think that's a a question that we're gonna continue to grapple with. And the UC system is those campuses are key to the future of of California and the state of our economy and and the growth of our economy. And so really, would love to see a report back on those issues.

Thank you for your comments.

Thank you, mister Fong. Thank you to, the panel, on this, item. We, I think, have the same group for our federal fund update. Obviously, we are all familiar and unfortunately familiar with the threats, but also, the actions that have been taken by the Federal Government, and what that could mean for our excellent, and thriving UC system across the board.

And so we were asked the panel to please walk us through what that could look like, what those impacts could be, and then how if I can ask all of you to always center students what this would mean for students as it relates to the cuts in some of this some of this funding. So we'll start with the legislative analyst office.

Florence Bouvet with the legislative analyst office. Before I provide the overview, I wanted to mention that we have covered this topic in more detail in our UC brief that you'll find on the Elliot website. And we also have on the website two tables that provide additional data on the federal funding allocation for this for research, the medical center, and financial aid on the on the website. So I will just provide an overview before is your time and provide more detail. So first, federal funding is an important component of UC budget, and it accounts for roughly one third of, its total funding.

In '25, 24-25 UC received more than $19,000,000,000 in federal funding, and these funds must be used for specific purposes. And, generally, they cannot be redirected to support, UC's core operations. Most federal funding supports three, major areas of UC operations, health care delivery and training, research, and, student financial aid. If you look at page, 17 of your agenda, you'll see a breakdown of, the allocation of, federal funding across, the six UC medical center. And, overall, nearly half of UC medical center's patient care revenue comes from the Federal Government.

On page 16 of the agenda, you'll see how much each campus relies on federal funding for research. And here, again, federal funding accounts for slightly more than half of total research funding provided to the UC campuses. For student financial aid, UC students received, again, in 24-25, about $2,000,000,000 of federal financial aid. And of that $2,000,000,000, half was gift aid and and the other half was roughly, student loans. When it comes to the recent federal policy changes, they're all affecting these three areas.

For health care, changes to medical eligibility rules and federal reimbursement policies could reduce federal payments to UC Medical Center and increase uncompensated care if, some patients are losing their health coverage. For research, near term risks appear to be more limited than initially expected as many of the proposed federal research cuts have been paused or reversed by court decisions, and Congress has recently rejected most of the reduction that were proposed by the federal administration. Finally, for financial aid, the largest impacts are likely to fall on graduate and professional students, as those federal changes eliminate the grad plus loan program and introduce new federal caps on federal loans. That concludes my overview, and I'm happy to answer any questions later.

Thank you. We're gonna go with UC next.

Thank you. For the record, I'm Seija Virtanen for the University of California. The university has operations in every California county that touch on the different aspects of life for Californians. While many people are familiar with the university's 10 instructional campuses, we also have six academic health centers that operate 20 hospital licenses. We have hundreds of faculty practice primary care clinics throughout the state.

We have agricultural extension research stations, and our faculty research projects take place in many locations. Slide seven in the handout shows a pie chart for the estimated 2025-26 total university expenditures as of the February 2026. As you can see, medical centers as well as sales and services, which includes medical clinics, dining services, housing, and parking, are nearly two thirds of the university's annual expenditures. Traditionally, the federal funding that supports the university's various services throughout California have been relatively stable. In both 2023-24, and in 2024-25, over 17,000,000,000 of the university's total budget was provided by the Federal Government.

With the passage of HR one, also known as the big beautiful bill, there were changes to the current federal funding allocations as well as future allocations to various programs. There have also been changes to federal research funding prior to HR one. Federal research funding Sorry. Federal funding for research remains unpredictable, and policies such as the h one b visa fees and immigration restrictions have made international collaboration more difficult and benefits from it more difficult to achieve. Currently, 172,000,000 in research grants have been canceled or suspended with another 800,000,000 in court cases fading can fighting cancellation.

This unpredictability is disrupting current research and threatens the research ecosystem that has made innovation possible. Our financial challenges are not going away. We have benefited from court rulings on federal funding cuts, but those decisions are under appeal. The ultimate outcome is uncertain. University of California affiliated faculty received five Nobel Prizes this year.

This is a unique achievement and is made possible by available research funding and a university environment that values curiosity and innovation. This innovation fuels California's economy as well. UC alumni launch more companies than the alumni of any other university in the world. And in 2024 alone, 67 new startup companies were formed based on UC inventions. Federal funding changes will also impact the University of California academic health centers.

UCHealth's designated public hospitals are safety net hospitals for the state. We are the second largest provider of inpatient medical care in the state. We treat patients from 99% of the state's ZIP codes and our specialty health services, such as the UC Davis burn center, are some of the only available for large parts of the state. UCHealth public hospitals provide high quality care to those in need regardless of their insurance ability to pay. The acceptance of all patients has led to some financial losses prior to the passage of HR one, with UC public hospitals providing about 4,000,000,000 in uncompensated Medicare and medical care.

HR one imposes new bureaucratic barriers on medical eligible patients seeking health insurance, including additional paperwork for work requirements and more frequent eligibility to read determinations. The LAO estimated that 2,100,000 Californians may be at risk of losing medical coverage due to these additional requirements. As people lose their health care coverage, we anticipate that UCHealth's uncompensated care cost will increase. HR one reduces federal share of medical spending, also known as FMAP, for emergency health care services to undocumented individuals. That change will take effect in October 2026 and will lead to a funding reduction for UC's public hospitals.

