The California State Assembly Budget Subcommittee No. 3 on Education Finance on Aug. 4 heard from the Legislative Analyst's Office and the three public higher‑education systems that deferred maintenance, seismic retrofits and new student housing needs total in the tens of billions of dollars and threaten campuses' ability to serve students.

Chair Alvarez opened the hearing saying the panel's “final hearing of the proposed budget” would focus on “capital outlay and building maintenance for our UC, CSU, and college campuses,” and noted lawmakers are “hoping that in 2026 we can go forward to the voters with a bond,” referring to ongoing policy work on Assembly Bill 48.

Why it matters: campus infrastructure funding affects safety, instructional capacity and housing affordability for students. Lawmakers and analysts said the state does not currently have a routine, data‑driven program to fund capital renewal, leaving policymakers unable to measure the gap between emerging needs and current spending.

Key findings and testimony
- The Legislative Analyst's Office (LAO) told the committee that campus square footage and building counts have continued to grow while much of that inventory is aging. Ian Kline of the LAO said “the number of buildings and gross square footage has continued to grow, with the latter increasing by nearly 70%.” The LAO also reported classroom and instructional lab spaces are a relatively small share of total space (about 10% at UC and 25% at CSU) and that reported utilization at the segments is below legislative standards.

- The University of California's chief financial officer, Nathan Brostrom, told the panel UC's capital financial plan totals roughly $30 billion over five years and said the system cataloged “$8,500,000,000 in deferred maintenance projects” and about $13 billion in seismic renovation needs. Brostrom said UC has not had a state general‑obligation university bond in nearly 20 years and that building renewal for education and research “has no incremental revenue source to support this debt.”

- Paul Gano of the California State University Chancellor's Office said CSU's five‑year capital plan identifies nearly $31 billion in project needs, with the system's deferred maintenance backlog exceeding $8 billion. He described a shift since the mid‑2000s from predictable state bond support to a mix of one‑time appropriations, debt restructurings and campus financing that “none of them individually or collectively match the scale, certainty and impact of the previous bond funding.”

- Chris Ferguson of the California Community Colleges said the system's unmet facilities needs total about $33.5 billion in its latest five‑year plan, noting that more than 57% of community college facilities are over 25 years old and almost half are over 40 years old.

Data and process concerns
LAO analysts told the committee that campuses do not consistently report capital renewal spending by fund source, making it hard for the Legislature to know how much segments are already spending from tuition, auxiliary revenue, bond proceeds and other sources. LAO analyst Jennifer Paciello said “the data on capital renewal spending hasn't improved much over the last 2 years” and recommended requiring more granular, regular reporting, including annual facility condition and replacement‑value estimates.

Debt and financing
Witnesses described multiple financing tools in use: voter‑approved state general obligation (GO) bonds historically, authority granted to UC and CSU to issue university bonds (AB 94), campus‑issued debt for housing and medical centers, lease revenue bonds and local voter measures for community colleges. Brostrom said UC's total outstanding debt had grown to about $34 billion, driven largely by housing and medical center financing. CSU reported debt service that counts toward its statutory cap (12%) and noted other payments that do not count toward the cap.

Priorities and implementation
Campus leaders said they have prioritized projects through long‑range development plans and system capital plans but emphasized practical limits on how many projects can be implemented concurrently. CSU said some large projects become shovel‑ready within 9–12 months after schematic design; CSU also flagged that many renewal projects are amenable to quicker procurement. UC described an “integrated capital asset management” process (ICAM) to triage and sequence renewal work and noted the importance of pairing new‑construction approvals with plans for ongoing operation and capital renewal costs.

What the LAO recommended
The LAO suggested the Legislature: require more consistent reporting of facility condition and spending; consider funding targets for capital renewal (LAO noted a common best practice of 2–4% of a portfolio's replacement value); and monitor segment debt service and capacity for new financing.

Next steps and outstanding questions
Committee members pressed witnesses on how many projects in the five‑year plans are truly shovel‑ready, how utilization metrics should influence prioritization, and whether a future state bond should be structured to prioritize modernization and seismic work versus growth. Several witnesses and the LAO agreed that clearer, regularly reported metrics on condition, replacement value and renewal spending would improve legislative oversight.

Ending note
Committee staff said the hearing would inform future budget deliberations and policy work on AB 48 and on how the state might structure a bond or ongoing funding strategy to address the multi‑billion dollar backlog of renewal and seismic projects across UC, CSU and the California Community Colleges.