In May 2022, the State finalized a five-year compact with the California State University (CSU) system covering fiscal years 2022–23 through 2026–27. The compact outlined a commitment to provide 5% annual base funding increases to CSU during this period. In 2023 and 2024, CSU engaged in collective bargaining with all of its labor unions. While the compact projected consistent increases in state funding, both CSU and the unions recognized that these increases were not guaranteed. As a result, the parties negotiated and agreed upon salary increases that were contingent on the state delivering the compact funding.
Despite recent claims by some unions, the Budget Act of 2025 does not provide any new, unallocated, ongoing General Fund appropriations to the CSU. Instead, it enacts a 3% reduction to CSU’s current base budget—approximately $144 million. While the state is offering a short-term, zero-interest loan equal to the amount of the reduction, this is not new funding; it is a one-time loan intended to temporarily offset a budget cut and must be repaid. Characterizing this as a funding increase is misleading and disregards the clear contractual language to which both parties agreed.
The CSU is fulfilling its contractual obligation and expects union representatives to do the same. We will continue to engage in forthright, fact-based dialogue rooted in the actual terms of our agreements and the fiscal realities established by the state.
FAQ
Are the unions correct in claiming that CSU is breaking its promises to workers?
No. The CSU is fully honoring all labor agreements that were negotiated and ratified through a collaborative collective bargaining process. These agreements contain clear, mutually agreed-upon language, including contingency provisions that tie certain salary increases to the receipt of new, unallocated, ongoing state funding. Those contingencies were not met. The 2025 state budget does not provide the required new, unallocated, and ongoing funding. Instead, it includes a 3% reduction to CSU’s base budget—approximately $144 million—deferred to 2026–27, with an optional zero-interest loan to temporarily offset the reduction. That loan must be repaid and does not meet the contractual thresholds needed to trigger additional compensation increases. Therefore, CSU is acting in full accordance with the terms of the contracts and remains committed to transparency and honoring the agreements made with its labor partners.
What threshold must be met in the collective bargaining agreements for the increases to take effect?
In the case of the California State University Employees Union (CSUEU), certain salary increases scheduled for this year in the contract are contingent upon the State of California providing at least $227 million in new, unallocated, ongoing General Fund support to the CSU. The 2025 Budget Act does not meet that funding threshold. Similar contingency provisions exist in agreements with other unions, including the Teamsters and the Statewide University Police Association (SUPA). As such, CSU is complying with the contractual terms by not implementing those increases at this time.
The unions say CSU received “full funding” in the 2025 budget. Is that true?
No. First, “full funding” is not the threshold specified in the collective bargaining agreements. The agreements explicitly tie certain salary increases to the receipt of new, unallocated, ongoing General Fund support—not to simply being “made whole” or receiving temporary budget relief. Second, the 2025 Budget Act does not provide any new ongoing funding to the CSU. Instead, it includes a $144 million reduction.
But if CSU avoided a $375 million cut, isn’t that a win? Doesn’t that mean more money is available?
While we did avoid the originally proposed $375 million cut, the CSU received a $144 million reduction to its base budget in 2025–26. The state intends to defer these funds to the 2026–27 fiscal year, but the impact remains. Avoiding a deeper cut is helpful, but it does not equate to an increase in funding—and it certainly doesn’t meet the thresholds outlined in our collective bargaining agreements.
How can the CSU afford to invest in new building projects when it received a $144 million General Fund reduction?
The majority of new building projects are funded from sources that are separate from the General Fund. These include self-supporting programs (i.e. student housing, parking, and dining) that use systemwide revenue bonds repaid by their own program revenues, state grants restricted to building or improving affordable student housing, auxiliary organizations (such as foundations, student unions, and athletics associations) that operate independently of the CSU’s General Fund.
Why did the CSU decide to invest in AI during this time of budgetary challenges?
Tens of thousands of CSU faculty, staff, and students across the system had already purchased their own individual licenses for various AI tools prior to our system-wide investment. These individual licenses did not protect privacy or intellectual property, unlike our systemwide investment. This also left many of our community members behind (those that couldn't afford the $30/month).
Furthermore, several of our campuses were exploring signing their own AI contracts prior to our systemwide investment. Again, this approach would have left many of our campuses behind (those that couldn't afford to make such investments).
Our contract with OpenAI has the lowest cost per user in the United States, cheaper than the market rate by an order of magnitude. The CSU would have likely spent more in total if we had simply let several campuses proceed with their individual negotiations and investments, and this would have resulted in no access for many members of the CSU community.
Our OpenAI ChatGPT investment was based on guidance from the 2024 CSU Generative AI Committee's report, which states: "The CSU should promote inclusive and equitable access to GenAI technologies and ensure that all CSU faculty, staff, and students have access to GenAI tools and training necessary to leverage them for teaching, learning, research, and work." This committee was an official committee of the CSU and had appointees from the Academic Senate, CSSA, and campuses across the system.
Does CSU plan to use the $144 million zero-interest loan offered in the budget?
The Chancellor’s Office is currently reviewing the loan option. However, it is important to reiterate: This is not new or ongoing funding—it is a temporary loan that must be repaid. Accepting the loan would maintain our flat funding level for the year but would not satisfy the contractual thresholds required for additional compensation provisions.
What is CSU’s message to faculty and staff amid these disputes?
We deeply value the contributions of our employees and the agreements we have reached together. We also understand the frustrations caused by the state’s budget complexities. The CSU remains committed to transparency, good faith bargaining, and securing the resources necessary to support our workforce and mission.
Please refer to our systemwide letter for more details.