Beginning in 2028, HR one cuts state directed payments, a key financing mechanism for public hospitals. Unless Congress reverses this reduction, it will reduce payments to UC academic health centers, which provide primary care, specialty care, and inpatient care. In addition to our extensive health care services, UC operates one of the largest Health Care Professional Education programs in

the nation. HR one is tax, also known as the managed care organization tax, which has provided UC 75,000,000 in 2025 and in 2026 to support and expand medical residency positions. These extensive impacts on the University of California won't be contained to our students, staff, and faculty. Services the University of California provides statewide will be impacted. Restructuring or eliminating services must be considered for aligning revenues and expenditures. Thank you for your time today.

Thank you. Does the Department of Finance have anything to add?

No specific comments or no proposals, as it relates to the loss or potential threat of federal funds, but the administration and Department of Finance is in constant communications with the University of California along with our HALT team just to, monitor any potential threats and upcoming losses.

Thank you very much. Thank you to all three. Do you have questions from our colleagues? Doctor Patel?

Thank you. As a former, graduate student of UC Irvine, I understand the value of NIH funding on our campuses and want to stress that I hear loud and clear that Congress is starting to reject some of those cuts. But I wanted clarity on, are they still considering reductions in the indirect cost percentage on those grants as those grants return?

The last budget negotiation Congress has not adopted their recommendation that those be reduced. So they're still maintained at their current level.

Okay. That is good news because we know that research takes a lot of infrastructure to conduct, not just the direct pipettors and tips and and students to do the work, but a lot of support structures from the UC system. We want to make sure that our undergrads as well as our graduate students get hands on experience as they develop their interest in STEM careers. Thank you for that.

Thank you, doctor Patel. Mister Fong.

Thank you so much, mister chair. Just a quick question also on the research cuts. So thank you for the updates there. $800,000,000 of research grants that are part of court cases fighting cancellation and a $170,000,000 of research grants have been canceled or suspended. And as doctor Patel mentioned, we know that students' ability to gain experience, to learn in these labs, to do research, and to learn from post doc researchers, some research on the campus.

I remember when I was an undergrad at UCLA, I had a chance to to enter in some of the labs as well. And so just that student experience is so critical. Do we have any information on the ground as to the the level of impacts right now to our students and their experiences in in labs? Like, how many what percentage of students are being affected?

I I don't have the percentage of students that have lost their jobs because of these, lost grants. But you're you're absolutely correct that these funds primarily go to support graduate students to pay their, salaries and fee remission and the for the graduate students who are helping the faculty in the labs. The faculty salaries are paid by the university from our core funds, but the faculty are losing this research. And once the research is disrupted, it's very difficult to start up again. Some of the faculty lose all the progress they've made, and the research has to start from scratch, unfortunately. The there are about 1,600 research projects currently impacted.

Okay. Thank you so much for that context. And anything we would do to continue to push back against these cuts and to support the efforts there is something we wanna continue to uplift. So thank you. Thank you, mister Chair.

Thank you. Very briefly before I ask questions, because one of our colleagues needs to go, and we have a quorum, and we will be taking one action today. So we'll call the roll.

[Roll Call]

On the I am gonna have some questions on this issue, but on the previous issue of UC enrollment, we're gonna have 22 thing. One is a request to the LAO. Given the discussion that we had earlier, we'd like you to bring back or prepare for us a report on funding based on your recommendations on a base increase to the university and also an enrollment based budget per our conversations. Is that miss Bouvet, is that clear to you, or do you need more direction?

That's clear. Thank you.

Okay. Thank you. And then I'd like to make a motion to adopt supplemental reporting language to require that the UC, prepare a report on the issue of the, make sure I get this right because I I keep calling it a buyout, but I wanna be correct. The nonresident replacement plan with options for the assembly to consider reviewing or at least to review a different approach for that motion in the second.

And then, chair, if I may, just very quickly, ..., the administration has not necessarily reviewed the language. We remain open to conversations, but at this time, remain oposed until we see the language just for further review and communications.

Yeah. And we won't have a position either until we see the language. So, we will have a a deadline. How much time we wanna be collaborative with UC? How much time do you think you would need to prepare a report like that?

You required such a report back in 2019 that took us approximately seven months to complete. That was a cost estimate of reducing, non residents. So I would say, probably, next December.

Oh, no. That's not gonna work. Need to have this before we adopt the budget this year.

Oh, you want it by May? Yes. Oh, my. Okay. I will work with the committee consultant. Thank you. On on a reasonable timeline Okay. Or what we can produce within that time frame.

Well, it seemed like to me in our earlier conversation, you had already looked at some numbers and figures. And so I hope that that includes some some of that work product could be utilized for the report. Okay. So with that, we have a motion and a second. All in favor we're gonna take a roll, actually.

[Roll Call]

Right. Motion carries. Thank you. Thank you, to the, members. On issue three, going back to that now, I have one question that was, doctor Patel really, remind me of this, to to the UC.

