By Mikhail Zinshteyn for CalMatters

The California State University system voted today to raise tuition 6% annually for the next five years, a decision that seemed destined when its leaders revealed in May that Cal State brings in far less revenue than it needs to educate its nearly half a million students.

The system’s board of trustees voted 15 to 5 to approve the hikes, choosing financial stability over the collective outcry of students and the faculty union that denounced the move.

The Cal State “is a dream engine” but approving tuition hikes is a “nightmare scenario,” said Cal State trustee Jose Antonio Vargas, who ultimately voted for the increases.

The first increase will kick in for all tuition-paying students next fall. For in-state undergraduates, that’ll be an uptick of $342, rising to $6,084 per year. After five years, annual undergraduate tuition will be $1,940 higher than it was in the 2023-24 school year.

Currently, tuition and campus fees at most Cal States are below $8,000 — and below the national average of nearly $10,000.

Cal State is in a race to increase its graduation rates — especially among Black, Latino and Native American students — to make good on a promise that all major ethnic groups graduate at similar levels by 2025. That means more faculty, classes, tutors, mental health professionals and other academic expenses. Other expenses include more than $40 million annually to adopt changes to how the system tracks and resolves sexual discrimination cases after a series of high-profile incidents that led to top officials resigning. Two marquee reports published in July faulted Cal State’s handling of sexual misconduct violations. Also looming over the system is the risk of strikes as workers seek raises Cal State says it cannot afford.

Cal State expects to draw $148 million in new revenues in the first year of the tuition jump. Core to the plan is that one-third of those revenues will support student financial aid.

Around 60% of Cal State undergrads don’t pay any tuition because they receive enough state and system financial aid. An additional 18% of students pay partial tuition. Cal State senior staff say that won’t change under the tuition hike. Meanwhile, a new state grant is sending more money to middle-class students.

Those details were scant consolation to the students raging against the increases during yesterday’s meeting of the Cal State board of trustees. Across roughly 2.5 hours of designated time for public comments, an hour longer than trustees planned, students  inveighed against the trustees for proposing the tuition hikes and reprimanded the trustees for slouching and looking at their phones during the students’ remarks. Some decried what they called the inherent racism of raising revenue through tuition hikes at a system that enrolls mostly students of color. A few admonished Cal State for not explaining how the hikes will affect students who pay full tuition. Others bitterly observed that the incoming system chancellor’s compensation will exceed $1 million.

“Students are supposed to be offered affordable higher education but instead we are slowly being stripped away of our education because the CSU fails to see us as students but instead sees us as their salary increases,” said Cassandra Garcia, the student body president at Sonoma State.

“You watch your students sleep in cars from the comfort of your gated communities,” another student from Cal State Dominguez Hills said.

“We are working numerous jobs just to be able to attend and you want to raise tuition,” said Courtland Briggs, a student from Cal State Channel Islands. “It’s pathetic. Y’all are pathetic.”

Shortly after the public comment session Tuesday, Interim Chancellor Jolene Koester tried to quell the nerves of trustees. “I know you are uncomfortable and I appreciate your discomfort,” she said. But Koester reiterated her comments in July that it’s never a good time to raise tuition and expecting students to ever support hikes is “fantasy.”

Among the trustees opposing the hikes were two prominent California lawmakers and likely gubernatorial hopefuls who sit on the board of trustees: Lt. Gov. Eleni Kounalakis, who has announced she’s running for governor in 2026, and State Superintendent of Public Instruction Tony Thurmond, who’s been “seriously considering” jumping into the race.

Kounalakis said the trustees “headed into an action that you do not fully understand the consequences of,” she said today before the vote. Even if 60% of undergraduates don’t pay tuition, 184,000 students do. “I don’t see how we can do this without knowing what a $2,000 a year increase is going to mean for our students. We know anecdotally that a lot of students are going to drop out.” She wanted to postpone the vote until trustees learned more — and let the incoming chancellor who starts next month make the final call.

Trustee Lillian Kimbell pushed back, saying while she doesn’t know how the hike will affect the students paying tuition, she knows “100%” of students will experience a worse academic experience without the added revenue.

Twelve of the 20 trustees also shot down an effort by a student member, Diana Aguilar-Cruz, to limit the tuition hikes to four years rather than five. Doing this would have cost the system $126 million in lost revenue, said Koester. Still, the board is empowered to shorten the length of the hikes in the future.

Tuition hikes were on the table since May, when a task force concluded that Cal State needs at least $1.5 billion annually in new revenue to afford student services and bolster its academic offerings.

“This is a lot like climate change,” said Julia Lopez, a CSU trustee and co-chairperson of the working group, at the May trustees meeting. “If we don’t heed the warning signs right now, we’re going to find ourselves in a world of hurt down the line. So that’s what we’re trying to do, to get ahead of that.

Daniel Fanous, a third-year business major at CSU Bakersfield, pays full tuition, so the hike will affect him. Fanous said he covers the costs by working a full-time job seven days a week, and with support from his parents.

“I think that, over time, if they keep increasing it, a lot of people are going to see value elsewhere in life than just getting an education formally,” Fanous said.

Kathryn Flores, a third-year liberal studies major also at CSU Bakersfield, pays for her tuition both out-of-pocket and with student loans.

“I feel scared about it because I pay for my own college tuition,” she said. “My parents don’t pay for it.”

