A $1.5 billion budget shortfall, student outrage over planned annual 6% tuition hikes for at least five years, stubborn racial gaps in graduation rates and widespread distrust over how the university handles sexual assault claims.

This is the job that awaits Mildred García, who was named chancellor of the California State University on Wednesday, July 12.

García, a former CSU president, will oversee the nation’s largest four-year public university system and its nearly 500,000 students at a time when public confidence in the value of a bachelor’s degree is at a nadir.

She is to begin her post Oct. 1.

“The students at the CSU represent a new majority of America: The first-generation, the low-income, the students of color, the adults,” García said to the trustees this morning. “What a privilege that I have been granted.”

García will earn $795,000 in base salary — higher than the $625,000 the current interim chancellor receives —  deferred compensation of $80,000 yearly, a monthly auto allowance of $1,000 and a monthly housing stipend of $8,000. Two trustees, Diana Aguilar-Cruz and Douglas Faigin, voted no on that compensation package, arguing it was too high and a bad look given the tuition increases the system is considering. Other trustees rejected that argument, saying the pay may not be enough for a university as complex and large as Cal State’s.

At least 21 other public university system and campus chief executives across the country earned a higher base salary in 2021, according to the latest data from the Chronicle of Higher Education.

One more challenge for García to overcome? Persuading more students to enroll at Cal State’s 23 campuses as the system is beset by an enrollment decline that’s also upending its finances.

The questioning of college baffles her. “When people say not everybody needs a college degree I always want to say, ‘is that your children or your grandchildren we’re talking about,’” she asked during an interview with CalMatters.

Still, she wants Cal State campuses to better signal the link between college and career. García hopes to oversee more paid internships and laboratory opportunities for students, plus beefed-up campus career services centers.

She and her younger brother were born after her parents moved from Puerto Rico to Brooklyn with five of their older children. García, whose parents worked in the nearby factories, grew up in ethnically and racially diverse tenements as neighborhood schools were integrating. She got “a violin for me to take home, my brother received the cello,” she said.

After her father died when she was 12, the family relocated to Farragut Houses, a public housing complex in Brooklyn. Though she had the grades to enter a four-year university immediately after graduating from high school, she attended New York City Community College instead. “I wasn’t leaving my mom and I could walk to school,” she said during the trustees meeting today.

With the encouragement of mentors and teachers, eventually García earned an associate degree and transferred to Bernard M. Baruch College, where she earned a bachelor’s degree in business education. Then she earned a master’s degree in business education from New York University. At Teachers College, Columbia University, she earned master’s and doctorate degrees in higher education administration.

García, who’ll become the first Latina chancellor in the system’s 63-year history, led Cal State Fullerton from 2012 to 2018 and Cal State Dominguez Hills from 2007 to 2012. At Dominguez Hills, she became the system’s first Latina president.

She left her post at Fullerton to lead a national association representing 350 public colleges and universities, the American Association of State Colleges and Universities, where she’s remained since. Among the association’s members are all 23 Cal State campuses and one University of California campus, UC Merced.

While at Cal State Fullerton, García oversaw a rapid rise in graduation rates:

• The four-year graduation rate grew from 14% for students who started as freshmen in 2008 to 25.5% for students who began in 2014.
• The six-year graduation rate grew from 51% for students who started as freshmen in 2006 to 67.8% for students who began in 2012.

During her tenure, Cal State Fullerton’s six-year graduation rate actually surpassed the systemwide average after being nearly identical when she took over as president.

The six-year graduation rate gap between racial and ethnic groups also narrowed some while she was president. For example, between 2012 and 2018:

• The graduation rate gap between white and Black students at Cal State Fullerton decreased from about 15 percentage points to approximately 9 percentage points;
• Systemwide, the gap remained wider overall between those two groups, shrinking slightly from about 24 percentage points to around 20 percentage points.
• And while the graduation rate among Latino students was the same at Fullerton and systemwide — 44.6% — the rate jumped nearly 19 percentage points in that time period at Fullerton while climbing just under 12 percentage points across the CSU.
• Systemwide, the gap between white and Latino students narrowed slightly from 13.8 percentage points to 12.4 percentage points. At Fullerton, the trend was similar, dropping somewhat from a gap of 11.4 points to 9.8 points.

She and her presidential cabinet installed “student success teams” at each college in the university to review academic data, call and text students at risk of failing so they could try to motivate them, and connect other students with financial aid officers — all efforts she said helped with the turnaround.

Systemwide graduation rate gaps

It’s those wide gaps across the system that will likely consume much of Garcia’s reign at the CSU. Cal State still graduates just under half of Black students within six years— 49% — who started as freshmen. That rate has been about 20 percentage points lower than that of white students for at least 16 years, as CalMatters has reported.

Cal State’s program to grow graduation rates and close gaps among identity groups, Graduation Initiative 2025, now receives $380 million a year in state and institutional support, wrote Amy Bentley-Smith, a Cal State spokesperson, in an email. Since the initiative debuted in 2015, rates for all ethnic and racial groups grew, but the gaps among specific racial and ethnic groups remain.

García will have just two years to steer the system toward reaching a key 2025 goal of doing away with any differences in graduation rates among racial groups.

“We need to graduate all students because they’re going to help their families and they’re going to uplift their cities and their state,” García said in an interview.