There's a proposal, or I don't know if it's in the budget or not, help me understand, to help with some of this graduate concern that it's very legitimate that the Federal Government, the action that they're taking, whether it's the definition of professional degrees and other things that they've done, can potentially inhibit the the different types of of professionals and and different types of degrees from being accessible to people. And I'm wondering if if if your earlier comment, was is the proposal one in the budget? And two, is it have you targeted have you defined what those graduate degrees support that you're seeking, what those are, and the justification be behind those specific degrees?

So, chair Alvarez, I think you're referring to the recent, depart federal department of education reclassification of graduate degrees as not being professional degrees.

Correct. That's one of the impacts of all of this.

What what that did was it limited the amount of loans that students Right. Can take to attend those programs. And unfortunately, now the loan limits annually are below the total cost of attendance for those programs, which means that any student who either doesn't get a lot of financial aid or doesn't come in with their own, full funding is going to face severe challenges in completing those degrees. We have a list of them that was compiled for the hearing on March 3 in this committee when we discussed financial aid. But some of them I I know nursing is one education. Maybe LAO has

I let me ask it this way. Earlier in I don't know if it was the very first panel, you mentioned that you have a request and budget to support some graduate level professional degrees. I wanna just understand what the one, whether that's in the current budget or is that a request of an augmentation to the budget? I think that's the first question.

That is the University of California request of augmentation to the budget that was not in the part of the governor's budget.

And and were those degrees aligned with the ones that now are beyond reach from the loan given the new loan limits by the Federal Government? Or which ones are you hoping to support with that funding?

We would support, programs in optometry, dentistry, pharmacy, and veterinary medicine.

Oh, so medical based. Okay.

Medical entirely medically based. It's recruiting students who want

Sorry to interrupt you, but I my understanding was that those were defined as professional, though. Yeah. All those medical degrees.

They are all defined as professional. Yes.

So that that proposal of yours is not to support the nonprofessional. It's just to support graduates just generally.

That's correct. Our our proposal is to expand enrollment in those programs.

Got it. Thank you. Appreciate that. Clear. Alright. Thank you all for your presentations on this. Let's move on to our title nine update. If we can please ask our panelists to come forward. Education code requires us to consistently revisit title nine in hearings throughout the year. So we have that with us today, and we will with each one of the segments.

Obviously, we believe importance and compliance with title nine. However, the the policy bill is asking us to continue to have oversight. I think we're trying to figure out how to perhaps do that better so that we don't have to make you come back often to be able to keep you to do the work that you're doing so well at UC. So I'll turn over to the UC office of the president.

Good morning, chair Alvarez and members of the committee. My name is Nicole Richardson, and I am the the UC system wide title nine director. Today marks my one year anniversary with UC. Over the past year, I have learned so much from my colleagues and have developed a deepened appreciation for the culture, values, and mission of UC. I'm proud to be part of UC's ongoing commitment to preventing and addressing discrimination and harassment based on sex, including sexual assault and other forms of sexual violence in compliance with state and federal law.

Thank you for the opportunity to address this committee. UC's office of the president has a dedicated Office of Civil Rights or soccer for short, Which includes the system wide title nine office or STIXO for short, which I lead. Each UC campus and location also has a dedicated title nine officer. Collectively, the local title nine officers and STIXO are primarily responsible for ensuring that education, work, and patient care environments are free from all forms of sex sexual harassment. The system wide sexual violence and sexual harassment or SBSH policy is periodically updated at by and is implemented by STIXO .

The SBSH policy prohibits all form of harassment based on sex and applies to all faculty, staff, students, and third parties such as visitors and patients. Additionally, there are accompanying investigation and adjudication frameworks, which clearly set forth steps to complete the resolution process under the SBSH policy. Additionally, materials contain the materials contain information regarding remedial and supportive measures and potential disciplinary actions or corrective measures depending on the outcome. In 2025, STIXO issued and updated the SBSH policy and adjudication frameworks to incorporate technical changes required by state law. STIXO provides education, guidance, and strategic and investigative support across the system to ensure consistent implementation of the SPSH policy.

For example, STIXO host monthly virtual meetings with title nine officers deputies to facilitate sharing of best practices along with updates or training on trends or changes in the law and policy. Each title nine officer also has a monthly one on one meeting with me and the executive director for soccer to whom they have a reporting line. Further soccer host biweekly office hours were title nine officers have access to ask questions and consult with soccer leadership. In June 2025 based on feedback from UC community members who expressed a preference for a UC developed training, soccer launched the new sexual violence and her sexual violence and harassment, anti discrimination prevention and education, student training. SHAPPE, as it is called, was developed by soccer in consultation with other UCOP professionals and campus and location representatives.

All UC students are required to take this training annually to ensure they fully understand their rights and responsibilities under the SBSH policy and how and where to go to make a report or seek help regarding sexual harassment, assault, or violence. A similar training was launched in fall 2023 for employees and supervisors.

