Cal State error could mean loss of 3,000 new student housing beds – Daily Democrat
Thousands of California State University students could lose affordable housing because the Cal State system misinterpreted the fine print of a new state student housing program.
The mistake – discovered by CalMatters and acknowledged by Cal State officials – is simple but costly. By completing the required documents to obtain your share of the $ 2 billion from Governor Gavin Newsom set aside for student housingCal State mistakenly assumed it could use that money – and only that money – to build dorms and apartments for low-income students.
In reality, state rules allow Cal State to combine this limited pot of state money with outside funds, such as dollars from bonds issued regularly by the university. Using a mix of funds allows a campus to build larger structures to include more beds or to combine projects to accommodate more students.
The consequence of the Cal State blunder: Unless state lawmakers intervene, up to 3,000 students will be deprived of affordable housing.
CalMatters discovered the gap by reviewing building applications, official correspondence and other documents related to the three-year $ 2 billion higher education student housing subsidy program that the legislature approved in the budget. of the state this year. During that three-year period, Cal State is expected to receive $ 600 million from the grant program to build low-rent housing for students.
The error comes after a Cal State Vice Chancellor implored the state to change the rules to allow more flexible spending.
The state housing program is seen as a way to cover a large portion of the costs of attending university. More than half of students in Cal State and UC California do not pay tuition, but campus rent can be as high as $ 11,000 per year for Cal State students, although that federal grants can help cover these expenses.
Probably hundreds of thousands of California universities and community college students struggle to afford a stable place to live. University housing is generally less expensive than off-campus housing in surrounding communities.
Fixing Cal State’s snafu can be difficult
The Cal State paperwork snafu directly affects the initial $ 150 million portion of funds allocated to the university system in this year’s state budget. Requests for the use of funds had to be submitted by October 31. As the deadline came and went, a recovery for Cal State is tricky, said Rebecca Kirk, project manager at the Department of Finance, an agency of Governor Gavin Newsom’s administration. who oversees the management of the student housing grant money.
“Because that first round of filing had a deadline of October 31, that was sort of the deadline for the first rounds,” she said in an interview. Correcting the mistake would be “a pretty big potential change” to the proposals, Kirk said.
The department has until March 1 of next year to submit to the legislature a list of recommended housing projects that the state should fund. From there, lawmakers and the governor will ultimately decide what gets funded as part of the state budget process or a stand-alone bill.
It’s unclear whether lawmakers could allow Cal State to come up with new building plans to better use the money. The law governing these funds does not say whether lawmakers can deviate from what the campuses initially proposed in their nominations.
“If the CSU mistakenly submits its candidacy based on a bureaucratic misunderstanding, we must give it every chance to correct it,” said Assembly Member Phil Ting, a Democrat from San Francisco who is president of the Assembly Budget Committee, one of the two committees which ‘I will receive recommendations from the Ministry of Finance. “Student housing is too big a problem to let the bureaucracy stand up to. “
The speed at which decisions must be made is intentional: the law prioritizes affordable student housing projects that can begin construction by the end of 2022.
The Cal State system acknowledged its error at the behest of CalMatters. The “misinterpreted” university the advice that the Ministry of Finance has given to campuses as “the program’s intention to fund the entire student housing subsidy project,” Vi San Juan, Cal state vice chancellor in charge of construction, wrote in a statement. The finance ministry guidelines, shared with the state’s public higher education systems on Oct. 7, said “proposals that include funding contributions from other sources will be considered.”
Kirk said the system could revise its remaining unfunded proposals in the program’s first year in the funding cycles for 2022 and 2023.
Mixing public and external funds can mean more student accommodation
The potentially massive setback for students results from a misunderstanding of the rules by the California state system that has persisted for weeks. On November 8, Robert Eaton, the Vice Chancellor of Cal State who oversees the funding, incorrectly told lawmakers in a public hearing that the funds of the student housing scholarship program cannot be combined with other funds. He then urged lawmakers to change the rules of the program to allow this.
