Newsom threatens to cut USC funding if it complies with Trump

Newsom responded with his own ultimatum: sign the White House request, and “instantly” lose state funding, including CalGrants, the $2.4 billion in annual state-funded scholarships for California students. 

The threat — which puts California universities in the position of choosing between losing state or federal funding — is the latest escalation in the state’s dealings with the Trump administration. It comes as an increasingly combative Newsom seeks both to push back on the Trump administration’s stretching of democratic norms, and to burnish his own standing as leader of the national Democratic resistance. 

The state has sued the administration over its withholding of federal grants or attempts to tie unrelated federal funding to policy demands around diversity and inclusion initiatives or immigration. Now Newsom is threatening to punish California institutions that comply with Trump’s threats or assist with his agenda.

“California will not bankroll schools that sell out their students, professors, researchers, and surrender academic freedom,” he said in a press release, using all-caps quotes mimicking the president’s social media posts, which have become frequent fodder for the governor’s own communications. 

It was not immediately clear how much state funding USC receives, including in CalGrants scholarships. 

In the 2024 fiscal year USC got $1.35 billion in federal funding — $650 million in student financial aid and $569 million for research. The university cut budgets and froze hiring in March in part over a persistent deficit and uncertainty surrounding federal funding. In July, interim president Beong-Soo Kim announced the university would likely conduct layoffs.

The White House letters come as universities across the country face increasing pressure from the administration over allowing transgender athletes to compete, their handling of pro-Palestinian protests last year and general accusations of liberal bias. 

A federal judge recently allowed UCLA to reclaim many of its federal grants, but the university is contending with a more than $1 billion fine from the federal government over allegations of allowing antisemitism on campus; in settlement negotiations the Trump administration has made a litany of demands of the university, including that it not admit international students who have “anti-Western” views. Newsom has called it “extortion” and said in August he hoped to “stop folks from selling out.”

With Thursday’s letter, the Trump administration is seeking to incentivize compliance with other universities. 

The letter sent to USC and other universities, according to The Associated Press, states that in exchange for complying with the White House directives, institutions would get benefits such as “substantial and meaningful federal grants.” The directives include freezing tuition, capping the number of international students, banning the use of race and gender in admissions, limiting accommodations for transgender students and fostering a campus environment that is more welcoming to conservative ideas. 

The universities that received the offer were selected because officials believed they could be a “good actor,” and had “a president who is a reformer or a board that has really indicated they are committed to a higher-quality education,” White House senior adviser May Mailman told the Wall Street Journal, which first reported on the letter. 

USC officials did not say whether they would agree to the offer, stating only that they “are reviewing the administration’s letter.” A White House spokesperson did not immediately respond to a request for comment on Newsom’s response.