We know that having adequate support We know that having adequate support resources is key to creating a climate where individuals feel safe and supported. Each UC campus has a center for advocacy, resources and education or care office to provide survivor support services as well as advocacy and healing services. Campuses also have respondent support service coordinators to assist individuals responding to allegations of misconduct under the SBSA's policy by providing help to navigate the resolution process and offer referrals to campus and community community resources for emotional and mental health support in SBSA matters. Soccer leadership regularly attends meetings with campus care directors and respondent support service coordinators to learn about student concerns from the perspective of those who have been directly impacted by the SBSH policy and adjudication investigation and adjudication frameworks. Soccer uses this feedback from these valued stakeholders to inform policy updates and training.

At the University of California, we do not tolerate sexual harassment or violence in any form. In creating soccer, STIXO , and the system wide policies, UC has signaled the importance of these issues at the highest level of leadership. Our goal is not merely to comply with state and federal law, but to go beyond those minimum requirements to prioritize the well-being of our community members. Our commitment to both fairness and compassion is a cornerstone of the university's culture of safety, respect, and accountability. Thank you, and I welcome your questions.

Thank you. I wanna start by thanking you for your work. Congratulations on your one year.

Thank you.

But, more importantly, thank you for your your work, in taking this on. It's, obviously, something that the legislature has found very, important and significant. I know the chair of higher education committee has been very, committed to this effort. And, and I also just wanna acknowledge the office of the president for the update that was provided, in writing to us, about a month ago at, at that hearing. And I appreciate again the work that you're doing. I'll turn it over to mister Fung.

Thank you so much, mister Chen. Thank you for your partnership and efforts on the bill package we had a couple years ago. And thank you to the Assembly Higher Education Committee staff, especially Alan, for working efforts around Title nine. And congratulations to you on your one year anniversary

And everything you're doing at the UCOP and really looking at policies and procedures across the University of California system. And in in the on page 22, you mentioned that SOCR leadership regular attends meetings with students and making sure that we have student feedback, where it's information that's used to best inform my practices at the UC system. Can you give one example of how student feedback has influenced the best practices and any policy updates there?

Sure. We meet with the care directors and the respondent service coordinators, their directors, and they have direct, contact with students who are part of the process, and they share with us some of the the challenges that the students face going through the process, and we try to incorporate that into our updates and training.

Well, thank you for that context. And then on page 20 of the report, it mentions the three different systems. Just for my clarification, is there contact? Obviously, University of California, you're working closely with all the different campuses there. But is there any intersegmental collaboration between the community colleges, CSU, and the UC system on Title IX issues?

I've just completed my one year, and I actually started doing that a lot more. Started doing that a lot more. Now that I've gotten to know a lot of my colleagues within UC, I have started to reach out to collaborate with my colleagues across the other segments. Recently, I participated in a training with CSU.

Great. Thank you so much for that collaboration. Anything we can do to continue to foster a collaboration, especially on title nine issues is is critical. So Great. Thank you so much for that collaboration. Anything we can do to continue to foster a collaboration, especially on title nine issues is is critical. So

Appreciate your leadership there. Thank you, mister chair.

Thank you. And, again, thank you, mister Fong, for your work on all of this over the last few years. I I think one question that has has to get asked as part of this oversight is just, are there any current issues that you think we should be made aware of as it relates to any Title nine concerns, any concerns raised on enforcement not happening, anything that you think really should we should know about that may be highlighted in other public spaces that what we should be aware of. Or if that's if that's not the case, then the second question would be, what are some of the things that continue to be a priority for you where you would like to ensure that there's support for the work that you're doing?

Thank you for that question. As I mentioned in my remarks, we, issued an updated policy and framework, last year based on the slate of bills that came into law. So at this time, we're basically implementing those new provisions, and we continue to consult with the campuses and locations to evaluate any financial resource or other impact. As we see, those, new provisions go into effect and how it impacts our our population, we definitely we will bringing that forward and, sharing that.

Okay. And one thing I think you said it, but I think it's important to highlight because this was big as part of the the efforts in the last couple of years. At the moment, each campus has a title nine office and coordinator. Right. Thank you. And thank you for your work. Appreciate you. Thanks for being here.

Thank you.

We will go on to it's just an oversight, so no action on this item. Go on to our final issue, basic needs funding. We obviously, sort of tied to the prior panel on funding cuts from the Federal Government. Maybe should have tied these two a little bit together. But, hope you all had a little bit of a break.

And welcome back to the three panelists. The federal impacts go beyond the education, and we in this state decided a few years ago that there are some other important components of an educational journey and that make that's making sure that students' basic needs are met. And so that obviously requires some partnership from federal sources, and those are all being threatened once again as well. So we wanna get a review of where we stand with our panelists, and we'll start off with the Department of Finance.

Alex Anaya Velasquez with the Department of Finance. As it relates to basic needs, the governor's budget does not propose changes to the ongoing support for UC's basic needs, rapid rehousing, and mental health services programs, and maintains the current service level as follows. For basic needs, this includes 15,800,000.0 ongoing. For rapid rehousing, 3,700,000.0. Lastly, for mental health, 21,300,000.0 for a rough total of 48,100,000.0. This concludes my remarks, and I'm happy to take any questions at the appropriate time. Thank you.

Thank you. Let's hear from the legislative analyst office.

Florence Bouvet with the legislative analyst office. The state funds three categorical programs that you see that are generally viewed as addressing student basic need. I was mentioned earlier, food, rapid rehousing, and mental health. On page 23 of your agenda, you'll have, a description of the distribution of the funding for those three programs across UC campuses. The state began funding all three of these programs at UC beginning in 201920.

