What’s Next for Higher Education in 2023?
After a three-year hiatus, California and its institutions of higher education are ready to turn the page on the COVID-19 pandemic. But learning loss in the K-12 system, enrollment concerns across segments, widening equity gaps and a potential recession could hamper the state’s efforts to meet Governor Newsom’s ambitious goal of 70% postsecondary attainment by in the year 2030.
In 2022, California made historic investments and policy changes to improve equity and improve the education pipeline. The University of California (UC) and California State University (CSU) systems eliminated or made standardized admissions tests optional. Informed by our research, policymakers strengthened laws to reform developmental education in community colleges. The governor also developed agreements with UC and CSU that will provide 5% funding increases for the next five years if the systems meet equity, enrollment, completion and affordability goals. Governor Newsom’s 2023–24 budget proposes to maintain these funding increases in the coming year.
As the state continues to address ongoing issues from the pandemic, here are important changes to watch for in higher education in 2023:
California can take targeted steps to shrink growing equity gaps.
With higher completion rates in courses leading to transfer, improvements in transfer rates overall, and four-year graduation rates at UC and CSU reaching all-time highs, recent reforms were showing signs of success before the pandemic. Unfortunately, the pandemic increased the challenges for low-income students and students of color, and many of them delayed their studies or dropped out of college. Policy changes and budget priorities that encourage UC, CSU, and community colleges to address equity gaps in access and completion are poised to help students regain momentum. Declining enrollment can lead to greater coordination.
Enrollment of students intending to transfer to community colleges fell by about 20% over the past two years, a decline that is already affecting the state’s four-year colleges. With California public higher education funding dependent on steady enrollment growth, competition for students is likely. To ensure that students benefit from such enrollment competition, the state must stimulate coordination and equity through policies, programs, and funding structures. Promising steps include a new dual admissions program that guarantees admission to a UC or CSU if a high school student successfully completes courses at a designated community college and dual enrollment, which allows students to take college courses and earn college credits during high school. The College and Career Access Dual Enrollment Program (CCAP) is a great example of this. The program is helping to increase equity in college access by expanding dual enrollment opportunities for students who have long been underrepresented in dual enrollment and higher education more broadly—the funding model is considered a win-win for K-12 and community colleges. A new financial aid policy could provide more aid to students and improve access to college.
In the 2022–2023 school year, California school districts will be required to show that their entire high school graduating class completes the Federal Application for Federal Student Aid (FAFSA), the California Dream Act Application ( CADAA) or a withdrawal form. Only about half of California high school students complete the FAFSA or CADAA, leaving about $560 million in annual federal aid on the table for California. Universal completion of the FAFSA/CADAA can provide low-income students with federal grant aid and enable access to state financial aid programs such as Cal Grants. Other states such as Louisiana and Texas have implemented a similar program, with significant increases in college tuition rates. However, universal FAFSA/CADAA will require intensive support services and outreach to students and their parents. Policymakers and system managers may need to prepare for falling revenues.
The Legislative Analyst’s Office has projected a deficit of $24 billion for next year in their latest Fiscal Outlook, similar to the shortfall specified in the proposed 2023–2024 budget. UC and CSU funding tends to be particularly vulnerable to cuts during recessions due to the lack of constitutional protections. In the past, UC and CSU could raise tuition and enroll out-of-state students to offset declines in state funding. However, changes in UC tuition policy and a cap on the share of non-resident students present challenges to this approach in the future. If the state faces a prolonged recession, the governor’s agreement with UC and CSU to provide a five-year annual increase of 5 percent may be difficult to sustain.
The coming year will test California’s higher education institutions as they seek to regain their pre-pandemic momentum in improving student outcomes. However, the state’s commitment to past investments, even during the recent decline in revenues, gives hope.
