Assessment of CSU’s Graduation Initiative 2025

analysis full 2026-27 BUDGET Assessment of CSU’s Graduation Initiative 2025 GABRIEL PETEK | LEGISLATIVE ANALYST DECEMBER 2025 www.lao.ca.gov 1 analysis full AN LAO REPORT 2 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT Executive Summary Nationally, Universities Heighten Focus on Student Outcomes. At the beginning of the 21st century, universities began extending their focus from enrolling more students to graduating more students. In concert with these national efforts, the California State University (CSU) launched a graduation initiative in 2009 with the goal of increasing its six-year graduation rate for first-time freshmen from 46 percent to 54 percent and cutting its equity gaps in half by 2015. (CSU adopted the national definition of equity gap, which was the difference in graduation rates between American Indian/Alaska Native, Black/African American, and Hispanic/Latino students and their peers.) CSU increased its six-year graduation rate, surpassing its goal by 3 percentage points. CSU’s systemwide equity gap, however, remained nearly unchanged. CSU Created New Graduation Initiative as Previous One Ended. As CSU’s prior graduation initiative was ending, faculty, students, and campus leaders met to set new graduation rate and equity gap targets for CSU’s next graduation initiative. Under Graduation Initiative 2025 (GI 2025), CSU added a four-year first-time graduation rate target and placed greater focus on transfer graduation rates. CSU aimed to increase its systemwide four-year first-time graduation rate to 40 percent, six-year first-time rate to 70 percent, two-year transfer rate to 45 percent, and four-year transfer rate to 85 percent by 2025. In addition to the systemwide targets, each campus had campus-specific targets. CSU also expanded its equity gap targets to include income and first-generation status. CSU aimed to eliminate equity gaps in graduation rates by race/ethnicity, income, and first-generation status by 2025 at the systemwide and campus levels. Both State Funding and Tuition Revenue Support GI 2025. The state began funding GI 2025 in 2016-17, with an initial appropriation of $10 million ongoing General Fund. The amount of annual state funding for GI 2025 has increased over time—reaching $347 million in 2024-25. Nearly 90 percent of state funding for GI 2025 is used for general GI 2025 activities, whereas the remainder is designated for student basic needs and mental health services. In addition to state funding, CSU dedicated $75 million in ongoing tuition revenue for GI 2025 starting in 2017-18. In 2024-25, total ongoing funding for GI 2025 was $422 million. CSU Chancellor’s Office Allocates GI 2025 Funding to Campuses. The CSU Chancellor’s Office does not have a set formula to allocate GI 2025 funding to campuses. In some years, new funding has been allocated based on multiple factors (such as the number of students eligible for Pell Grants at each campus, a uniform per-campus allotment, and campus performance outcomes). In other years, funding has been allocated based on a single factor (such as the number of students eligible for Pell Grants at each campus). Campuses Have Discretion in How to Use Funding, With a Few Exceptions. When the state has provided funding for GI 2025, it usually has not specified how funding must be spent. Campuses generally have discretion in how to use GI 2025 funding. Campuses report using their GI 2025 funding for activities focused on helping students graduate faster (such as offering more course sections) or helping students who may be at risk of dropping out persist to the following year (such as offering emergency financial assistance). In a few instances, the state designated GI 2025 funding for targeted purposes, such as hiring more tenure-track faculty. www.lao.ca.gov 3 analysis full AN LAO REPORT CSU Met One Systemwide GI 2025 Target. Of all its GI 2025 targets, CSU surpassed one— exceeding its two-year transfer graduation rate target by 1 percentage point. Since the start of the initiative, CSU increased its four-year graduation rate for first-time freshman cohorts by 15 percentage points but fell short of meeting its target by 3 percentage points. The six-year rate, on the other hand, only increased by 3 percentage points, and CSU was 8 percentage points short of meeting this target. CSU also was 8 percentage points short of meeting its four-year transfer graduation rate target. Thus, CSU saw greater success at graduating students faster compared to graduating more students altogether. Moreover, equity gaps by race/ethnicity, income, and first-generation status have remained wide for first-time freshman cohorts. Campuses Saw Mixed Success in Meeting GI 2025 Targets. Though CSU did not reach most of its systemwide targets, 5 campuses met or surpassed their four-year first-time graduation rate target and 13 campuses met or surpassed their two-year transfer graduation rate target. No campus met their six-year first-time graduation rate target, and only one campus met their four-year transfer graduation rate target. Most campuses did not close equity gaps for first-time students, with some campuses having wider gaps than at the start of the initiative. Tying State Funding to GI 2025 Provided Some Benefits. Prior to GI 2025, CSU was already using some of its unrestricted funding for activities designed to improve student outcomes. Tying some state funding directly to GI 2025, however, helped increase transparency and institutional accountability around student success, improved data collection processes among campuses, and set an expectation that improving graduation outcomes is a joint effort between campuses and students. GI 2025’s Program Structure Had Some Drawbacks. Having multiple program objectives seemed to make it challenging for campuses to pursue all of them, especially given campuses implemented different types of activities in response to different objectives. For example, activities designed to help students graduate faster are different from those activities intended to close equity gaps. Additionally, GI 2025 funding has not been allocated to campuses consistently in a way that has been tightly linked to program objectives. Finally, a lack of consistent reporting on cost and utilization rates for GI 2025 activities makes determining the relative cost-effectiveness of those activities challenging. CSU Is Transitioning to Its Next Graduation Initiative. CSU’s next graduation initiative expands upon GI 2025. In addition to setting new graduation rate targets, CSU is introducing other measures of student success, including student retention rates and job/graduate school placement. CSU is currently in the process of finalizing its systemwide and campus-specific targets for each metric and will begin tracking progress with the entering fall 2027 cohort. Recommend Legislature Make Structural Changes if Continuing GI Support. Given the state continues to have a structural imbalance between its revenues and spending, we recommend the Legislature continue to set a high bar for new spending moving forward. This implies weighing CSU’s next graduation initiative against the state’s other budget priorities. We recommend three statutory changes if the Legislature decides to maintain its current level of GI 2025 funding or provide additional GI funding. Specifically, we recommend the Legislature tie GI funding to specific objectives (with each objective having a set amount of dedicated funding), adopt a statutory allocation formula to distribute funding to campuses based on the specified objectives, and adopt an annual reporting requirement to track the use of funds. These changes could help improve the efficacy of the initiative as well as its cost-effectiveness. 