The as was mentioned, the governor's budget leaves funding for these three programs flat in 26-27, and there are no new state proposals for these programs this year. The Federal Government, however, recently tightened up certain exemptions such as the that CalFresh recipients are now going to be required to work twenty hours a week to maintain their benefits. And, if it's my understanding is that college students have to meet on exemptions if they are to be eligible for, for CalFresh. And these changes are going to effect starting in June 2026. Usually, it is likely, to cover the anticipated impacts on UC students.

So I'll just note to finish that UC students are unlike many other CalFresh recipient in that UC students also can qualify for, Pell Grant, Cal Grant, middle class scholarships, and UC institutional aid, which all are gift aid that can help UC students cover their living costs. Thank you.

Thank you. We'll hear from UC.

Thank you. For the record, I'm Seija Virtanen for the University of California. The University of California's definition of basic needs includes a list of comprehensive needs representing the minimum resources necessary to to holistically support all students in their daily lives. In 2017, the state provided the university with 2,500,000.0 in one time funds to develop a hang hunger free campus pilot. Since then, the annual state appropriation has grown to 15,800,000.0 for food security and housing programs, another 3,700,000.0 for student rapid rehousing programs, and $21,000,000 for mental health.

The university now has a robust basic needs infrastructure to serve our students. Each campus has a basic needs center offering a range of services, including, permanent food banks, pop up pantries, free food cafes, pay as you go food trucks, and CalFresh application assistance, emergency housing, rent subsidy pilot programs, emergency, grants, and crisis response. In addition to the work done on campuses, UC has established collaborations with community partners and other public higher education segments to expand the basic needs infrastructure. Intersegmental working groups have enhanced collaboration and shared best practices. Community partnerships have expanded access to food, housing, public benefits, and coordinated support services, thereby enabling campus to respond effectively to both ongoing needs and acute crises.

Direct partnerships between county offices of health and social services and campuses have ensured regular office hours for on campus county staff to assist students with CalFresh applications. And lastly, UC was the first higher education institution in the country to establish a contract with USDA to accept EBT at campus food retail locations. In 2049 campuses served approximately 77,800 unique students system wide. A detailed study conducted at four campuses found that food pantries made up about half of all services used by undergraduates and 60% of all services used by graduate students. CalFresh assistance and prepared food were the next most utilized services.

In-depth analysis of students who utilize campus basic needs services and campuses who do not utilize basic needs services found a strong correlation between graduation rates and food insecurity, as well as a correlation between retention rates and food insecurity. Students who started as as freshmen at UC and experienced low food security had an 84.3 percent six year graduation rate compared to a 92.6 percent graduation rate for students who did not experience food insecurity, an 8.3 percent difference. This data points to the importance of continuing basic needs programs on campuses to ensure that students have the support that they need to graduate. We discussed federal impacts to the university in the previous item, but I wanted to mention that HR one imposes work requirements of twenty hours per week for CalFresh recipients beginning to July 01/2026. This will be as the spring term is wrapping up on most campuses, so the true impact of this change has yet to be felt.

Please note that parenting students who have a child under the age of 14 are exempt from these work requirements. And in 2022-23, approximately 58,000 UC students received CalFresh benefits totaling $17,300,000. Prior to direct state appropriations for basic needs, the university's approach to food and housing security was to adjust financial aid allocations and to ensure that financial aid covered the tuition and fees of as many as the lowest income students as possible. In addition to the upcoming CalFresh eligibility changes, the state budget is proposing to not renew the one time funds for middle class scholarship, which will impact about a 100,000 UC students and their ability to cover the cost of their education. Thank you for your time, and I'm available for questions.

Thank you. I wanna start with that last point that was well made by UC on the issue of students being impacted by HR one and CalFresh given the success that obviously has occurred. I'm still not under I know there might be others who who do understand this. I'm not understanding how we're going to be able to do the work requirement that was mentioned, the twenty hours for these students who currently depend on this service and how how our education system just in general is going to make sure that students don't lose out because they haven't met the requirement because they're doing what we expect them to do, which is to be students. So, what's the thought that's been given at the UC on how to achieve this?

So we are currently looking at what can be done in establishing further community partnerships, especially with local food banks near campuses. But at the moment, the University of California, unless we were to get the full compact funding, we do not have the funding to backfill for the over $17,000,000 in cost that it would take to, fully cover what students are currently getting in CalFresh benefits.

I'm glad you put a a a number to that. Thank you. That's helpful. 17,000,000 is the cost currently. But what are the I guess, again, trying to explain that I'm not as well versed as others in in in this issue of how individuals will be getting certified that they are meeting the requirements of HR one in terms of any number of requirements.

In this case, working twenty hours to be a recipient. Students I I don't think we expect students to to do that or at least not the majority of students because they're spending their time studying and and doing their work as students. So is there an alternative? What's being I just don't know what's being discussed for students. Is there any other alternative that's being potentially discussed at the federal level or or another way to for students to self certify? What what what does the picture look like?

