It depends. At my university, graduate students are state employees, but not standard state employees the way facilities/staff/administrators are. Those groups

It depends. At my university, graduate students are state employees, but not standard state employees the way facilities/staff/administrators are. Those groups have a union, benefits, and pension plan, everything is very rigid. Graduate students are paid a "stipend", required to work 19 hours or less/week, and can't have any other form of state employment that might put them at 20+ hours/week. Total pay comes out to about $18,000/yr before student fees. This is because at that point, the type of employment is considered changed, and benefits have to be provided. The default appointment is for teaching, and doesn't include summer pay (no teaching in the summer). However, if your group has external funding, you can use that external funding to pay the students, but you can only pay them the default appointment (plus summer). So the wage doesn't change, the students are still paid by the university and are state employees, but the university gets the funds from grant funding, not wherever it comes from for TAing (probably undergrad revenue + state taxes). The best solution here is state legislature passing legislation to increase what graduate students are paid, take the money out of the tax budget (seriously, 100% of graduate students at my university are below the federal poverty level, which just enables this stupid degrading benefit double-dipping to subsidize salaries), and provide benefits and treatment as standard state employees. However, universities have been sucking up cheap/slave graduate student labor for years and are completely addicted to it. They have ignored this demographic completely and most state universities cannot function without graduate students. Graduate students do research. Research attracts big researchers who bring in multi-million dollar grants for the NIH and NSF. The schools take 45%-65% off the top of each grant in the form of indirect cost recapture. That heavily subsidizes the schools. Also, high quality researchers brings in more, better undergraduates. All of this while grad students are paid $16k-$30k/yr, mostly without benefits, for extremely highly skilled technical work. When fewer and fewer Americans were going to graduate school in the 80s and 90s, rather than try to make graduate school more enticing, the US simply pivoted to the H1B system. The hilarious thing is many schools claim graduate student tuition is part of their compensation, and that's worth tens of thousands of dollars, but in reality, graduate student tuition is just being in a research lab doing work that benefits the university anyways. Most graduate students in science take 4-6 classes over ~5 years of graduate school - not worth anything close to what universities claim it is. And most grad students still have to pay student fees, while having reduced access to undergrad facilities (no dining hall, no dorms, no gym access at lots of universities, reduced health clinic access, etc).