4 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT INTRODUCTION Almost a decade ago, CSU launched its time for the state to reflect upon the initiative and Graduation Initiative 2025 (GI 2025). The objectives identify lessons that could guide its role in future were to increase graduation rates and close gaps graduation initiatives. In this report, we first provide in graduation rates among particular student background on GI 2025, then discuss GI 2025 groups by 2025. Since 2016, the state has provided funding and activities. Next, we analyze the a total of $1.7 billion General Fund for GI 2025. outcomes and assess the benefits and drawbacks In 2024-25, the state provided $347 million of GI 2025. Lastly, we make recommendations for ongoing General Fund for GI 2025—representing the Legislature to consider as it contemplates its 6.9 percent of CSU’s total ongoing General Fund involvement in CSU’s next graduation initiative. support. The end of GI 2025 presents an opportune BACKGROUND In this section, we provide background on CSU’s The push was driven by an acknowledgment graduation initiative prior to GI 2025, then describe that existing graduation rates were low and the transition to GI 2025. graduating more students from all student groups could help the United States remain competitive, Previous Graduation Initiative fulfill its workforce needs, and reduce income About 20 Years Ago, Colleges Began inequality. In 2007, leaders at 22 public higher Placing Greater Focus on Student Outcomes. education systems (including CSU) collaborated Historically, many colleges have focused on on an initiative to increase the number of college expanding access by increasing enrollment. graduates nationwide and reduce gaps in In the 2000s, some colleges across the nation graduation rates between students who had been heightened their focus on student outcomes, with traditionally underrepresented in higher education an interest not only in enrolling students but helping and their peers. them through to graduation. In 2007, the six-year CSU Set Graduation Rate and Equity Gap graduation rate for first-time, full-time students Targets Prior to GI 2025. Emanating in part from at four-year public institutions was 55 percent. what was happening nationally, CSU leaders met Hence, many students entering four-year public independently in fall 2009 to discuss how the institutions were leaving without a degree. Over the CSU system could improve its own graduation past 20 years, researchers have identified various rates, especially for students with historically barriers to college graduation. Financially, some lower graduation rates. Though CSU’s six-year students have challenges covering college costs, graduation rate was higher than many of its peers including their housing costs. Programmatically, at this time, less than half of first-time freshmen some students lack available courses or timely entering CSU were graduating in six years. To track advising. Administratively, some students have its progress on improving student outcomes, difficulty transferring course credits, registering CSU adopted the national performance metrics for classes, and completing financial aid forms. of the six-year graduation rate and equity gap by On a personal level, some students have certain race/ethnicity. (Consistent with the approach being family obligations, health issues arise, or social used nationally, CSU measured equity gaps as connections wane. the difference in the graduation rates of American National Push Emerges to Increase Indian/Alaska Native, Black/African American, and Graduation Rates and Close Equity Gaps. Hispanic/Latino students—students with historically Graduating more college students became a lower graduation rates—and Asian, multiracial, and heightened national priority in the mid-2000s. white students.) For each metric, CSU set targets. www.lao.ca.gov 5 analysis full AN LAO REPORT Specifically, CSU aimed to increase its systemwide Transition to GI 2025 six-year graduation rate from 46 percent to CSU Expanded Set of Graduation Rate 54 percent by 2015. It aimed to reduce its equity Targets. As this earlier initiative was nearing gap by half—narrowing from a gap of 13 to its close, CSU planned to continue improving 6.5 percentage points. its graduation rates. To this end, CSU faculty, Each CSU Campus Set a Graduation Rate students, and campus leaders met to set new Target. Under this initiative, each CSU campus graduation rate targets for 2025. Whereas the prior committed to increasing the six-year graduation initiative stemmed from a national focus on the rate for its first-time freshman cohorts to bring the six-year graduation rate, the new initiative added a systemwide rate within the top quartile of national focus on the four-year graduation rate. Graduating universities. Campuses that already were in the students in fewer years (four rather than six) was top quartile of national universities committed a key state priority, as graduating in less time to increasing their six-year graduation rate by reduces the overall cost of college (if unit-taking is six percentage points. All campuses committed to reduced or additional academic terms are avoided) reducing their equity gaps by half. and allows students to enter the workforce full CSU Surpassed Systemwide Six-Year time earlier. Additionally, transfer graduation rates Graduation Rate Target but Equity Gap became a greater focus, with CSU placing more Remained Nearly Unchanged. CSU exceeded its emphasis on its two-year transfer graduation six-year target—raising its systemwide graduation rate. CSU established its GI 2025 graduation rate rate to 57 percent in 2015. CSU did not, however, targets in fall 2016. As Figure 1 shows, CSU aimed reduce its equity gap by half. Both sets of to increase its four-year graduation rate for its student groups saw an increase in their six-year first-time freshman cohorts by 19 percentage points graduation rate, but the systemwide equity gap and its two-year graduation rate for its transfer remained nearly unchanged. student cohorts by 12 percentage points. Figure 1 GI 2025 Graduation Rate Targets Systemwide Graduation Rates for First-Time Freshman and Transfer Cohorts 2016 2025 Increase in Graduation Rate Graduation Rate Target Graduation Rate First-Time Freshmen Four-Year Rate 21 Percent 40 Percent 19 Percentage Points Six-Year Rate 59 Percent 70 Percent 11 Percentage Points Transfer Students Two-Year Rate 33 Percent 45 Percent 12 Percentage Points Four-Year Rate 74 Percent 85 Percent 11 Percentage Points GI = Graduation Initiative. 