Our current financial aid does assume that students would work, up to twenty hours a week. So some of our, lower income students probably meet that work requirement, but oftentimes, students don't have consistent work schedules. They're often working minimum wage jobs, often in the food industry, where they might bounce anywhere between ten and twenty hours a week. We do not permit our graduate students to work more than twenty hours a week. So and some of them have appointments for less time than that.

The students that do manage to work would then receive continue to receive those benefits, and students who do not meet those hours would have, three months of CalFresh benefits and then be permanently dropped. Mhmm. So we're likely to see these impacts really start hitting in the fall quarter. And, at this time, the university does not have a plan to fully backfill for this.

We are trying to establish more community partnerships to get additional food donations for our food banks, and to make students aware of where in the surrounding communities there may be food banks that they can turn to. But, as the economy is not as strong for everyone right now, there's a lot of people turning to food banks, and we're hearing about food banks being overdrawn. Okay.

Right. Mister Fong, do you have some questions?

Thank you so much, mister chair. Just a quick question on the on page 23 of the report. So there's a breakdown on the basic needs, rapid rehousing, and mental health funds. How's how are those funds allocated? Is it at the at the campus level, at the system wide level? How how are those decisions made?

So UCOP divides these funds between the campuses. All of our campuses receive a little bit of a base funding that helps them hire staff to run programs, and then the remaining funding is divided based on enrollment student enrollment on those campuses.

Okay. Thank you for that context. And then on page 25 of the report on student mental health provision prevention, I saw that Santa Barbara says NDA. Is there do we have information as to prevention and early invention on mental health services for Santa Barbara?

Unfortunately, it looks like we don't have that. I can inquire from the campuses, but some of the campuses didn't necessarily track all of the all of the students that were being being served because the the prevention efforts often are low level counseling sessions that don't necessarily require legal reporting. So there wasn't always as close of a tracking of the students utilizing those services.

Okay. Thank you for that context. And I think we can do it around basic needs, continue to meet the needs of our students as critical. So I really appreciate the work and efforts around the space here. Thank you,

mister chair. Thank you. We will, hold this open. Thank you to the panel, and we brings us to our final panel today, which, also should be no surprise. We've talked about it at the beginning of the the set of hearings here in higher education in this education finance subcommittee.

It's an issue that have has been raised by colleagues, which is common course numbering. Wanted to get an update on where this is given UC's very critical role to this being successful. So I think we're gonna start with the office of the president.

Thank you, chair Alvarez and members of the committee for this opportunity to speak about the intersegmental efforts to improve transfer and specifically common course numbering. My name is Hanmi Yoon Woo. I am the associate vice provost and executive director for undergraduate admissions for the UC system. I wanted to begin my remarks by affirming university's commitment and support for the transfer function, transfer enrollment, and transfer student success. These continue to be among the highest priorities for the University of California.

Transfer students are admitted at UC at extremely high rates. Last year 77 percent of community college applicants were admitted to the university, and UC enrolls more community college students than any university of its caliber in the nation. These students don't only enroll at UC, but they succeed in earning degrees and contributing to an educated and upwardly mobile California workforce. A third of UC's bachelor degree recipients started at a community college. UC has a higher share of entering students who are transfers than any other selective public or private university.

And the university recognizes the importance of genuine partnerships and coordination across California's post secondary institutions to smooth and transfer to smooth the transfer process for the thousands of students enrolling in the community colleges with the intention of transferring and earning a bachelor's degree. One example of demonstrating the strength of our partnership with the community college chancellor's office is the annual ensuring transfer success program that provides training and professional development to the hundreds of counseling and advising staff whose work it is to guide community college students towards successful transfer to UC. This program has persisted over several decades and combined with tools such as assist and the UC transfer admission planner have resulted in positive outcomes over the years. In 2021, assembly bill 1111 was signed into education code to implement a student facing common course numbering system across the California Community College System. The idea behind the CCN project is to identify comparable courses and assign them the same course number across all the community colleges in order to streamline transfer and reduce excess credit accumulation.

In other words, CCN should provide students with transparent and reliable information for community college course selection, transferability, and degree attainment. While the CCN effort is led by the community college chancellor's office in partnership with the academic senate for the California community colleges, CCN implementation relies on faculty expertise and decision making as this work is curricular in nature. And for UC, articulation policies or the decision to accept courses as transferable are within our faculty's purview. So our faculty are active participants in this work alongside the faculty of the community college and CSU systems, not only through the Intersegmental Committee of Academic senates or ICUS, but also as subject matter experts. At the center of CCN implementation is the development of universal templates to represent comparable courses in a given subject across and within the 115 community colleges.

So this is more than simply giving new titles to existing courses. It's a complex curricular statewide effort to identify and quantify foundational course alignment. Because UC has a vested interest in transfer student success, UC faculty and staff have invested hundreds of hours into the CCN effort and participated in numerous meetings, councils, and work groups, including biweekly three hour convenings since January 2024 on top of their existing workload. These hours of collaboration have produced over 150 templates representing the most frequently enrolled and transferred general education courses. Our faculty and staff have participated in interdisciplinary work groups to determine the essential template elements needed to facilitate UC's decision making on course transferability and general education.

