Fiscal crunch threatens CSU’s ability to meet higher ed. demands

California State University (CSU) is an engine of economic mobility for Californians, particularly those from historically underrepresented communities. The system’s 23 campuses are also vital in helping the state meet labor market demands for highly educated workers. But despite annual funding increases, CSU has struggled to enroll all eligible students in the face of increased financial pressures, including a lack of bond funding and ballooning costs for deferred maintenance.

The COVID-19 pandemic may exacerbate these challenges as state and local tax revenues fall, other sources of revenue become scarce, and more students require financial aid.

In this report, we examine enrollment growth at CSU and the factors that contribute to the system’s capacity constraints. We find:

–Since the Great Recession, student demand for CSU has outpaced enrollment capacity. The number of eligible applicants who were denied admission to CSU increased fourfold between 2008–09 and 2018–19. The number of eligible freshmen applicants who were denied admission rose from about 4,100 to 21,800, while eligible transfer applicants denied admission grew from 2,500 to 12,600. Upward trends in high school graduation rates, college readiness, and transfer rates will likely lead to continued growth in student demand for CSU in the coming decade. Recent efforts to redirect students to campuses with more capacity are a step in the right direction, but ultimately more room is needed at high-demand campuses.

–The majority of CSU campuses lack sufficient classrooms and lab seats for in-person instruction. Only the East Bay and Humboldt campuses have adequate space for current instructional needs. Three campuses—Fullerton, San Diego, and San Jose—face especially significant shortfalls, with enrollment exceeding physical capacity by 5,000 or more students.

–Instructors and staff are a key consideration when planning for enrollment growth. CSU has historically accommodated enrollment growth by hiring faculty, instructors, and support staff, and the number of faculty and instructors is a key factor when determining whether programs are able to enroll all eligible applicants. Additionally, in 2018–19, salaries and benefits accounted for the largest portion of the system’s spending, nearly 60 percent of total expenditures per student; in contrast, capital expenditures made up only 12 percent. The vast majority of funds to support CSU’s Graduation Initiative 2025 have been used to add course sections and hire instructional staff—suggesting that these needs are also important.

–Prior to the pandemic, many campuses had already expanded access through online learning. In 2018–19, roughly a third of CSU students took both online and in-person courses. The pandemic has accelerated CSU’s transition to online instruction, which could further expand access in the long term, especially for students who attend or apply to overenrolled campuses. However, successful online learning requires investments in course design, pedagogy, and technological capacity.

Addressing capacity constraints at CSU will require a multi-pronged approach.

First, focusing on enrollment capacity at high-demand campuses is important to accommodate student demand and capitalize on economies of scale. Other investments should be directed toward hiring more instructors and staff at high-demand campuses while expanding and supporting high-quality online instruction. Finally, CSU should continue its focus on improving graduation rates and shortening time to degree—these efforts are not only essential in helping students achieve their academic and career goals, but they can relieve capacity pressures.

During the Great Recession, student enrollment at CSU declined due to funding cuts and related tuition increases. As the governor and state policymakers once again contend with diminishing resources, prioritizing long-term capacity planning and expanding access at CSU will be crucial. Recent successful investments in K–12 education and the community colleges have led to greater demand for a four-year degree. Expanding enrollment capacity at CSU would safeguard its ability to accommodate this rise in eligible students, thereby promoting economic mobility and growth in California.
—
Editor’s Note: The Public Policy Institute of California is a nonprofit, nonpartisan research institution examining issues of critical importance to California. This story is a summary of the full report, which can be seen here.