Deferral or default? In budget deal, California universities left to wait and hope – POLITICO

By Eric He, 07/11/2025 05:28 PM EDT

SACRAMENTO, California — California’s marquee public universities looked like clear-cut winners in the state’s recent budget deal. But behind the apparent triumph, nerves are fraying as higher education leaders have been left waiting to see if leading Democrats will be good for their word.

Gov. Gavin Newsom and legislative Democrats last month struck a deal to sidestep deep cuts to the University of California and California State University systems that would have landed like a gut punch amid a $12 billion deficit. The move spared UC and CSU from 8 percent reductions originally proposed in Newsom’s budget blueprint, prompting university officials to publicly praise the outcome as a dramatic improvement over what many feared. That relief, however, may be fleeting for the sprawling school systems.

Instead of delivering nearly $275 million the systems were owed under prior agreements, lawmakers opted to defer that money to next year, offering only a pledge to make the universities whole in 2026. Another $490 million in promised funding tied to enrollment growth was also left on the table. University leaders and advocates are openly questioning whether the money will ever come.

“Deferred funding is never a guarantee,” Meredith Turner, UC’s senior vice president of external relations and communications, wrote on social media after the budget deal was announced. Turner added that the “real test will come next year—when we’ll look for them to make good on the promise to backfill what’s been deferred.”

Whether that happens is up in the air. The state’s finances are projected to worsen over the coming 12 months and be deep in the red next summer when it’s time to hammer out a new budget. Term limits, meanwhile, will have Newsom preparing to leave office at that point and his successor, who may well have different priorities, waiting in the wings.

Newsom told POLITICO that he is “100 percent committed” to paying back the money.

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