Having intersegmental agreement on appropriate template content is needed not only to validate the efficacy of the CCN templates, but also to ensure fidelity to existing articulation decisions. CCN implementation is being conducted in phases with phase one template development completed and student facing for all 115 community colleges as of this past fall 2025. Template development for the 18 phase two courses is also complete, and the final steps to make them student facing by fall 2026 are in progress. The UC academic Senate and staff at the office of the president are committed to continuing to work with intersegmental partners at the CSU and community college chancellor's office on the CCN initiative. And we believe in the long term potential of CCN to streamline transferability and academic planning for prospective UC transfer students.

Thank you for your time, and I'm available for questions.

Thank you. Finance.

Alex Anaya with the Department of Finance. No additional comments, but available for questions.

Thank you. Legislative analyst office.

Florence Bouvet for the LAO. We don't have any additional comments.

Great. Thank you. So the Budget Act, Finance, and LAO allocated 10,000,000 for for a work group to develop the system. Where is that expenditure? Has it all been spent? Do you know?

Alex Anaya with the Department of Finance. That would be on the community college side for the expenditure, but that's something that we can, look at and get to your staff as soon as possible.

Great. Thank you. I'll probably ask when the chancellor come or when community colleges come as well. You don't have any idea, LAO? Okay.

I heard a figure of a 150 templates. I wanna make sure I understand what that means. Those those are not actually numbered courses yet because I also heard that there was some rollout of something. Please please provide more more specific details because I I think I missed it. I just caught that you said something rolled out in 2020 last year and more will be rolling out.

So I'm just trying to understand where are we, what does that mean, Mhmm. How many courses are currently numbered common in with common numbers? Let's start with that.

Right. So phase one is complete and student facing as of this past fall. It encompass six courses. And so those would be, for instance, communications, introduction to public speaking, English, writing, English, critical thinking and writing, political science, psychology, and statistics. So those are the three or sorry, the six courses.

Okay. Together, those represent 14 templates because there are, like, honors sections of those kinds of courses. So those six courses represent 14 templates. Again, those are completed and student facing at the community colleges. So courses at the community colleges under those common courses have

Can I can I ask you, what does a community college student see when they see that? Do they besides the number, or does it tell them this is now the same as UCCSU? What what else does it signal to a student who, you know, may not have a counselor sitting next to them saying that's the right course for UC and CSU? What what what are they seeing?

So, I'm not sure if you're familiar with ASSIST, but that's our statewide repository of articulation agreements.

And so if a student were to work with an adviser or counselor and look in ASSIST, which would show the articulation when they register for a course, for instance, the statistics introduction introduction to statistics at their specific community college, they can see that the course is articulated or that it's transferable to the UC and CSU campuses and also meeting, probably the quantitative reasoning requirement for the California, general education requirement.

So a student would either have to enter and assist, or I am assuming, and I'll ask this to the community colleges, they may be signaling through their course catalog this is being offered and it's equivalent to a a UC and CSU introduction to statistics.

The equivalency would be presented in the assist database.

Only in the assist database.

Not necessarily from the community college. K.

I'll have to ask about the utilization of assist because I I assume not every student knows to go to assist and type in and and and get feedback on that. So but you've already gave a given me more information than I had coming in, which is great. Six courses were rolled out as of last fall, with 14 templates. And then phase two will be you were about to get into that.

Yes. There are 18 courses covered in phase two, which represent 42 templates.

18 above the six or 18 total?

On top of the six. K. So in addition to the six or 18 additional courses representing 42 templates, the template development has been completed and, the what is in progress is getting those courses sort of renumbered and then student facing in time for fall 2026.

Okay. Again, very helpful there. I guess my my other question on this front is from the ... where is there a public facing report document that exists as you're doing this work in terms of how someone how how someone in the public ourselves can see what are the courses that are that you've achieved in terms of common course numbering, which ones are being worked on for phase two. How how does someone get information if it's not through an oversight hearing of a legislature?

I believe that would come from the community college chancellor's office. They are the project

Implemented. Thank you. Initiators.

We will ask them.

And what is the next phase after fall of this year? Because by 07/01/2027, the education code is requiring essentially all courses. And at the rate, it sounds a little bit like that might be a challenge.

Well, so the next phase three, there are 46 courses involved in phase three, which would represent at least a 106 templates. So it's a much bigger, exercise because it does require the faculty of, in all those different areas teaching those courses to, convene and get agreement on what the template should look like. So what it should be included in templates for those specific subject areas. So it is a big lift.

So are you channeling to us today that you don't believe that you'll be able will be able to meet education code requirement of 07/01/2027 for common course numbering?

I'm not sure. I think that would be a question for the, again, for the chancellor's office.

K. If I ask the chancellor's office if they are receiving all support, coordination, from all institutions, UC and CSU, should I expect to hear some concerns about anything in particular that the UC is doing or not doing as it relates to advancing the goal of a July 2027 implementation?

Our faculty are committed to this project, and they are active participants in the work groups and the disciplinary special reviews. So from UC's perspective, you know, we've been giving constant feedback as templates are being developed. So I I don't know yeah. I'm not involved myself in these conversations, but my staff have told me that, you know, we are actively participating.

When it when when is the next gathering of the appropriate group for the phase three phase of the project?

I don't know the answer to that. I'm

Do they normally meet on a monthly basis, on a regular monthly? What's the what's the work group arrangement?