The state and federal ban on affirmative action limits the system’s direct outreach to students of color, but García said the task isn’t insurmountable. Partnerships with Black churches and writing marketing material in Spanish to host families on campuses are just some of the approaches she mentioned and tried herself as a campus president.

“You have to look for those creative ways of getting to these populations and not ignore them,” she said.

Distrust over system’s handling of sexual assault claims

García will also have to contend with a Cal State rocked by allegations of sexual harassment and abuse. The fallout began when USA Today published an investigation revealing that the system’s then-chancellor, Joseph I. Castro, mishandled claims that a vice president at Fresno State sexually harassed students and staff when Castro was president of the campus. The allegations against Castro led to his resignation in February 2022.

Since then, news outlets uncovered more instances of sexual misconduct among senior  officials at other CSU campuses. For example, according to EdSource, a Bakersfield campus vice president “was fired for viewing pornography on his work computer,”  a Monterey Bay campus dean “harassed and demeaned female employees,” and “an administrator at Sonoma State University ‘asserted his dominance’ over a female co-worker and became violent when she rebuffed his advances.”

The Los Angeles Times has produced nearly 30 articles in the past 18 months detailing campus claims of rape, assault, harassment and intimidation. Last year the president of Sonoma State resigned after facing outcry over “her leadership amid a campus sexual harassment and retaliation scandal involving her and her husband.” The newspaper also chronicled allegations of rape and assault aboard a training ship operated by Cal Maritime.

Outside lawyers told Cal State trustees in May that students and staff don’t trust system leaders or processes for handing sexual assault claims. That firm plans to release a formal report on its findings by Monday. On Tuesday, the state auditor also plans to issue a report, requested by lawmakers, about the system’s ability to handle sexual assault claims.

These reports will come with recommendations of at least $25 million annually for systemwide changes, such as more data-tracking, training investigators and hiring more staff across the campuses and central office, Cal State senior officials predict.

“I have to hold people accountable,” García said in an interview.

Funding gap and likely tuition hikes

Cal State faces a growing $1.5 billion shortfall between what it should be spending on student academics and what it actually collects from its main revenue sources — state tax dollars and tuition.

A few hundred people attended a rally against tuition hikes, including students, instructors and union members, at the California State University Chancellor’s office in Long Beach on July 11, 2023. Photo by Ted Soqui for CalMatters

Lawmakers and Gov. Gavin Newsom have approved more than $400 million in new, ongoing education spending for the system in the past two years, part of Newsom’s promise that, if kept, would lead to more than $1 billion in extra revenue by 2026-27.

But that’s still far too little to plug Cal State’s budget hole — and relying on state revenues alone exposes Cal State to California’s often volatile budget, which can have a $100 billion surplus one year and a $31.5 billion deficit the next.

So the system’s trustees are now eyeing annual tuition increases of 6% for all students for at least five years — a plan they’ll vote on in September. Most trustees seemed in favor of raising tuition for several years at the meeting Tuesday, but many balked at the original proposal that the hikes continue without end. Some asked to delay the vote until November. Lt. Gov. Eleni Kounalakis, a trustee, said the timing of the discussion was unfair to students who are now off for the summer.

“I was right that what we would hear was that this was not the right time to do it,” interim Chancellor Jolene Koester said later in the meeting yesterday. She argued that the system cannot wait any longer to pass these hikes.

Undergraduates would see base tuition increase by $342 in the first year. However, around 60% of Cal State’s students would be unaffected by the tuition hikes because they receive non-loan financial aid. The state’s Cal Grant program that covers tuition for many students would automatically adjust to continue covering students’ full tuition, though technically the governor’s office could bill the system for the added costs to the grant.

But for the remaining 40%, annual jumps in tuition will cut deep, especially for “students on the verge of middle class who are still struggling,” said Sacramento State student and activist Michael Lee-Chang, in an interview.

The system’s student government association also opposes these hikes, but backs some kind of increase to tuition, said Dominic Treseler, president of the Cal State Student Association, in an interview with CalMatters. “We’re not opposed to multi-year increases,” he told CalMatters, but 6% is too high, and the association faults the Cal State’s senior leaders for not spelling out specifically how the new tuition revenue will be spent.

Tuition for undergraduates who pay would rise steadily, from $6,084 in the first year of the hike to $7,682 by 2028-29. However, some of that price hike will be curbed by a new state Middle Class Scholarship.

Trustees also fear sticker-price shock will chase away students, no matter how much financial aid they’ll get. Getting the word out that the cost of attendance is much less with grants and scholarships costs money too, Koester said Tuesday.

The tuition plan would boost system revenues by $148 million in the first year and grow to an extra $840 million by the fifth year of the tuition spikes. System officials say they will divert 33% of that extra revenue to campus financial aid for low-income students, known as the State University Grant.

With the new revenue from tuition, Cal State wants to pour money into programs to help students graduate faster, narrow the gaps in the graduation rates among racial groups, and respond to the months-long demands of employee unions for salary increases to restore the buying power they lost due to inflation. Professors and counselors seek 12% raises.

Increasing employee salaries by 1% alone would cost the system $55 million annually — and already about three-fourths of the system’s operating budget is spent on compensation.

Strikes are on the table, which would cripple Cal State’s education mission.

Mikhail Zinshteyn is a reporter with CalMatters.