Governor Gavin Newsom’s proposed budget for 2026-27 would invest a $5.6 billion base funding in the California State University – a 50% increase since 2019.
CSU Chancellor Mildred García released a statement in which she thanked the governor for his investment and “for taking a bold stand for higher education in what has been a very challenging time for California’s colleges and universities.”
In face of budget cuts by the state, last year the CSU accepted a zero-interest $144 million loan from the government which they are required to pay by July 2026.
The proposal plans to defer the repayment into 2027-28, allowing the CSU to take on a cash flow loan to retire its current debt.
The budget will also extend the deferral of the 3% cut – $143.8 million – in base funding, and shift repayment to 2027-28.
Last year, the state split what would’ve been the fourth compact payment in two, deferring around $100.9 million for the 2026-27 fiscal year and $252.3 million to 2027-28. The budget proposal also aims to make the fifth and final increase of the ongoing general fund of around $264.8 million in this upcoming fiscal year.
The CSU and the governor’s office Multiyear Compact was created in 2022, promising a 5% annual increase for the duration of five years centered around their mutual goals, such as closing equity gaps, increasing education affordability and promoting student success and workforce preparedness.
In an operating budget plan for 2026-2027, the CSU highlights that the deferrals and budget cuts in the past year have increased its budget gap to $2.3 billion for 2025-2026.
According to the report, in order to stabilize the budget, universities have reduced more than 1,200 positions and 1,400 courses, reduced student support staff, delayed hiring and maintenance, and reduced the Chancellor’s Office budget by 8%.
The CSU’s budget proposal requests $9.1 billion in operating funds for 2026-27, which is a 7% increase from the current year. It also requests the restoration of the $143.8 million base reduction and the full payment of the compact dues.
In the budget proposal of 2025, Newsom studied a 8% budget cut, before decreasing it to 3% and delaying it to this fiscal year.
The decision came as the state faced a $11.8 billion deficit and was met with opposition from the CSU Advocacy and State Relations.
“The proposed $144 million budget cut to the CSU system threatens to impact students and campuses statewide,” reads the statement released last year. “Reduced funding would mean larger class sizes, fewer course options, and cuts to vital support services—making it harder for students to graduate on time and succeed. Ongoing layoffs and hiring freezes would further strain campus operations and compromise the quality of education.”
In order to further expand on their mission, in September 2025, CSU launched the CSU Forward systemwide plan, focusing on the economic impact the CSU has on California, remaining sustainable, increasing impact and continuing to be an employer of choice.
This plan also brings a 6% tuition increase in the upcoming fiscal year, providing the CSU with an additional $175.8 million in funds.
The proposal of a $348.9 billion budget for the upcoming fiscal year will add $3 billion to California’s Rainy Day Fund – a budgeting stabilizer account – totaling $23 billion in reserves.
The proposal focuses on strengthening higher education and K-12 programs, funding reserves and housing resources.
In higher education, it would also fund $5.3 billion for the University of California and $15.4 billion for community colleges.