They had been participating, in biweekly meetings.

Biweekly. Okay. Sounds frequent. Alright. I'll be asking same questions of the other segments. So appreciate you providing that information. It's very helpful. No additional questions or comments on this. Thank you, all of you, for your time on this issue. We will hold this open.

And with that, brings us to our public comment section. We will be taking public comments on items that were on today's agenda. We ask you to please, step forward, introduce yourself, and provide your, comments to the committee. And we wanna welcome you all. And thank you for for being here and for your patience listening to our presentations. We'll start with our first speaker. Please come forward. Welcome.

Thank you. My name is my name is Trevor Griffey. I'm vice president of legislation for UC AFT. We represent lecturers and librarians in the UC system. Three quick points.

We very much support the governor's proposed budget and would encourage you not to ask them to do more with less. Usually, when that happens, it means laying off our members or increased class size. But we can always work with you on finding other cuts to middle management and other things. Second, the Trump administration has sued UC again, and is trying to shake it down for hundreds of millions and possibly a billion dollars. We believe it would be appropriate to make funding conditional upon their not using taxpayer money to settle with the Trump administration.

And third, I think there needs to be more honest reporting about reserves. I think UC said today that they have a 155,000,000 in uncommitted core fund reserves. But the fact is their endowment and their, their unrestricted reserves are in the billions of dollars. We know that the blue and gold fund has 7,600,000,000.0 in it already, and we think it's essential to add some language to the budget that would make sure that tuition increases and funding increases don't go to pad the reserves as there as is happening at UC Irvine. Thank you.

Thank you very much. Welcome.

Good morning. Chair Alvarez and members. Vincent Rosso with the University of California Student Association. On behalf of over 230,000 undergraduate students enrolled across nine of our campuses, UCSA is in strong support of the governor and legislature fully funding the UC for the 2627 budget. We're aligned with UC on the much needed fiscal support to operate our campuses, with the continued increases to enrollment, as well as securing facilities bond measure, for the deferred maintenance, affordable housing bond to support student housing projects at growing campuses like Riverside, San Diego, and Merced, and the research bond to maintain UC's health and science research programs.

We also elevate concern over equitable campus supports and basic needs with UC admitting increasingly diverse cohorts of students and federal attacks to our equity programs and initiatives. We saw the regions approve additional cohort based tuition hikes in November, where UC students elevated the potential to tie a portion of tuition dollars to student services and basic needs. And, similarly, we're asking the legislature to ensure that student services are being sustained especially, as demand increases across our campuses.

Thank you. Good morning, mister chair members. Excuse me. I'm Christina Di Caro, lobbiest for the California Veterinary Medical Association. A group consisting of veterinary medical professionals, animal shelters, and animal welfare joined together in 2024 to pass SB 1233 which received an incredible level of support from the legislature and the governor.

The law envisions creating high quality, high volume spayneuter programs at the UC Davis School of Veterinary Medicine and the Western University College of Veterinary Medicine in Pomona. We are asking for $5,000,000 in one time funds to launch the program, to train our students in this innovative, and effective surgical technique. This is one of the smartest things that we can do to address our pet overpopulation program in the state. We urge your strong support, and I've also been asked to extend the support of social compassion and legislation and the San Diego Humane Association our society. Thank you.

Thank you.

Good morning, Chair Alvarez and members. My name is Quinn Lynn Field and I'm joined by my colleague, Angel Claywater. And we are here representing the entire student body at the UC Davis Veterinary School and asking for your support for funding for SB 1233. The stakeholder coalition has requested $5,000,000 to fund high quality, high volume spay neuter training certification programs for both UC Davis and Western University Veterinary Schools. This funding will ensure equal access to standardized surgical training that will better equip new graduates to meet the needs of the communities that we serve in addressing the pet overpopulation crisis. Thank you for your time.

Thank you.

Good morning, mister chair member. Mister chair. Karen Lange on behalf of the California Animal Welfare Association, which is the statewide association of public and private animal shelters. We're here in support of the $5,000,000 request to the UC. We're not in denial about the pet overpopulation problem, and we need to start working on the solutions. And this is part of it, and we ask for your support when the time comes. Thank you.

Thank you.

Mister chair, Dylan Finley, on behalf of the American Society for the Prevention of Cruelty to Animals. We respectfully urge the inclusion of 5,000,000 in this year's budget to support the HQ HVS curriculum as championed by senator Wiener and senator Cejarto and supported by many of your colleagues within the assembly Now align our comments with those, before me. Thank you for your consideration.

Thank you. X

Animal Welfare Association mister chair. Matt Robinson on behalf of Humane World for Animals, formerly the Humane Society of the United States, also in support of the $5,000,000 request for the training for HQ, HV, spay and neuter programs. I would just know this seems like a really good opportunity for the state to address something early, before it becomes a much larger, much costlier program down the road. Thank you.

Thank you.

Good morning, Chairperson Alvarez. Doctor Grant Miller on behalf of the California Veterinary Medical Association, just echoing the sentiments of my colleagues and respectfully asking for your support of the SP 1233 funding. Thank you.

Thank you very much. Any other members of the public? Seeing none, thank you all for being here today. We're adjourned.