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Proposed Budget Cuts $1.4B from Higher Education

January 11, 2011

SACRAMENTO — Gov. Jerry Brown proposed a balanced, deficit-closing 2011-12 state budget Monday (Jan. 10) that relies on painful cuts in state services including a $500 million reduction in support for the University of California.

The 16.4 percent drop in state general fund support for UC would result in a historic shift in how California's public research university is funded: For the first time in UC's 143-year history, student tuition revenue will surpass what the state contributes to the university's core operating budget.

“The crossing of this threshold transcends mere symbolism and should be profoundly disturbing to all Californians,” said UC President Mark G. Yudof, calling it a sad day for California.

Funds would drop to 1998 levels
Brown's proposed state general fund budget will return UC to 1998 funding levels when the system enrolled only 161,400 students, 73,600 fewer than today's enrollment of 235,000 students.

The governor proposed a $2.5 billion general fund contribution to UC while the university estimates student tuition will contribute $2.7 billion in revenue. UC's core operating budget funds instructional costs, including faculty and staff salaries and benefits, energy expenses, campus building and lab maintenance, and financial aid.

“Undeniably, the governor's hand has been forced,” Yudof said. “He has produced, as he calls it, a tough budget for tough times, and the university will stand up and do all it can to help the state through what is a fiscal, structural and political crisis. There can be no business as usual.”

The $500 million cut to UC represents a “best case scenario,” said Patrick Lenz, UC's vice president of budget and capital resources, and is dependent on successful passage of Brown's tax extension package.

The governor's budget also includes a $500 million cut to the California State University and a $400 million cut to the California Community College system, resulting in a more than $1.4 billion reduction in state support for California's three public higher education systems. The budget would also raise community college fees $10, from $26 per credit unit to $36. Brown said he would keep public safety and K-12 funding stable.

“Given the vast demographic shifts underway in California, now is not the time to shrink public higher education, but to grow it,” said a joint statement from the leaders of the three higher education systems. “The road to recovery from this recession and prosperity far beyond it runs straight through our many campuses. These universities are the economic engines of California.”

UC prepares
Yudof said he will be giving budget reduction targets to the 10 campus chancellors and the Office of the President and asking them to come back in six weeks with plans to meet those targets. His main priority, he said, is to protect as best as possible the quality of the university's core academic and research missions.

“My preference at this point, and my sense of where the Board of Regents stands on this issue, is to not seek an additional fee increase,” Yudof said. “That said, I cannot fully commit to this course until the board and I have assessed the impact of permanent reductions on campuses.”

Yudof said he hopes to protect funding for financial aid and to press forward with the systemwide initiative to save $500 million in administrative costs over the next few years. Those savings won't be enough, he acknowledged.

“With the governor's budget, as proposed, we will be digging deep into bone,” Yudof said.

Most state sectors face pain
Brown proposed a 2011-12 fiscal year state spending plan that seeks to eliminate a budget gap of $25.4 billion and includes a rainy day fund of $1 billion. The $127.4 billion budget he introduced Monday slashes $12.5 billion in spending. Those cuts include 8 to 10 percent cuts in most state employee paychecks and steep cuts in funding for Medi-Cal, welfare-to-work, developmental services, childcare subsidies for low-income families and other programs.

“What I propose will be painful,” Brown said today. “It will require sacrifice from every sector of the state, but we have no choice. For 10 years, we've had budget gimmicks and tricks that pushed us deep into debt. We must now return California to fiscal responsibility and get our state on the road to economic recovery and job growth.”

Brown also will ask taxpayers to approve a five-year extension of the current levels of income and sales taxes and vehicle license fees.

“We're going to face the music,” Brown said in response to media questions about what would happen if voters don't pass the continuation of the tax increase. “If we don't have the taxes, it will be draconian.”

UC funding steadily declining
The dramatic cutbacks proposed for higher education in 2011-12 come on the heels of three years of severe state cuts and a 20-year decline in California's per-student UC funding, which has dropped 57 percent since 1990. UC had a 20 percent cut in state support in 2008-09.

As state funding has declined, demand for a UC education has increased, with the number of applications for fall 2010 the highest in the university's history.