6 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT CSU Used New Methodology for Setting CSU Also Expanded Definition of Equity GI 2025 Targets. Similar to its earlier graduation Gaps and Set New Equity Targets. During the initiative, CSU established both systemwide and process of finalizing GI 2025 graduation rate campus-specific targets under GI 2025. However, targets, CSU representatives also met to discuss the methodology to determine each campus target new equity gap targets. CSU decided to expand its changed under GI 2025. For graduation rates measurement of equity gaps to capture additional for first-time freshman cohorts, each campus aspects of its student body. While continuing aligned its 2025 targets with high-performing peer to measure the graduation rate gap based on institutions. Specifically, each campus set its target student race/ethnicity, GI 2025 also focused on the based on the average graduation rate and average graduation rate gap between low-income students growth in graduation rates over the past five years and their peers, as well as first-generation students of its top five peers. (CSU identified peer institutions and their peers. For this purpose, CSU defines based on similarities in certain metrics, including “low-income students” as those who receive a enrollment, student-to-faculty ratio, and percent Pell Grant, which is a federal financial aid award of Pell Grant students.) For transfer students, CSU given to students with financial need. CSU defines believed existing available data indicated it already “first-generation students” as those who report that had relatively high graduation rates compared neither of their parents attended any college. In fall to peer institutions. Rather than benchmarking 2016, CSU established its 2025 targets to eliminate its outcomes to a set of peers, CSU directed gaps in graduation rates by race/ethnicity, income, campuses to increase their graduation rate targets and first-generation status. for transfer students a minimum of 10 percentage points above their current rates. FUNDING Funding for GI 2025 Has Increased State Also Started Funding Student Basic Substantially Over Past Nine Years. CSU receives Needs and Mental Health Programs. The state funding from two main sources—state General appropriates three pots of GI 2025 funds—a general Fund and student tuition revenue. Most of this pot and two earmarked pots (for student basic funding is unrestricted, meaning CSU can decide needs and mental health services, respectively). how to use it. Some of this funding, however, is The state first provided ongoing funding for the two designated for specified categorical purposes (such earmarked pots in 2021-22. In 2024-25, $42 million as providing certain student services). Whereas (12 percent) of the ongoing state funding for the 2009 graduation initiative received no direct GI 2025 was for student basic needs and mental funding, GI 2025 has received both state funding health services while the remaining $305 million and student tuition revenue. Most of this categorical (88 percent) was for general GI 2025 purposes. funding is ongoing, but CSU also received small Campuses may use student basic needs funding for amounts of one-time state funding for GI 2025 food pantries, meal voucher programs, free access in its early years of implementation. As Figure 2 to local bus services, emergency funds for housing, on the next page shows, total annual funding for additional counselors, and wellness workshops, GI 2025 has grown from $50 million in 2016-17 to among other similar uses. CSU considers funding $422 million in 2024-25. Roughly 80 percent of for basic needs and mental health services as part the ongoing funding for GI 2025 is from the state. of its overall GI 2025 efforts, as these types of When CSU raised tuition in 2017-18, it dedicated services help reduce barriers to graduation. $75 million in tuition revenue (out of an additional $119 million) toward GI 2025, comprising the rest of the ongoing funding. www.lao.ca.gov 7 analysis full AN LAO REPORT Figure 2 GI 2025 Funding Has Grown to More Than $400 Million Annually State General Fund Unless Otherwise Specified (In Millions) $450 One-Time Funding Student Basic Needs 400 GI 2025 (General) 350 Ongoing Funding Tuition Revenue 300 Student Mental Health Student Basic Needs 250 GI 2025 (General) 200 150 100 50 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 GI = Graduation Initiative. General GI 2025 Pot of Funding Has Come Chancellor’s Office Determines How GI With a Few Strings From the State. The general 2025 Funds Are Allocated Across Campuses. pot of GI 2025 funding can be used for any GI 2025 The state did not establish statutory rules for purpose, with a few exceptions. In 2018-19, the how GI 2025 funding is allocated to campuses. state dedicated $25 million of new ongoing GI 2025 This has been decided by the Chancellor’s funding to increase the number of tenure-track Office in consultation with campus leadership. faculty at CSU. Across the 2018-19 through As Figure 3 shows, CSU’s formula to allocate new 2020-21 period, CSU reported spending $52 million ongoing GI 2025 funding has varied over the years. for this purpose using a mix of GI 2025 and other The most common factor CSU has used in its funding. (The intent of hiring additional tenure-track allocation formula has been campuses’ Pell Grant faculty was to offer students more mentoring counts. The next most common has been providing and advising, further flexibility in meeting with a uniform amount per campus (for example, faculty, and increased research opportunities with $960,000 per campus). Other factors have included professors.) In 2024-25, the state required CSU the number of tenure-track faculty at each campus to use $35 million of its existing ongoing GI 2025 (with campuses lower than the systemwide average funding for efforts specifically aimed at closing receiving more funding) and average unit load of equity gaps. certain student groups (with campuses seeing unit-load increases receiving funding). 