The tuition hikes were formally proposed in July and were met with instant opposition from the system’s faculty union, the California Faculty Association, which represents about half of Cal State’s roughly 60,000 workers, as well as a student group affiliated with the union.

“CFA opposes student tuition increases,” said Charles Toombs, the union’s president, at the July trustees meeting. He called on the system to prioritize the state support it already receives and advocate for more state funding. He also reiterated that Cal State should spend more of its money on student instruction and advancement.

The union reiterated its opposition to the hikes this week ahead of the trustees meeting with an email blast that said its members ”unequivocally oppose the 6% multi-year tuition increase.”

The system’s academic senate, which represents professors on academic matters, passed a resolution this month asking the Cal State trustees to delay its tuition-hike vote “until the impact of such a tuition increase on enrollments and diversity has been analyzed and reported upon.”

The resolution also criticized the trustees for formally discussing the tuition hike for the first time in July, when most students and professors aren’t in class.

It’s a point underscored by Dominic Quan Treseler, president of the systemwide Cal State Student Association. “You cannot tell me we wouldn’t have had twice as many protesters outside of those doors If this was not presented three weeks after school started,” he said during remarks to the board Tuesday.

While about 42% of undergraduates borrow to attend Cal State, a new report co-sponsored by the student association finds that almost two-thirds of those students come from families that earn less than $54,000.

Given those figures, Treseler said, the tuition hikes “will continuously suffocate and impede the success of our students and the system.” And because two-thirds of Black students borrow, he added, a tuition increase “will decimate the Black student population across our system.”

He noted that many students who want to avoid borrowing must work more than 20 hours a week to afford college expenses beyond tuition, such as housing, food and transportation. This tuition increase, he said, would require another three to four hours of work per week.

Treseler also expressed exasperation that student government advocates spent weeks persuading the trustees to change the tuition hike so that it’s not indefinite — as originally proposed in July — to one across five years. And while he has sympathy for the Cal State leaders’ obligations to respond to salary demands from its workers, he said the system’s top consideration should be “to offer an accessible and affordable road to success for every Californian.”

But it’s salaries that are the main expense for the system. More than 70% of Cal State’s $8 billion core budget is spent on salary and benefits.

The faculty union is in heated negotiations with Cal State over raises to lessen the sting inflation has had on workers’ purchasing power. The union wants 12% raises this year. Cal State said it can do that across three years or a one-year raise of 5%.

Other unions also want raises, but Cal State says it needs to spend $55 million annually for every 1% bump in pay for all employees. Money for those salary demands and the student services Cal State says it needs to have more students graduate are in direct competition this academic year, the system wrote. Teamsters Local 2010, a union that represents skilled workers such as electricians and plumbers, plans to ask its members to approve a strike in the coming weeks, its principal leader, Jason Roboniwitz, told CalMatters.

“And if they don’t start getting fair with us, the new chancellor could start her first month on the job with a 60,000-person strike, the biggest labor dispute in CSU history,” he said.

Outside the trustee meeting space yesterday, unionized workers chanted for better wages, at times with a full drum kit. But the system insists its budgets are already strained by its wage-increase promises.

“The CSU’s commitment to fair and competitive employee compensation requires budgetary tradeoffs, which could result in nearly all other operating budget priorities receiving only some or none of the new funding in 2023-24,” Cal State leaders wrote in documents ahead of today’s vote.

That sentiment was echoed by Interim Chancellor Koester during an Aug. 25 video address, in which she said current new salary commitments for staff and faculty were greater than the $227 million in new money Cal State got from the state budget this year.

“Her fearmongering threats are not only disrespectful towards the faculty and staff who serve the students in the CSU, but it is also disingenuous to claim that the CSU does not have the budget to properly compensate workers,” a September faculty union press release said.

But even with tuition increases that’ll kick in next year, Cal State’s revenues won’t be enough to handle all its future costs, system leaders argue. Cal State’s proposed budget for 2024-25 seeks $557 million in new revenue. About a quarter comes from new tuition hikes and $240 million from additional state funding Gov. Gavin Newsom promised the system as part of a five-year compact. But Cal State wants $145 million on top of that.

All that translates to just $220.7 million to fund 2024-25 compensation increases for all employees, Cal State says. That’s enough for 4% across-the-board raises for all staff, it says.

Pushed to increase raises beyond what it’s been offering, Cal State “will have fewer employees and we will have fewer seats for students in our classes,” Koester said Tuesday.

In one scenario, if Cal State agrees to 15% raises over three years, and the tuition hike didn’t happen, the system would have a half-billion-dollar budget hole. The new tuition revenue would still mean a deficit of $322 million, said Ryan Storm, a senior budget staffer for the system, today. Again, layoffs would be likely, he added.

The faculty union also points to the system’s reserves as another source of money. Is there money in the piggy bank? Cal State says no. The system reports having $2.5 billion overall in reserves and short-term investments and just under $800 million in cash reserves — money it squirrels away by spending less than it collects from tuition and state revenue. But system policy requires Cal State to maintain reserves equal to at least three months of its operating budget. The reserves it has now equals just 33 days of its annual budget.

“We haven’t solved the problem” of insufficient revenue with the tuition increases, said Steve Relyea, chief financial officer for Cal State, at a press event last week. “What we’ve done is narrowed the problem.”

Haydee Barahona, a fellow with the CalMatters College Journalism Network, contributed reporting for this story.