What the Governor's proposed budget means for UC

by Eric Hays, Executive Director, Council of UC Faculty Associations

The budget forecasts a hole of about $9.2 billion that will need to be addressed with cuts or tax increases. Brown is proposing to split the difference, with about half of the hole filled by cuts (mostly to social service programs) and half by his proposed tax increase (a temporary increase of the income tax on those making $250,000 or more a year and an half percent increase in the sales tax, increases that would expire by 2017). This year Brown is taking his tax proposal to the voters through a ballot initiative rather than try to get the legislature to pass a tax increase. There is another budget trigger in this year's budget that will fire if the voters do not approve the tax increase (more on that below).
The budget proposal treats the post-trigger 2010-11 state budget as the base, so the $100 million cut that UC just officially received last month is counted when calculating the base UC budget of $2.274 billion, the lowest funding UC has received from the state (when you count federal American Recovery and Reinvestment Act money) since the 1999-2000 budget, without even adjusting for inflation or considering the increases in enrollment that have occurred in the intervening years.

To this base, Brown proposes adding $90 million, which can be seen as an acknowledgement of the state's obligation to begin again contributing towards the UC Retirement Plan. The budget also eliminates almost all categoricals in UC's funding –- the language specifying specific programs the state expects UC to spend certain of the state budgeted money on -- which the Governor's budget characterizes as increasing UCOP's flexibility in how it manages recent cuts in state funding. But this includes no longer separately budgeting UC's capital costs, which is to "require the University to factor these costs into UC's overall fiscal outlook and decision making process."

The budget proposal makes major cuts to student financial aid that would eliminate funding for tens of thousands of students currently receiving financial aid.

If the Governor's tax proposal fails to pass and the trigger gets pulled, most of the cuts -- $4.8 billion – would be made to K-14, but UC and CSU would each be cut $200 million, which the budget anticipates would likely result in tuition increases at each system.

In a separate document, the Department of Finance has indicated that there is a plan to provide UC and CSU four percent increases in state funding each year starting with the 2013-14 fiscal year, assuming the Governor's tax proposal passes.