8 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT Figure 3 CSU Has Allocated GI 2025 Funding to Campuses Based Upon Various Factors Share of New Ongoing GI 2025 Funding by Allocation Factor Allocation Factor 2016-17 2017-18 2018-19 Campus Size 3% Pell Grant-Eligible Students Uniform Per-Campus Allotment 35% 30% 33% 35% College Preparationª 50% 50% Chancellor’s Office Tenure-Track Faculty 35%d 29% Unit Loadb Base Operating Budgetc 2019-20 2021-22 2022-23e 2024-25 10% 33% 100% 100% 56% 90% 11% a Refers to the number of first-year students who need additional preparation in math and/or English. b Refers to the increase in the average unit load of American Indian/Alaska Native, Black/African American, and Hispanic/Latino students from fall 2016 to fall 2018. c Refers to amount proportional to each campus’ share of CSU’s 2023-24 base operating budget. d For 2017-18, funding was allocated based on the number of students eligible for Pell Grant and State University Grant awards. e All new ongoing GI 2025 funding was allocated based on the number of Pell Grant-eligible students except for the $10 million increase in ongoing funding for student basic needs, which was allocated by the proportion of students with zero expected family contribution at each campus. GI = Graduation Initiative. GI 2025 ACTIVITIES Campuses Have Notable Discretion in How Real-Time Data Also Guide Activities. They Use GI 2025 Funds. Apart from the purposes Campuses rely on real-time data to help them noted earlier, the state generally has not required make specific decisions regarding how to use CSU campuses to use GI 2025 funds for specified GI 2025 funds. Real-time data can include students’ activities. When launching GI 2025, the CSU course enrollment, degree progress, and grades. Chancellor’s Office identified six priority areas to Many campuses use real-time data in these areas to guide campuses’ spending decisions. Figure 4 on identify students who are not on track to graduate. the next page lists these priority areas. The CSU Campuses then reach out to those students at risk Chancellor’s Office identified the priority areas of dropping out to understand what barriers are based on national research and best practices on impeding them from graduating. This helps inform improving graduation rates. Campuses are to align which GI 2025 activities would best serve those their GI 2025 activities with these priority areas, but students. For example, a campus might decide to campuses have considerable discretion in deciding provide a particular student with a grant to complete the specific set of activities they implement using courses during the summer or expand tutoring GI 2025 funds. services for courses that have high failure rates. www.lao.ca.gov 9 analysis full AN LAO REPORT Figure 4 GI 2025 Activities Are Related to Six Priority Areas Priority Area Example of GI 2025 Activity Academic Preparation Created new centralized tutoring center and increased group-study sessions for challenging classes. Enrollment Management Increased number of sections offered per semester for high-demand courses. Student Engagement and Well-Being Provided services for students facing housing and/or food insecurity. Student Financial Support Provided financial support to graduating seniors facing unexpected costs to help them stay in school and complete their courses. Data-Informed Decision Making Improved tracking of course-level performance data to understand which courses had highest dropout, failure, and withdrawal rates. Administrative Improvements and Efficiencies Replaced some paper forms with electronic forms to help students complete administrative requests faster. GI = Graduation Initiative. Some Activities Focus on Time to Graduation. Some Activities Focus on Graduating More To meet their four-year graduation rate targets, Students. To increase graduation rates and campuses must help some students graduate close equity gaps, campuses must also graduate faster. To this end, campuses implement activities more students. About one-third of students that that are focused on time to graduation. These enter CSU as freshmen end up leaving rather types of activities include increasing the number than graduating. Many of these students do of units that students can take each term and not make it to the end of their sophomore year. increasing the number of sections for high-demand Once students leave a campus, it is challenging to and required courses each term. These types of bring them back. To address this concern, some activities help students progress more quickly GI 2025 activities focus on student retention, and potentially more efficiently through their with many of these activities directed at retaining graduation requirements. first- and second-year students. Examples of these activities include providing a summer program for entering freshmen who need additional academic preparation and operating a first-year mentorship program to help students adjust to college life. OUTCOMES In this section, we first analyze CSU’s graduation However, as Figure 5 shows, CSU saw a sharper rate outcomes both at the systemwide and campus increase in the four-year rate during the years of levels, then turn to equity gaps. The outcomes data GI 2025 compared to its peers. The most recent includes graduation rates through the final year of data (2017 entering freshman cohort graduating GI 2025. in 2021) indicates CSU’s four-year graduation rate was just 2 percentage points lower than its peers. Graduation Rate (Six-year graduation rates at CSU are generally CSU Increased Four-Year Graduation higher than peer institutions—both before and Rate at Faster Rate Than Peers. Historically, during GI 2025 efforts.) CSU’s four-year graduation rate has been lower than its peers. The year prior to the start of GI 2025, the rate was 7 percentage points lower. 10 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT Figure 5 CSU's Four-Year Graduation Rate Has Been Catching Up to Peer Institutions Cohort Graduation Rate for First-Time, Full-Time Freshmen 40% 35 30 25 Peers 20 15 CSU 10 5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Note: "CSU Peers" reflects the four-year graduation rate at public universities with the following 2021 Carnegie Classification: Master's Small, Medium, Larger; Doctoral/Professional; Doctoral High Research Activity; or Doctoral Very High Research Activity (only for universities from CSU's peer list). The shaded region reflects the years prior to Graduation Initiative 2025. CSU Almost Reached Its Four-Year Target 70 percent. One reason the six-year graduation rate for First-Time Freshmen. CSU’s sharp increase has been stagnant is because underlying student in its four-year graduation rate brought it close to persistence rates have not improved. CSU tracks meeting its systemwide target. As Figure 6 on the the share of students that persist to the next year next page shows, CSU was 3 percentage points of college at their campus of origin. As Figure 7 away from hitting its four-year graduation rate target on the next page shows, CSU’s persistence rates of 40 percent for its first-time freshman cohorts. were slightly worse for students entering in fall 2022 The four-year graduation rate steadily increased under compared to fall 2016 (the year prior to the launch GI 2025, rising 15 percentage points since the launch of GI 2025). Unlike with the four-year rate where the of the initiative (beginning with the 2017 graduation focus is on graduating students faster, CSU has to year). Of all the GI 2025 objectives, CSU made the graduate more students altogether to increase the most progress on this metric—helping students six-year rate. To do so, campuses must focus on graduate faster. Shortening time to degree likely has retaining students at risk of dropping out. Focusing on corresponded with other positive outcomes, including these students could entail more resource-intensive lowering overall college costs (by reducing excess activities than helping those students already on track units and academic terms) and increasing college to graduate. access (by freeing up enrollment slots