Billions of dollars are at stake, and the fight is just beginning.
Last month, defying the wishes of Gov. Jerry Brown, the University of California's board of regents voted to raise tuition by as much as 28 percent over the next five years. It's a move both Brown and legislative leaders are eager to block. This will form a centerpiece of the state's budget debate in 2015.
"What's happening in California is not unlike what's happening in many states," said David Longanecker, president of the Western Interstate Commission for Higher Education. "The state will say don't raise tuition, we'll give you funding instead, but the funding isn't a full replacement of the costs."
Following years of decreases in state funding, the UC system has been getting more money lately, thanks to voter passage of the tax-increasing Proposition 30 in 2012. The state gave UC a $140 million boost this year. Brown is promising another 4 percent increase next year.
In exchange, however, the 10-campus UC system wasn't supposed to raise tuition until the 2016-2017 budget year. But Janet Napolitano, the system's president, insists it's still not enough.
State funding for UC this year is $2.64 billion -- but that's down nearly a half-billion dollars from where it stood back in 2008. A decade ago, the state picked up 60 percent of the tab, while students and their families paid 40 percent. Today, those figures are reversed. Under the state's 1960 Master Plan for Higher Education, California's system of colleges and universities--the University of California, California State University or community college--were supposed to be largely free of charge for students.
"There's no way to get around the mass level of disinvestment by the state in higher ed over the last 15 years now," said Sean Randolph, president of the Bay Area Council's Economic Institute.
Napolitano argues that the UC system, which includes some of the world's finest universities, including Berkeley and UCLA, is underpriced compared to comparable top-flight public school. Tuition is about $12,200 a year for full-time, in-state students. UC also faces much bigger pension deficits than other higher education systems, Longanecker said.
Brown and legislators such as state Assembly Speaker Toni Atkins believe UC could still stand to tighten its belt, cutting back on administrative costs and getting more with the times when it comes to use of technology.
If they don't come up with the kinds of funding Napolitano is seeking, they could head her off by threatening to withhold state funds by an amount equivalent to any tuition hike.
But such budgetary brinkmanship won't answer the fundamental questions the state faces, Randolph argues, such as how many students it's going to educate. The less-prestigious California State University system has already lowered its enrollment targets for the fall.
This comes at a time when higher education in the state is going to have to adapt to changing demographics, including a rising share of the student-age population being made up of minority populations in which parents are disproportionately low-income and not highly educated.
"The fact is, what we have here is a state that has no medium or long-range plan as to how much higher education it's going to provide and how that responsibility is going to be split up," said Patrick Callan, president of the Higher Education Policy Institute, which is located in San Jose, Calif.
Unlike nearly every other state, California lacks a central governing or coordinating board that oversees higher education policy as a whole. There's no entity with the capacity to mediate between the individual university systems and the state's political leaders, or help guide funding as a whole.
"Neither the governor nor UC brings any kind of broad perspective about where higher education should be, how it fits into the larger puzzle," Callan said.
That means UC's quest for more dollars -- and Brown's desire to hold the line on tuition -- will come to a head through the legislative process over the coming months. It's not clear which side the public is rooting for.
A recent poll by the Public Policy Institute of California found that 59 percent of Golden State adults say funding for higher education is too low -- but 56 percent say they don't way to pay higher taxes to support additional funding.
Still, Mark Baldassare, the policy institute's president, said that it's significant an even larger majority -- 77 percent -- doesn't want student fees to go up.
"In many situations where states have reduced funds, voters have approved," he said. "In this case, the public finds raising costs for students even more unacceptable than raising taxes."
Baldassare predicts the state will ultimately fashion a compromise, with UC getting more money in exchange for finding ways to become more efficient and cut spending.
But Callan said the lack of vision and the argument over a few percentage points' worth of funding will not lead to the broader debate needed about the future direction for higher ed in the state.
"It could turn into a monumental game of chicken," Callan said.