December 2004

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Guest Commentary

Dr. Reed is chancellor of the California State University system.

For the past decade and a half, California’s public higher education systems have been on a budgetary roller coaster. The state’s boom-and-bust cycle of soaring highs and crippling lows have made for a wild ride – but not sound public policy. A strong public university system is essential to the economic health of the state. That is why, as California prepares to emerge from one of the deepest budget crises it has ever experienced, it is time to get our universities back on track.

As one of the largest entities within the state’s discretionary spending category, the 23-campus California State University system has been an easy target for budget cuts. California’s public universities suffered devastating cuts during the recession of the early 1990s. And over the past three years, the CSU has withstood budget reductions totaling more than $522 million. These kinds of cuts have had damaging effects on the CSU’s long-held promise of access to all eligible students.

Of course, many public entities have suffered during the state’s budget crisis. But a healthy, properly funded public university is an essential component of a state’s economic and social development. In fact, a renewed investment in our state’s public higher educational systems is more than just an investment in a university – it’s an investment in California’s future.

According to a recent study of the impact of the CSU, our often undervalued system has a dramatic impact on California even while it struggles with budget shortfalls. In pure economic terms, for every dollar the state invests in the California State University, CSU-related expenditures generate $4.41 in spending. This translates to $13.6 billion annually in economic activity, compared with state support of $3.09 billion. But public universities do not just spend state money; they spend money to educate, thus increasing the economic power of the state and its citizens by building up the knowledge base. The CSU provides the majority of the skilled professional labor that is critical to the state’s knowledge-based industries such as agriculture, engineering, business, technology, media, and computer science.

When more students earn a university degree they obtain better jobs, and California benefits from a high-end economy along with greater incomes and higher tax revenues. With the enhanced earnings of the California State University’s 1.7 million graduates factored in, the total annual economic impact of CSU expenditures generates a $53 billion spending impact on the state, or an annual return of $17 for each dollar the state invests. The CSU in effect pays for itself.

The CSU’s 23 campuses are also leaders in expanding the reach of higher education by serving the increasingly diverse population of the state. More than half of all undergraduate degrees granted to Latino, African American and Native American students in California were awarded by the CSU in 2002/03. The CSU is the nation’s most diverse university, with 53 percent ethnic minority students, twice the national average for four-year public universities.

Additionally, CSU campuses are working every day to improve local communities and residents' quality of life. CSU students contribute 35 million hours a year to community service activities ranging from preschool reading programs to public art preservation to health education and literacy projects.

Imagine the capabilities of the university system if it were fully funded. In fact, this year could mark a turnaround for public universities. A new compact agreement with Gov. Schwarzenegger promises slow but steady funding increases for the California State University and the University of California systems over the next six years.

But along with the promise of compact funding, California’s public universities also need to be valued by the public and need a strong commitment from lawmakers to help fulfill the promise of higher education. We must get higher education back on track so that it can continue to perform for California. When a state’s higher educational system flourishes, everyone wins.