sooner). For Transfer Students, CSU Increased Its CSU Had Little Improvement in Its Six-Year Two-Year Rate Faster Than Four-Year Rate. Rate, Reflecting Little Change in Underlying As Figure 8 on page 13 shows, CSU surpassed Student Persistence. In contrast to the four-year its two-year graduation rate target for transfer graduation rate for freshman cohorts, the six-year students by 1 percentage point. With the rate was relatively flat throughout GI 2025, with an exception of 2020, which likely was affected increase of only 3 percentage points. CSU was by the pandemic, this rate steadily increased 8 percentage points short of its six-year target of under GI 2025, rising 11 percentage points. www.lao.ca.gov 11 analysis full AN LAO REPORT Figure 6 Over Past Several Cohorts, Four-Year Rate Has Improved, but Not Six-Year Rate CSU Systemwide Cohort Graduation Rate for First-Time, Full-Time Freshmen 100% GI Target = 90 80 70 60 Six-Year Rate 50 40 30 20 10 Four-Year Rate 2000 200120022003200420052006 2007200820092010 201120122013201420152016 2017201820192020 2021 GI = Graduation Initiative. Note: Cohort graduation rates are reflected by the year the cohort enters college. For example, the 2020 first-time freshman cohort entered college in fall 2020 and generally began graduating in spring 2024. The first cohorts to graduate under GI 2025 entered in 2011 and 2013, for the six- and four-year rates respectively. Figure also provides data prior to GI 2025 for comparison purposes. Figure 7 A Notable Share of First- and Second-Year Students Still Are Not Persisting at CSU Entering Cohort of First-Time, Full-Time Freshmen Entering Fall 2016 Entering Fall 2022 Freshman Year Freshman Year 100 Students 100 Students 16 percent of cohort left after their freshman year 18 percent of cohort left after their freshman year Sophomore Year Sophomore Year 84 Students 82 Students 10 percent of cohort left after their sophomore year 9 percent of cohort left after their sophomore year Junior Year Junior Year 74 Students 73 Students 3 percent of cohort left after their junior year 3 percent of cohort left after their junior year Note: Figure does not include students who have graduated. Students who leave are no longer attending their respective CSU campus. They might have left higher education (temporarily or permanently) or moved to a different campus (within or outside of the CSU system). 100 students is used as a frame of reference. It does not represent the number of students entering CSU. 12 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT Figure 8 CSU Reached Its Two-Year Transfer Graduation Rate Target, But Not Four-Year Rate CSU Systemwide Cohort Graduation Rate for Transfer Students 100% GI Target = 90 80 70 Four-Year Rate 60 50 40 30 Two-Year Rate 20 10 2000 20012002 2003 2004 2005 2006 2007 2008 2009 2010 20112012 2013 2014 2015 2016 2017 2018 2019 2020 20212022 2023 GI = Graduation Initiative. Note: Cohort graduation rates are reflected by the year the cohort enters college. For example, transfer students that entered in 2022 generally began graduating in spring 2024. The first transfer cohorts to graduate under GI 2025 were 2013 and 2015, for four- and two- year respectively. Figure also provides data prior to GI 2025 for comparison purposes. The four-year graduation rate for transfer students freshman cohorts, only two campuses fell more increased more slowly. CSU fell short of its than 10 percentage points short of their four-year four-year graduation rate target for its transfer graduation rate target for transfer students. cohorts by 8 percentage points. Similar to the Disparities in Graduation Rates Across trends for first-time freshman cohorts, CSU saw Campuses Remain Large. As Figure 10 on more improvement in graduating transfer students the next page shows, large gaps in graduation in less time compared to graduating more transfer rates continue to exist among CSU campuses. students overall. Its persistence rate for transfer Moreover, the gap in graduation rates between students remained about the same as it had been the highest-performing and lowest-performing at the start of GI 2025. campuses has grown since the start of GI 2025. Campuses Trends Parallel Systemwide (Part of this could be due to GI 2025 not initially Trends. As Figure 9 on the next page shows, setting higher targets for campuses with five CSU campuses surpassed their four-year lower graduation rates.) The implication is that graduation rate target for first-time students, but students’ likelihood of graduating remains tightly no CSU campus met its six-year graduation rate linked to the campus they attend, even beyond target. Similarly, 13 CSU campuses surpassed the traditional equity gaps discussed next. their two-year target for transfer students, but For example, 50 percent of first-time Pell Grant only 1 CSU campus met its four-year target for students at San Luis Obispo graduate in four transfer students. Comparing freshman and years compared to 16 percent of non-Pell Grant transfer cohorts, more campuses met their students at Dominguez Hills. That is, the likelihood transfer targets. Whereas nine campuses fell of graduating is much higher overall for students at more than 10 percentage points short of their San Luis Obispo. six-year graduation rate targets for first-time www.lao.ca.gov 13 analysis full AN LAO REPORT Equity Gaps Figure 9 Systemwide Equity Gaps in Graduation Most Campuses Did Not Meet All Their Rates Remain Notable for First-Time Students. Targets As Figure 11 shows, equity gaps in graduation Number of Campuses in Each Range From rates by race/ethnicity, income, and first-generation Graduation Rate Targets status persist. (As discussed in the box on page 16, equity gaps in graduation rates by gender also Number of Campuses persist.) Generally consistent with how institutions across the nation have been tracking equity gaps, First-Time Students CSU continues to measure the gap in graduation Four-Year Rate At or above target 5 rates of American Indian/Alaska Native, Black/ Less than 5 percentage points from target 10 African American, and Hispanic/Latino students 5 to 10 percentage points from target 3 compared to their peers. (This report uses these More than 10 percentage points from target 5 categories to maintain consistency with CSU’s Six-Year Rate At or above target — data.) Since the start of GI 2025, the equity gap by Less than 5 percentage points from target 3 race/ethnicity has grown from 13 to 16 percentage 5 to 10 percentage points from target 11 points for the four-year graduation rate and from More than 10 percentage points from target 9 13 to 15 percentage points for the six-year rate. Transfer Students The equity gap by income has decreased from Two-Year Rate At or above target 13 15 to 14 percentage points for the four-year rate Less than 5 percentage points from target 8 but increased from 11 to 12 percentage points for 5 to 10 percentage points from target 2 the six-year rate. The equity gap by first-generation More than 10 percentage points from target — status has remained nearly unchanged at Four-Year Rate At or above target 1 17 percentage points