Due to a lack of funding, the school closed in 1898. A group of teachers, students, and supporters pressured the California State Legislature to convert it into a state-funded institution.

On March 22, 1899, the California State Legislature approved the creation of the San Francisco State Normal School, with an appropriation of $10,000. Frederic Lister Burk was appointed as the first president and chose the school's motto, Experientia Docet. The school rented space in a building on Powell Street between Clay and Sacramento Streets