CSU to take $144 million loan to mitigate budget cut effects | News

The CSU has decided to seek a $144 million short-term loan previously offered by the state.

CSU has stated that the money will be used to offer one-time bonuses to both faculty and staff.

This decision comes amidst a bargaining period for CSU unions and leadership, which has been stalled since April due in part to disagreements on bargaining ground rules.

Unions such as the California Faculty Association, the CSU Employees Union and Teamsters Local 2010 have urged CSU leadership to take the loan in order to fulfill past bargaining promises that were contingent on state funding.

With the money from the new loan on the table, the CSUEU plans to meet with CSU leaders to negotiate the details of the incoming compensation.

“Our work is not over. With new money on the table, we have to push management hard to get what we deserve,” the CSUEU wrote in a statement on Oct. 16.

Any raises that come from the loan would only be offered for 12 months of the budget year, meaning the CSU is not obliged to maintain increased wages, according to past contracts with unions.

According to the CSU, the loan is not new or ongoing funding, meaning it does not qualify as grounds for wage increases for some union contracts.

“Certain salary increases scheduled for this year in the contract are contingent upon the State of California providing at least $227 million in new, unallocated, ongoing General Fund support to the CSU,” the CSU website said in regard to their contract with the CSUEU.

This loan was initially offered to attempt to mitigate a 3% budget cut that will hit the broader CSU during the 2026-2027 fiscal year.

This budget cut will eliminate $143.8 million from CSU’s base funding.

Although the loan will allow the CSU to repay with no interest within the first year, the loan must be paid in full before July 1, 2026.

Projections show that repayment of the loan will increase the deficit the system is currently operating in, according to CalMatters.

The CSU is currently operating in a $2.3 billion deficit as of July 2025. Tuition increases and state aid have not been able to counter this deficit, resulting in cuts to staff and courses, as well as building maintenance backlogs across the system.

CalMatters reported cuts to more than 1,200 staff positions over the past two years and the termination of nearly 4,000 courses since 2021.

The CSU is likely to receive the money from the loan within the next 60 days.