for the four-year rate and Less than 5 percentage points from target 6 14 percentage points for the six-year rate. 5 to 10 percentage points from target 14 More than 10 percentage points from target 2 Figure 10 There Is a 47-Percentage-Point Gap in Four-Year Graduation Rates Among CSU Campuses Four-Year Cohort Graduation Rate for First-Time, Full-Time Freshmen, 2021 Entering Class San Luis Obispo San Diego Monterey Bay Maritime Fullerton Long Beach Sonoma Pomona Chico San José San Francisco Bakersfield Sacramento Stanislaus Channel Islands San Marcos San Bernardino Northridge Fresno Humboldt Los Angeles East Bay Dominguez Hills 10 20 30 40 50 60 70% 14 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT Figure 11 Equity Gaps in Graduation Rates Remain Wide for First-Time Students CSU Systemwide Cohort Graduation Rate for First-Time, Full-Time Freshmen Race/Ethnicity 100% 90 80 Other Groupsa 70 60 Six-Year Graduation Rate 50 Historically Underrepresented Groupsb 40 Other Groupsa 30 Four-Year Graduation Rate 20 Historically Underrepresented Groupsb 10 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Income 100% 90 80 Non-Pell Grant Students 70 Six-Year Graduation Rate 60 50 Pell Grant Students 40 Non-Pell Grant Students 30 Four-Year Graduation Rate Pell Grant Students 20 10 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 First-Generation Statusc 100% 90 80 Non-First-Generation Students Six-Year Graduation Rate 70 60 First-Generation Students 50 40 Non-First-Generation Students Four-Year Graduation Rate 30 First-Generation Students 20 10 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 a Asian, Native Hawaiian and Pacific Islander, two or more races, and white students. b American Indian/Alaska Native, Black/African American, and Hispanic/Latino students. c The final year of graduation data disaggregated by first-generation status was not yet available at the time this report was released. Note: Cohort graduation rates are reflected by the year the cohort enters college. For example, the 2020 first-time freshman cohort entered college in fall 2020 and generally began graduating in spring 2024. The first cohorts to graduate under GI 2025 entered in 2011 and 2013, for the six- and four-year rates respectively. Figure also provides data prior to GI 2025 for comparison purposes. www.lao.ca.gov 15 analysis full AN LAO REPORT Equity Gaps by Gender Are Notable Male Students Continue to Graduate at Lower Rates Than Female Students. The designers of the Graduation Initiative 2025 (GI 2025) expanded the notion of equity gap to include not only race/ethnicity but also income and first-generation status. GI 2025 did not, however, include a focus on gender, despite male students historically having lower graduation rates than their female peers. The gender gap has persisted throughout GI 2025. Based on the most recent data, CSU’s systemwide four-year graduation rate is 42 percent for first-time female students compared to 31 percent for first-time male students. (CSU does not provide graduation data for students who identify as neither male nor female.) Though this gap is somewhat smaller compared to the gaps by race/ethnicity, income, and first-generation status, it is still notable. Moreover, the four-year graduation rate gap by gender has become slightly wider since the start of GI 2025 (2 percentage points wider) while the six-year gap remains nearly unchanged. More Campuses Have Widened Equity Gap by for six-year graduation rates, with only 9 campuses Race/Ethnicity Than Narrowed It for First-Time having narrowed or eliminated the gap, while Students. For equity gaps by race/ethnicity at the 14 campuses have widened it. Dominguez Hills campus level, 11 campuses narrowed or eliminated is the only campus to eliminate the gap in the the gap in four-year graduation rates for first-time four-year first-time graduation rate for Pell Grant freshman cohorts, while 12 campuses had gaps students and their peers. For the six-year rate, that widened since the start of GI 2025. The pattern Dominguez Hills and San Bernardino are the only was the same for six-year graduation rates, with campuses to eliminate this gap. (CSU does not 14 campuses widening their gaps. Stanislaus provide campus-level data on equity gaps by is the only campus to eliminate the gap in the first-generation status.) four-year first-time graduation rate for American Systemwide Equity Gaps Remain Narrow for Indian/Alaska Native, Black/African American, and Transfer Students. Equity gaps among transfer Hispanic/Latino students and their peers. For the students have historically been much narrower six-year rate, Bakersfield and Monterey Bay are the compared to the gaps among first-time freshman only campuses to eliminate this gap. cohorts. One reason for this is likely because Campus Trends in Equity Gaps by Income transfer students arrive at CSU having already for First-Time Students Are More Nuanced. completed their initial years of college and having Since the start of GI 2025, 16 campuses have overcome associated challenges. As Figure 12 narrowed or eliminated the gap in four-year shows, equity gaps are almost closed for the graduation rates between first-time Pell Grant two-year transfer graduation rate. For the four-year students and their peers, while 7 campuses have transfer graduation rate, however, equity gaps have widened the gap. The trend is somewhat different slightly widened since the start of GI 2025. 16 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT Figure 12 Equity Gaps in Graduation Rates for Transfer Students Are Generally Narrow CSU Systemwide Cohort Graduation Rate for Transfer Students Race/Ethnicity 100% 90 Other Groupsa 80 Four-Year Graduation Rate 70 Historically Underrepresented Groupsb 60 Other Groupsa 50 40 Two-Year Graduation Rate Historically Underrepresented Groupsb 30 20 10 2000 2001200220032004200520062007200820092010 2011201220132014201520162017201820192020 202120222023 Income 100% 90 Non-Pell Grant Students 80 Four-Year Graduation Rate 70 Pell Grant Students 60 Non-Pell Grant Students 50 40 Two-Year Graduation Rate Pell Grant Students 30 20 10 2000 20012002200320042005200620072008200920102011201220132014201520162017201820192020202120222023 First-Generation Statusc 100% 90 Non-First-Generation Students Four-Year Graduation Rate 80 First-Generation Students 70 60 Non-First-Generation Students 50 40 Two-Year Graduation Rate First-Generation Students 30 20 10 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 a Asian, Native Hawaiian and Pacific Islander, two or more races, and white students. b American Indian/Alaska Native, Black/African American, and Hispanic/Latino students. c The final year of graduation data disaggregated by first-generation status was not yet available at the time this report was released. Note: Cohort graduation rates are reflected by the year the cohort enters college. For example, the 2020 transfer cohort entered college in fall 2020 and generally began graduating in spring 2022. The first cohorts to graduate under GI 2025 were 2013 and 2015, for four- and two-year respectively. Figure also provides data prior to GI 2025 