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Monday, January 13, 2020

Monday, January 13, 2020

First Look at the Governor's UC Budget Proposal

By Eric Hays (CUCFA)

Governor Gavin Newson presented his 2020-21 state budget proposal last Friday. The full budget summary is here; the detailed budget for higher ed can be found here.

UC Board of Regents Chair John Pérez and UC President Janet Napolitano quickly put out a statement wherein they essentially thanked the Governor for his generosity. The concluding sentence is “UC appreciates the governor’s strong continued support of higher education and looks forward to our ongoing partnership.”

While there is something to be said for the politics of maybe getting more of what you want by being polite rather than by being rude, I think there is real harm in UC making such a public statement as it probably gives the public the idea that UC is being generously funded by the state while that is absolutely not true. And this proposed budget, should it pass, will simply make things worse.

Let me start by pointing out that California public universities are provided less funding per student than any state except Florida (see the "Total Education Revenue per FTE" data).

Governor Newsom can, and did, at the his budget release press conference point to a 5.8% increase in general fund base support for UC to try to make this budget proposal look generous, but that ignores so many things.  The first point to make about the increase in funding to UC is that this is a 5.8% increase only if you just look at the general fund base budget. In past budget years, the state has provided UC with substantial one time funds. This year there is substantially less one time funding. So, when you look at total state funding of UC, base plus one-time moneys, the overall increase to UC is actually 1.3% in 2020-21 relative to 2019-20. This compares to a 3.5% increase in state revenue overall,and a 2.2% average increase in state spending across all departments,
indicating that UC is not a priority in this budget.

To be fair, the table on page 25 of the budget summary link above shows that, at the macro scale of looking just at the grossest division of expenditures in the state budget, Governor Newsom is proposing cutting spending to almost every program in state government except Health and Human Services, which gets a 13% increase, K-12, which gets a 1.6% increase, and Higher Education, which gets a 0.1% increase.  

Public higher education, and UC specifically, then are getting a small increase in funding, but such a small increase will likely be completely countered by inflation.  More importantly, while funding is growing modestly, enrollment is growing quickly. University wide headcount grew from about 200,000 in 2015 to 222,493 in 2018.  State funding for UC would have to grow at least as fast as enrollment is growing if we were just to maintain the current funding per student (and remember, California is 49th of 50 states on this metric), and this low rate of growth in funding to UC is just not going to do it.

What's more, the budget numbers above don't consider big portions of UC's budget that the state has basically walked away from since the recession: namely paying for UC's pension and paying for facilities.

The state used to pay pension costs for UC's state paid employees. But, after the contribution holiday (when the UC Retirement System was more than fully funded such that neither employer nor employee had to make contributions into it for nearly 20 years) ended in 2010, the state refused to restart their employer contributions to UCRS. Note that the state continues to pay its share of retirement contributions for other state employees, such as faculty at CSU. As 
UC's 2019-20 budget proposal indicates, the state has shorted the UC Retirement System a total of about $3 billion since contributions restarted in 2010. (160)

Newsom's budget last year included a $3 billion supplemental pension payment to pay unfunded liabilities of the CalPERS retirement plan over fiscal years 2018-19 through 2022-23 plus $2.9 billion for CalSTRS (the K-12 teachers’ pension) to pay unfunded liabilities over the same period. Although at one point debated, in the end there was no similar debt relief for UCRS in last year's budget. This year's budget proposes accelerating the payout to CalPERS so that the 2020-21 through 2022-23 moneys would be paid in 2019-20 -- but still no money for UCRS.

For facilities, the state is short $20 billion in education and general facilities capital funding for UC -- the buildings and other infrastructure that UC needs for its core mission of teaching and research (about 1/4 of which is seismic repairs and upgrades, 1/4 is repairs and replacement of aging plant, and half is needed for expansion of educational programs caused by past and ongoing rapid enrollment growth).
The bottom line is that California public universities have long had to do more with less, causing real long term damage, and this budget proposal is not going to change that.


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