California Universities Spend Millions on AI Tools Amid Faculty Layoffs
Recent reports reveal that several prestigious universities in California are investing millions in artificial intelligence tools like ChatGPT for their students, raising eyebrows as they simultaneously let go of faculty members.
For instance, the University of Southern California (USC), a well-known private research institution, spent $3.1 million to partner with OpenAI, securing ChatGPT licenses for around 80,000 users—students, faculty, and staff alike.
However, this decision has sparked concern among USC professors, especially after the university laid off roughly 900 faculty members to address a nearly $200 million budget shortfall. In a letter to the Daily Trojan, a group of faculty members questioned the university’s fiscal priorities, stating, “The University of Southern California cannot afford to pay students for real people they trust, and instead they are buying cute toys.”
They further posed critical questions like, “What kind of human dignity does this action affirm? What kind of trust does it build?”
Andrew T. Guzman, USC’s provost and senior vice president for academic affairs, responded by defending the expenditures. He argued that this investment includes subscriptions for all users and advanced credits for deeper research while ensuring data privacy that individual subscriptions would not offer.
USC is not alone in its heavy investments into emerging technologies. California State University has rolled out this AI tool to nearly 500,000 faculty and students, costing around $17 million. Similarly, some campuses within the University of California system, like Berkeley and Irvine, have made it relatively easy for students to access AI accounts.
Critics, however, are expressing mixed feelings about the growing reliance on AI in higher education. Some warn that it could adversely affect learning and question the rationale behind massive spending while schools are letting professors go.
Lee Codding, a 55-year-old student at San Diego State University, noted, “This goes against what higher education is supposed to be about.” He also referenced his youngest son, who attends the same university. “We’re completely reckless. We don’t think it’s a good idea,” he added. While he sees the value in AI, he believes that professional accounts—capable of performing more advanced tasks than free versions—could actually hinder critical thinking.
Codding expressed his concerns by saying, “I’d rather be a little behind the curve than innovate in a vacuum,” also emphasizing, “That’s a lot of money. I would rather they commit to hiring more teachers.”
He further called it “insane” that California State University is investing heavily in AI while facing a staggering $2.3 billion budget gap. In the first half of 2025, CSU allocated about $1.9 million for ChatGPT Edu, a version designed specifically for the university, benefiting 40,000 users. Subsequently, they expanded their contract by $15 million to cover about 500,000 faculty and students until July 2026.
“I think providing individual AI accounts is overkill,” Codding remarked, while still expressing his enthusiasm for the technology. He also pointed out the complications of using public funds for private companies.
Saba Haseeb, a parent of students at USC and the University of California schools, also shared her concerns about the costs associated with AI tools. “I don’t want millions of dollars to be spent on that. I don’t think it’s right,” she commented.
Haseeb argued that public universities should focus on investing in human resources alongside AI. “If we are going to replace professors with AI, we should also consider tuition fees, because much of the tuition goes toward professors’ income,” she mentioned, emphasizing the need for transparency in funding and technology use.
She opined, “I think it would be great if we could let the public know that some of the funding will be used for things like AI and ChatGPT. Parents need to have some involvement in how this is used and implemented, or at least provide information.”
The University of California, Berkeley, responded to inquiries about AI tool costs, stating that these AI functionalities are bundled with existing licensed subscriptions, which include tools like the Google Gemini app and Zoom AI Companion. All students have access to the AI capabilities provided by these agreements.