for comparison purposes. www.lao.ca.gov 17 analysis full AN LAO REPORT ASSESSMENT In this section, we first discuss the benefits of having multiple objectives meant campuses had GI 2025, then identify its drawbacks. to make key choices regarding how much effort Tying State Funding to CSU’s Graduation and resources to dedicate to each objective. Initiative Had Some Benefits. Prior to GI 2025, Whenever a program has multiple objectives, CSU was already using some of its unrestricted having to prioritize among those objectives can state funding for activities designed to improve be a challenge. In the case of GI 2025, one key student outcomes, including increasing graduation complicating factor was that campuses generally rates. The CSU administrators we interviewed, had to implement different types of activities to however, believed that tying state funding to achieve each objective. For example, to increase GI 2025 directly helped cast greater legislative, the six-year rate, campuses had to focus on systemwide, and campus focus on graduation rates activities that helped students, primarily first- and and equity gaps. In our review, we identified three second-year students, persist. These activities specific benefits of GI 2025: (such as offering math supplemental instruction for freshmen) differ from the activities needed to help • Enhanced Transparency and Institutional students graduate faster (such as offering more Accountability. Though CSU’s longstanding course sections). Similarly, the activities aimed mission has been to educate and graduate at improving overall graduation rates (such as students, GI 2025 tied state funding to specific hiring more advisors) differ somewhat from those objectives with specific performance targets. activities aimed specifically at closing equity gaps Setting GI 2025 targets heightened public (such as creating a peer mentorship program for attention on CSU’s performance. In doing so, first-generation students). Moreover, the activities the CSU system and each of its campuses aimed at addressing certain equity gaps differ felt greater institutional accountability to from those aimed at addressing other equity gaps. demonstrate improved outcomes. Based on the outcomes data, campuses appear • Improved Data. Campuses had to improve to have compromised progress on some program their data collection efforts and upgrade objectives in order to make progress on other their data systems to better understand program objectives. what activities would help them reach their CSU’s Allocation Formula Has Been GI 2025 targets. Through these improvements, Inconsistent and Not Tightly Linked With Core campuses indicate they now are able to better Objectives. With little state guidance in how to identify students at risk of dropping out or allocate GI 2025 funds across campuses, CSU itself not graduating on time and provide relevant has decided how to make these allocations. Every support services. year since the inception of GI 2025 in 2016-17, CSU • Set Expectation That Improving has used a different formula to allocate new GI 2025 Graduation Outcomes Is a Joint Effort. funds, such that campuses have not known one CSU administrators shared with us that year from the next what it takes to obtain program implementing GI 2025 helped shift the funding. Moreover, CSU’s allocation factors have expectation of graduation from being the sole varied from strongly linked with program objectives responsibility of the student to being the joint (for example, Pell Grant counts) to not linked (for responsibility of the student and institution. example, providing a flat amount to every campus Thus, GI 2025 placed a greater emphasis on regardless of need or performance). the campus’ role in helping students succeed. State Has Not Received Data on Cost or Having Multiple Program Objectives Led to Utilization of GI 2025 Activities. The state Challenging Campus Decisions. Though GI 2025 required CSU to submit three reports on GI 2025 tied state funding to a clear set of objectives, activities. Those reports contained considerable 18 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT narrative around the GI 2025 activities that them. (For example, a 10 percent utilization rate for campuses were implementing. The reports did math tutoring services may seem low, but if it is the not, however, include the amount of money 10 percent of students at risk of failing their math campuses spent on each activity. Additionally, general education course, the activity is reaching they did not include utilization rates for GI 2025 the intended students.) Unfortunately, available data activities. Activities—such as tutoring, advising, is not granular enough to draw clear conclusions. and mentoring services—are only beneficial if Data on Cost-Effectiveness of GI Activities students, especially those who need them most, Correspondingly Is Not Available. Without are using them. Recent data from CSU indicates required reporting on how much campuses are that utilization rates are low for these types of spending on particular GI 2025 activities and how services across many student groups. Specifically, many and which students are using them, the recent survey results indicate that more than Legislature cannot know which activities are most 70 percent of students do not utilize or rarely utilize cost-effective. Currently, the Legislature cannot services such as tutoring, diversity and inclusion compare the cost-effectiveness of even the most programs, counseling, and career services. common types of GI 2025 activities, such as Low utilization could be cause for concern. tutoring, first-year mentoring programs, grants for Alternatively, though overall utilization is low, the graduating seniors, and additional high-demand small group of students most in need of certain course sections. support services could be the ones accessing RECOMMENDATIONS In this section, we first recommend the make adjustments accordingly. While a new CSU Legislature consider how CSU’s graduation initiative graduation initiative likely would provide some state fits within its overall state and higher education benefits (such as enhanced economic mobility), priorities. If the Legislature desires to maintain or those benefits could be less sizable or less augment state funding for a new CSU graduation significant than the potential public benefits of other initiative, we have three specific recommendations state programs. for it to consider. These three recommendations Tie Funding to Each State-Identified incorporate lessons learned from GI 2025, while Graduation Objective. If the Legislature decides also incorporating best practices in state program to maintain its current level of GI funding or design. (With CSU’s existing graduation initiative provide additional GI funding, we recommend phasing out in 2025, CSU has turned its attention the state tie that funding to specified objectives. to its next graduation initiative. In September 2025, We think doing so is particularly important given CSU finished its “Year of Engagement.” We provide the state’s recent experience with GI 2025, which more detail