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Saturday, October 9, 2010

Saturday, October 9, 2010

Losing Greater California

The University of California's permanent base budget share of the General Fund for 2010-11 will be about $100 million below expectations. This bring in the budget somewhat below the 2006-07 level in nominal dollars. I'll discuss the UC situation in more detail below, but will start with the overall state situation, which is even worse.

Commenting on the new budget and its $1 billion in last minute gubernatorial line-item vetoes, Palladium wrote this on the Sac Bee site:

Probably the worst Governor in California's history will soon be a thing of the past, only to leave the state torched, plundered and dying from his mostly inept handling of the state's affairs. A legacy of lies, treachery, deception, mistrust, favoritism and bullying litters the landscape left behind. It appears a brutish barbarian-like THUG and his closed-door cronies have all but bankrupted California to appease their baser impulses. True to the end - doesn't even get the last budget done without causing suffering and misery to tens of millions of Californians. California can flush its toilet - good riddance!
California will still have great mountains, beaches, and deserts, but "baser impulses" have wrecked the only thing that ever made its society special:  the use of state government for public development, sometimes at full throttle. 

Taxes in post-war California weren't meant only, in the low-brow contemporary way, to create a "safety net" to keep the absolute worst from happening. Taxes expected the best to happen --the country's best roads, best hospitals, best schools, best public universities.  All this was for a population that had through no fault of its own suffered through the Great Depression and World War II, and was now going to collaboratively develop itself into something really special.

Both the vision and the reality of Greater California are being systematically destroyed by the state's current crop of sorry political leaders, while its business and educational counterparts are standing by looking on.  The justification is always the same: California government costs too much and the state is broke.  Commentators like the Los Angeles Times's Michael Hiltzik and UC Berkeley Political Science Professor Bruce Cain repeatedly show this claim to be false: for example, California is 18th in overall tax burden, and 49th of 50th in ratio of state employees to the state population.  Neither the facts nor the damage seem to matter.  (See also the "Cuts Report" pp 6-7).  The Governor has suspended the funding provisions of Proposition 98 (guaranteeing school funding levels), and the California Budget Project reports that the budget agreement requires a 2012 ballot measure proposing a budget cap and budget "reserve" like those rejected by voters as Propostion 1A in 2009.  The budget agreement also reduces pension payouts for state employees, which has been an obsessive goal of the budget stalling and squeezing through the Schwarzenegger administration.   This puts pressure on UC to reduce its pension benefits as well.

Meanwhile, the state's crash and burn in educational attainment makes unimaginable a return to California's world-leading levels of technological and sociocultural innovation.  (California is now also 49th in the share of its population aged 25 and over that has a high school diploma.)  A generation of Republican politicians have made the Grover Norquist no-tax pledge the centerpiece of their public policy, and this unending one-way cutting of public funding, having eliminated $32 billion from the state budget during the Schwarzenegger administration,  is the most important source of the state's well-documented "race to the bottom."

Americans who travel to Europe and Asia notice quickly that American infrastructure is no longer internationally competitive.  Whatever their aims were during the sunny, Reagan period of attacks on big government, Republican no-taxers now hack away year after year at the most vulernable and the young.  The only apparent end point for the former is widespread Dickensian misery. Describing Gov. Schwarzenegger's $1 billion in line-item vetos, the Sac Bee coverage notes,
A $256 million reduction in child care funds for low-income, former welfare-to-work participants who have found work.

• An $80 million reduction in funds for child welfare services meant to boost efforts to investigate child neglect and abuse. The veto leaves funding at last year's level.

• A $133 million reduction for provision of mental health services to special education students, which essentially shifts responsibilities for such services from counties to school districts. . ..

The governor's other blue-pencil cuts targeted community clinics, women's and children's residential treatment services, community-based services for the elderly, and treatment of prostate cancer and substance abuse.
The state also throw 45,000 low income people out of work by closing a crucial job program that Congress didn't refund.  Etcetera

As for the young, their leaders, who mostly went to UC and CSU more or less for free in the 1960s and 1970s, have no intention of maintaining the conditions that created one of the most optimistic and productive societies in history. First to go from the negotiations was the partial buy-out of a 15% fee increase.  What does remain is bare bones.  UC's budget press release ritualistically celebrates its good fortune and praises Sacramento's profound commitment to higher education.  But the state does not agree to pay for the UC employer share of contributions, which means that another chunk of student tuition will need to be moved from instruction and other areas of operations into the pension fund.  (The state does delete language that prohibted a future contribution, and calls for constructive future talks on the subject.)   UC currently spends about $152 million of its own funds to support students whose enrollment the state does not actually fund, and one improvement this year is getting $51.3 million in new enrollment money.  Finally, UCOP had asked for a $305 million supplement, which would have restored about half of the $637 M cut (20%) in 2008-09, and has received $199 million (see p 25).  The press release states that one-time stimulus funds will bring the total to $305, but the September presentation was more candid about what this means:
In an effort to find monies to close the $4 billion remaining budget gap, the Legislature could reduce the $305 million in permanent State General Funds in the current version of the Conference Committee budget by
$106 million and use the one-time ARRA funding in its place. This would negate the understanding with the State that UC would receive a $305 million in ongoing State General Fund revenue as part of the budget restoration in 2010-11.
UC's 2010-11 General Fund share will come it at a bit under $2.918 Billion. This somewhat less what UC received in nominal dollars in 2006-07. It's better than the zero restoration predicted by some of our readers, but it is bad.  The "per student disaster" we charted last summer remains in play. UC is in effect in a funding freeze scenario, but without the undesirable ramp-up in student tuition that would in a bad way have provided future budget stability.

Regent Russell Gould's "death spiral" has slowed down this year, but its direction hasn't changed at all.  The entire discussion needs to be stood on its head, and start from the educational goals of faculty and students.  I'll come back to this in a following post.


AndrewD said...

"UC's 2010-11 General Fund share will come in at a bit under $2.918 Billion. This somewhat less what UC received in nominal dollars in 2006-07."

More strikingly, this is less than UC received (again in nominal dollars) in 2000-01 (about $3.2 billion), when the University had about 30% fewer students than it does now.

Unknown said...

I still think you have to give Arnold credit for trying to fix the structural deficit -- he actually cut a deal with the Democrats last year and convinced Maldonado and a handful of moderate Republicans to go along with a sizable one-time tax increase. That avoided a lot of pain and he bucked his own party. The voters didn't make it permanent and the mood this year is such that he couldn't do it again. But it could have been much much worse if Arnold had been a true right winger as opposed to a centrist. That's why eliminating the 2/3rd requirement is so key for the future.

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