$39 million for 3 years: CSU system renews contract with OpenAI
Amid skepticism from students and faculty, California State University officials renewed a controversial systemwide contract with ChatGPT developer OpenAI earlier this month. Per this three-year contract, the system’s 470,000 students and 63,000 faculty and staff across 22 campuses will continue to have access to ChatGPT Edu, billed by the company as a version of the chatbot customized for educational institutions.
The new contract also extends service to CSU graduates for the first year after graduation. At an annual price of $13 million, the agreement kicks in this July and will cost CSU a total of $39 million over three years. The CSU has the option to cancel annually with advance notice, an official said.
“We will continue offering ChatGPT Edu to maintain continuity in curriculum, faculty development and student pathways,” Interim Executive Vice Chancellor Patrick J. Lenz wrote in an email to employees May 19. “Maintaining this engagement will avoid shifting costs to our employees and students and build on the progress we have made toward creating equitable access to AI across our system.”
Pushback from faculty, student groups
In January 2025, the CSU entered into a $17 million agreement with OpenAI to provide access to its campus communities for 18 months. In the months since, some faculty members have urged systemwide leadership not to renew the contract and to use the savings to protect jobs at campuses facing layoffs instead. Both the California Faculty Association and the Cal State Student Association have asked for a seat at the decision-making table as the CSU implements its AI Initiative — something that so far they say they have not been granted.
“It was definitely surprising for a lot of our faculty when the official announcement came out,” Elaine Bernal, a lecturer at California State University, Long Beach and a spokesperson for the California Faculty Association, said. “There’s also a sense of disappointment that faculty were yet again not consulted on the AI contract. We continue to be at the table with the Chancellor’s Office to make sure there is more transparency and accountability around AI and better protections for faculty.”
As part of its ongoing bargaining process to secure a new contract, the faculty association has been pushing for safeguards for those who use and those who refuse to use AI, professional development resources and protections for faculty intellectual property. Discussions on this are ongoing, according to representatives of the faculty association that represents 29,000 union members.
In an independent online petition backed by the faculty association, San Francisco State professor Martha Kenney said ChatGPT Edu was a “general-purpose chatbot” that was “not designed, trained or optimized for education” beyond its privacy and security features.
OpenAI said on its website that ChatGPT Edu has higher message limits than the free version, tools like data analysis and document summarization, customizable versions for specific projects, support for campus administrators and a promise that data and conversations would not be used to train models. When the OpenAI-CSU partnership was announced in February 2025, OpenAI said it was the largest implementation of ChatGPT by any single organization or company anywhere in the world.
Kenney’s petition, which has nearly 4,000 signatures, urged the CSU not to spend money renewing the contract with OpenAI when several campuses like San Francisco State and Sonoma State had recently enacted austerity measures.
In its 2026-2027 budget plan, the CSU system noted that it faces a challenging fiscal environment and “substantial financial strain” amid competing state priorities, unpredictable federal funding and other economic pressures. It noted that campuses had implemented budget reduction strategies in recent years and said its plan was centered on protecting existing commitments rather than pursuing new initiatives.
Students too have raised concerns about the contract. In a February statement, the Cal State Student Association — which is led by and represents the student bodies at each CSU campus — cautioned against implementation of the AI Initiative without meaningful student input. The students urged the CSU to issue consistent guidance on AI use and expressed concern over data privacy. Drawing on a systemwide survey conducted in 2025, the statement said more than 80% of students worry about AI’s impact on personal data.
The association also drew attention to environmental concerns and psychological impact of AI use. Finally, the student body called for greater inclusion of student voices in the AI Initiative. Specifically, it called for a structured feedback mechanism, publicized campus-level data on AI usage and outcomes, and regular engagement with the student association in decision-making on AI.
“Without such accountability, the CSU risks creating a system where innovation moves faster than inclusion,” Katie Karroum, vice president of systemwide affairs, wrote on behalf of the association. “The CSU’s AI initiative has the potential to meaningfully transform higher education, but only if it is implemented with transparency, ethical accountability, environmental responsibility and sustained student partnership.”
Responding to the concerns, a CSU spokesperson said Tuesday that the system recognizes that artificial intelligence is a topic that has sparked important debate.
“We take seriously the concerns expressed about the ethical and responsible use of AI,” the spokesperson said. “At the same time, the CSU has made significant progress expanding access to AI tools and training for nearly half a million students and more than 63,000 faculty and staff. We believe continuing that work is essential to preparing our students, faculty, and staff for the future.”
According to the spokesperson, the CSU’s Generative AI Advisory Committee and its three subcommittees unanimously recommended renewing the contract. The advisory committee consists of nine representatives from the Chancellor’s Office, eight campus leaders, three faculty members, two students and a data specialist.
As the CSU system continues to implement its public-private initiative to make AI tools available to its community by partnering with leading tech companies, officials said it remained committed to expanding training opportunities, strengthening privacy protections and evaluating additional tools and partnerships.