about these efforts in the box on the had multiple objectives. Under GI 2025, CSU came next page.) close to meeting some objectives but remained Consider New Graduation Initiative Within far from meeting others. If the state desires to Broader State Context. We recommend the see improvement on a particular objective (such Legislature consider any new CSU graduation as increasing the six-year graduation rate), then initiative within the broader state context—weighing tying funding more tightly to that one objective the CSU initiative against other policy and budget will increase the chances campuses focus on priorities. Especially because the state continues to that objective. It also will minimize the risk that have a structural imbalance between its revenues campuses spread their efforts too thin or direct and spending, we recommend the Legislature their efforts toward some objectives but not others. continue to set a high bar for new spending moving Establishing each program objective and setting forward. We also recommend the Legislature the associated amount of funding for it would continue to monitor whether existing programs depend on the Legislature’s priorities and the state are meeting their objectives cost-effectively and budget condition. www.lao.ca.gov 19 analysis full AN LAO REPORT CSU’s Year of Engagement Year of Engagement Sets Up CSU’s Next Graduation Initiative. Over the past year, CSU has been working on developing its next graduation initiative. To develop the framework of the new initiative, CSU gathered feedback from faculty, students, campus leaders, staff, alumni, and community partners. It also analyzed CSU and peer data, reviewed national research, and conducted various focus groups. The new framework goes beyond the GI 2025 objectives of increasing graduation rates and closing equity gaps by adding new objectives and several new metrics. One notable new objective is ensuring all students are able to graduate with a first career job or pathway to graduate education. The figure below compares the metrics that CSU used under GI 2025 with the broader set of metrics under the new initiative. CSU will continue to measure graduation rates but will also measure retention rates, student satisfaction, and alumni engagement, among other metrics. Though the Year of Engagement framework mentions the importance of closing equity gaps in educational outcomes, it does not include an explicit equity metric. CSU Is Setting New Targets. CSU is planning to set targets for each of the identified metrics. CSU already has set new systemwide graduation rate targets: 50 percent first-time four-year graduation rate (a 13-percentage-point increase by the 2031 graduation year), 72 percent first-time six-year graduation rate (a 10-percentage-point increase by the 2033 graduation year), and 52 percent two-year transfer graduation rate (a 6-percentage-point increase by the 2029 graduation year). CSU has also already set systemwide retention rate targets for the 2027 fall cohort: 88 percent first-year retention rate (a 4-percentage-point increase), 81 percent second-year rate (a 9-percentage-point increase), and 78 percent third-year rate (an 8-percentage-point increase). CSU set these targets by looking at the system’s historical graduation New CSU Initiative Has More Expansive Set of Performance Metrics and retention rate performance, the GI 2025 Metrics New Graduation Initiative Metrics performance of its peers, and the performance First-time four- and First-time four- and Experiential learning Net cost of attendance six-year graduation rates six-year graduation rates participation rates of aspirational institutions (peers who increased Transfer two- and Transfer two-year First-, second-, and Student access and four-year graduation graduation rates third-year retention rates socioeconomic mobility their graduation rates rates after implementing Equity gaps by race/ Alumni engagement Job/graduate school by 6- Student satisfaction rates similar initiatives). ethnicity, income, and participation rates and 12-months of graduation first-generation status CSU Is Beginning Career earnings 2, 5, and Two-Year Transition 10 years after graduation Period. CSU plans to undertake a two-year transition period intended to give campuses time to develop the data tools, processes, and infrastructure needed to pursue its new objectives and ultimately reach its new targets. Over the coming months, CSU also will work with campuses to set campus-level graduation and retention rate targets, as well as targets for the remaining metrics. Given this transition period, CSU plans to measure outcomes beginning with the student cohort entering in fall 2027. 20 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT Create Statutory Formula to Allocate GI Require an Annual Program Report. Funds Across Campuses. Rather than continuing Another best practice in state program design is with the practice of CSU determining how to to require reporting on whether the program is allocate GI 2025 funding across campuses, we achieving its statutory objectives in a cost-effective recommend the Legislature adopt a statutory manner. To this end, we recommend the Legislature allocation formula for ongoing GI 2025 funding and adopt an annual reporting requirement to track the any potential new GI funding. Having a statutory use of current, and any new, GI funds. Specifically, allocation formula provides two main benefits. we recommend each campus provide a short First, it allows the state to link funding to each of description of each of its program activities as well its intended objectives. For example, if the state’s as the cost of each activity, how many students are objective is to improve student retention rates, served, and, when relevant, the utilization rate for funds could be allocated to campuses based on each activity. We recommend each campus provide the number of first-year students enrolled in certain this information in a consistent table format, such courses or the improvement in retention rates that the report is easier for campuses to prepare, over time. Second, a statutory allocation formula more concise, and more useful than previous ensures consistency over time, with attention GI 2025 reports. We recommend requiring the CSU maintained on the program’s objectives. For these Chancellor’s Office to compile these tables into one reasons, the state typically creates a statutory consolidated report that highlights key takeaways, allocation formula at the same time it establishes including identifying which activities it found most a new categorical program. cost-effective in meeting each of the program’s objectives. We recommend the report be submitted to the Legislature early each spring to help inform budget deliberations. www.lao.ca.gov 21 analysis full AN LAO REPORT 22 LEGISLATIVE ANALYST’S OFFICE analysis full AN LAO REPORT www.lao.ca.gov 23 analysis full AN LAO REPORT LAO PUBLICATIONS This report was prepared by Natalie Gonzalez, and reviewed by Jennifer Pacella and Ross Brown. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, California 95814. 24 LEGISLATIVE ANALYST’S OFFICE