At the annual budget town hall Oct. 29, Sacramento State President Luke Wood said the university will be pivoting to an “enterprise model” aimed at generating revenue through out-of-state targeted recruitment of out-of-state and international students, implementing a two-year campus residency requirement and other initiatives.
With ongoing state fiscal challenges, the California State University system is projected to face multi-billion dollar deficits over the next few years. To address this, the CSU recently accepted a $144 million zero-interest loan from the state, with approximately $8 million allocated to Sac State according to the town hall meeting.
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Wood described the new enterprise model as a “strategic shift” from traditional higher education funding that is specifically aimed at increasing revenue. He said that the school will focus on recruiting out-of-state and international students, as well as implementing a two-year on-campus residency requirement for incoming freshmen,
“As we move towards more of this enterprise focus, we believe that we’ll have the ability to balance out,” Wood said. “Because other campuses in our system have been able to do that.”
Wood said that focusing on elevating Sac State’s national brand and focusing on financial independence from fluctuating state funding will put the university in a position to deal with potential cuts over the next several years.
“We, as an institution, have been more accessible to students and have continued to prioritize access. I think that that’s a good thing,” Wood said. “So far, it’s working in terms of applications.”
Wood said that for the upcoming fall semester, Sac State is far ahead in application numbers than it has ever been as a university. As of Fall 2025, the university hit a post-COVID record enrollment of 31,307 students, according to Wood.
As more students enroll, he said this will allow the university to bring in more out-of-state and international students who pay higher tuition than California residents.
According to the presentation, Sac State is projecting 5% budget cuts annually over the next three years, with a structural deficit of $2.8 million.
“We’ve done our best to shield academic affairs from cuts, since they are the primary function of the university and where students take classes,” Wood said. “If we don’t have students coming in and we don’t have classes, then we’re not doing the core function of what we should be doing.”
According to President Wood, budget cuts across campus divisions are distributed to shield the areas of enrollment, with Academic Affairs at 11.6%, Administration & Business Affairs at 22.8%, Information & Resource Technology at 25.3%, Student Affairs at 22.1%, University Advancement at 29.5% and the Division of the President at 9.4%. There were no mentioned cuts for Athletics or any other divisions.
Last semester, the $37 million deficit resulted in each division being equally cut by approximately 22%, except for Academic Affairs. This year, the university is implementing the same strategy, with temporary relief from the state, by deferring cuts and obtaining funding through a zero-interest loan approved by the CSU system.
One student at the town hall asked if diminished state support would result in another tuition increase. The student said there seems to be a breaking point coming for Sac State, and without state support, the university will not be able to function. They also asked what programs could be stepped back or eliminated to reduce the deficit.
“I can say that tuition is not something that the campus has any control over. That is a fully determined matter for the Chancellor and the Board of Trustees.” Wood said in response. “So we have no insight into any plans.”
During the Spring 2025 semester, students voted against a “student success fee” that would have increased class sections, supplemental instruction and other academic resources. While Sac State has no control over CSU tuition hikes, it can propose new fees on its student body.
“That being said, that increase does not even come close to the escalating cost. And so you’re right,” Wood said. “Again, we’re focused on things that are revenue-generating for the campus.”
Wood said generating revenue would begin to alleviate some of the pressure the university is experiencing, and the move from a traditional model to an enterprise model is the goal.
Thad Gifford, a sophomore electrical and electronic engineering major, said any more increases in school costs would make it much harder for him to pay for classes.
“I’m lucky enough to be getting by with one job and money that my family saved for me to go to college at the moment,” Gifford said. “I’m cutting it very close.”
Gifford said he is not considering taking out loans, so if he had to pay more for tuition it would be out of pocket. He said it is scary to think about how much his workload could be with two jobs to pay for school alongside upper-division engineering classes.
Gifford said it was much harder for him to get classes he wanted this semester. He said the moment registration opened for him, he had to completely scrap his preferred schedule because there were not enough class sections available.
Anna Petrovich, a senior political science major, said the budget cuts are putting more financial stress on her, making it necessary for her to work more hours to afford school.
“Because of this, it becomes increasingly harder to prioritize and find time for school and homework,” Petrovich said. “The more I have to pay, the more I have to work, the less I have time to be a student.”
Petrovich said she believes that if the university were as focused on funding educational opportunities as it is on having celebrities at football matches, the university would be better off.
“Applying for grants, allocating enough funds towards teachers and expansion of necessary programs [are] far more preferable than the latest [celebrity] name they choose to manage or coach a team,” Petrovich said.
A faculty member asked how the university plans to retain faculty who may be without support for their research, while also facing increasing challenges to teaching conditions. They said faculty are being asked to increase services while presented with changes to the university’s mission, identity and the population they are serving.
Wood said Sac State has been dedicated to social justice and community impact for many years, and it retains a focus on diversity, equity and inclusion at a time when many institutions do not. Wood said he doesn’t think that the campus or its value system has changed.
“I think what has changed is state investment in public higher education. And, at the same time, I don’t blame the state,” Wood said. “I just want to be clear: they have less money, and so they have less money to give us.”
RELATED: CSU accepts California’s $144 million loan amid federal investigations and government shutdown
Both provost Erika Cameron and Wood said offering more courses through the College of Continuing Education, as well as having new programming in the CCE could be a way to generate additional revenues.
“We have a lean faculty, so I would love to be able to recruit and hire more faculty and more staff to really support our academic enterprise,” Cameron said. “But we have to look at creative ways to generate revenue at this point to supplement what is happening in our state.”
Gifford said he noticed fewer course sections and overworked lecturers, despite the school hosting concerts of unknown cost and planning a new stadium.
“I don’t think that the university is prioritizing students’ education,” Gifford said. “It feels like the majority of the funds are finding their way to attempts to improve the school’s branding at the cost of students’ educations.”
Petrovich said that while she did not have a hard time enrolling for classes for her major, general education courses are in such high demand that there are currently 120 students in her one Chicanx/Latinx studies course.
“This is not adequate to foster a productive and effective learning environment.” Petrovich said, “We need more teachers in the ethnic studies department, and I’m sure in other departments offering more general education courses as well.”
Another faculty member asked how divisions are being held accountable for their spending during the reductions.
Natalie Daniel, associate vice president of budget planning & administration, said the budget office is helping divisions conduct quarterly reports that will be sent to the president’s office for review.
Daniel said the BPlA is helping divisions identify any structural issues and making recommendations to try to assist divisions with closing any budget gaps.
“I do know partly where this question is coming from; there was a division last year that did overspend,” Wood said, referring to the division of Academic Affairs. “We have made changes in terms of how our process moves forward.”
Wood said the BPA is meeting more regularly now, and that the university has a better hold on what’s happening, budget-wise. He said Sac State does not anticipate that divisions will overspend their budget unless there is authority to do so based upon external factors.
Due to the fiscal uncertainty, Wood said he would be asking campus leaders to prepare for the incoming year-over-year cuts as part of the university’s strategy to maintain its mission while adapting to reduced state funding.