This would “spread the grant dollars over more projects, potentially providing affordability benefits to even more students,” Eaton said. The Cal State system can easily borrow money through its existing construction bond program. Eaton said that already about a third of Cal State’s $ 8.8 billion bond debt is used to finance student housing.
Experts say now is a particularly good time to plan for housing construction because loan rates are so low. Savings from near zero interest and state housing dollars reduce the cost of construction, resulting in savings for students as campuses can charge less for housing.
Jack McGrory, a Cal State administrator, said in an interview that if the system were allowed to use a combination of funds, it could build 5,000 to 6,000 beds rather than the roughly 3,300 on offer. McGrory, a real estate developer in San Diego, spoke to CalMatters before it became clear that the flexibility Cal State sought was already built into the state’s student housing program.
This is a tactic the University of California knew how to apply in its applications for student housing in the state. UCLA, for example, wants to use $ 35 million in state grants and $ 29 million for its own build 179 double rooms with private bathrooms. Due to the new housing subsidy affordability rules, rents per student will be $ 600 per month when the project is completed in 2025, about a third of what UCLA typically charges for such housing, according to CPU request.
UC Berkeley plans to use $ 100 million of money for state housing in conjunction with around $ 200 million in UC bonds to reduce the rents that students will eventually pay. Mixing the two pots of funds would allow the campus to add another 300 beds at rents of $ 1,100, about a third less than what other students on campus pay.
The community college system, California’s largest public university system, generally does not build student housing.
A story of housing shortage
California’s foray into student housing finance is new. Previously, lawmakers had approved money for campuses to cover short-term rent or hotel costs for homeless students.
The growing interest of lawmakers in student housing reflects their desire to enroll more California students at UC and the State of California. The state plans to increase in enrollment of 15,000 students in both systems next year – and more students means more pressure to accommodate them.
Hundreds of UC students decided to live in hotels because campuses do not have space for them and apartments nearby off campus are either too expensive or unavailable. Eight UC campuses this fall had 7,500 students on housing waiting lists. The Cal State system reported that 8,700 students were on the waiting list for housing.
Two UC campuses – in Davis and Santa Cruz – are linked by legally binding agreements with their local governments to increase enrollment only if they can add an equal number of new beds. Litigation like these has led to construction delays at UC Santa Cruz And one outright ban on expanding UC Berkeley enrollment.
The housing crunch exists despite the fact that Cal State and UC combined have built enough new housing for some 36,000 students since 2015 and plan to add 21,000 more locations in the near future.
Another student accommodation solution
At the same November hearing where Cal State’s Robert Eaton misinterpreted housing finance rules, UC told lawmakers it would benefit from a program in which the state grants loans to the university system without interest in building housing as another means of expanding the number of affordable students. housing stock. Influential higher education lawmaker Kevin McCarty, a member of the Sacramento Democratic Assembly, proposed such a bill this year, but it was heavily revised and excluded the ready aspect when it is finally passed.
UC San Diego Chancellor Pradeep K. Khosla said his campus would benefit from additional investment from the state as it is poised to maximize the amount of money it can borrow on the bond market. UC San Diego wants to build enough student housing to provide a four-year housing guarantee for all undergraduates whose rents are at least 20% below the market rate. The campus has been in a building frenzy to make it happen: Khosla said the campus has built 6,000 new beds since 2013 and is planning 10,000 more by 2030. A 0% state “revolving loan” d Interest would result in enough savings for UC San Diego will reduce campus rents to 38% below the market rate for the lowest-income students on campus, Khosla said.
But other campuses lack land to build more housing. This can mean demolishing existing buildings to build larger ones. This is another scenario in which the state’s growing footprint in campus housing may play a key role.
And with another year of record tax revenues likely appearing next year, state lawmakers will have plenty of options to fund a new batch of big projects.