The Faculty Association monitors the UC budget process and lobbies on behalf of faculty interests when the budget is discussed in the Legislature. We were pleased that the Governor’s proposal reflected faculty concerns in the Regents’ 2000-01 budget, such as a proposed 3% COLA for faculty. We were, therefore, shocked by the recently released report from the Legislative Analyst’s Office (LAO) in which drastic cuts to UC’s base budget are proposed. UCOP has announced that should these reductions be approved, UC would need to reduce the proposed faculty COLAs from 3% to 1%. The LAO made these recommendations despite predicting that the strong economy will produce $4.2 billion more in tax revenue than expected in the Governor’s budget. Among the proposals, the LAO says that the state should spend more money on K-12 and less on UC and CSU. The FA concurs with a comment by Sacramento Bee columnist Peter Shrag that with such a strong economy, there should be money enough available to strengthen K-12 without reducing the higher education budgets. Both UC and CSU presented arguments against a number of other significant cuts in the Governor’s proposal for higher education at a Senate Budget committee hearing on Feb. 23. In the interests of brevity, we present in this report details of a few specific cuts affecting UC (not including capital projects and not including cuts or adjustments to CSU) followed by UC’s response in the text below. The Senate committee took no action; they plan to meet again on March 8. The Faculty Association representatives are preparing a “white paper” to present to the legislators to oppose the cuts. We invite your comments.
The LAO proposes that the Legislature should:
- Shift $82.6 million in General Fund support from UC to K-12 and community colleges to equalize base increases at 2.84 percent.
- Reduce General Fund support by $17.1 million to reflect demographically based enrollment growth of 2.9 percent rather than the 3.6 percent included in the budget.
- Shift $71.3 million in General Fund support requested for K-12 teacher professional development institutes to K-12 schools to give them greater flexibility in meeting their accountability standards.
- Not endorse the proposed “partnership agreement” with the Governor which would provide an annual automatic 5 percent increase in UC’s base budget.
- Reduce General Fund support by $6.6 million to account for the fee-related support that UC will obtain for the additional students above the amounts assumed in the marginal-cost funding calculations.
- Deny the budget request for a one-time augmentation of $25 million to UC teaching hospitals for the purchase of medical equipment because the LAO’s analysis of the hospital’s recent financial statements indicates that the hospitals are generating sufficient funds to purchase this equipment.
- Direct UC to increase total fees paid by nonresident students by 4.5%. This would add $2million to UC’s fee revenue and result in a $2M reduction in General Fund costs. Also require UC to report on its policies for fees and grant aid for nonresident students because the LAO claims UC is providing virtually the same amount of grant aid to nonresident students that it receives from them in fees.
- Deny UC’s request for $1.1M to hire staff to begin planning for a UCSC off-campus center in Santa Clara because UC has neither shown a need for the center nor gone through the established process for new center proposals.
- Adopt budget bill language that provides full marginal-cost funding for all enrollment growth at UC regardless of the season in which it occurs; appropriate $12M to UC to reduce student fees in the summer to the same level as for other quarters; and expect reports from UC during the budget hearings on their plans for implementing year-round instruction.
UC’s Response:
In a statement prepared for the hearing, President Atkinson said that he could only describe his reaction to the LAO report as one of “grave disappointment.” He noted that the recommendations for UC are “not only mistaken but also troubling in the message that they convey about the priority accorded to higher education in California.” He delineated the possible effects by saying, “The Analyst’s recommendations to reduce our basic budget increase, change our projections on enrollments, and reduce the marginal cost would have the effect of:
- denying access for students who are eligible under the Master Plan-the LAO recommendation cuts out approximately half the funding needed to accommodate projected enrollment growth;
- preventing us from providing competitive salary increases for both faculty and staff. We planned a 3% COLA for faculty (based on the State-approved CPEC methodology) and 2% for staff. . .The LAO’s proposal would allow only a 1% COLA for faculty and staff;
- eliminating increases for research that will make the California economy more competitive. The LAO recommendation ignores the future revenue-generating aspect of our research proposals;
- eliminating increases for core needs, such as maintenance, libraries, instructional equipment replacement, and instructional technology-areas that, year after year, the Legislature has identified as high priorities.
He defended the K-12 Teacher Professional Development Programs by saying that the Governor proposed them because UC has a history of operating highly successful professional development programs for new teachers.
He stated that the LAO proposal makes no attempt to recognize the fiscal plight of our hospitals which are heightened by insufficient reimbursement for clinical care, disproportional responsibility for the poor and medical education costs, and compliance with SB 1953 (Hospital Seismic Safety Act). UC estimates the seismic problem alone to be in excess of $600M.
He asserted that the budget is built on funding principles contained in a preliminary version of the Partnership Agreement and that significant progress has been made on the accountability principles, with an expectation of finalizing the agreement with the Governor sometime this spring.
In response to the Legislature’s request for UC to assess the feasibility of year-round operations (YRO), Atkinson said that UC will submit its report by April 1. It will conclude that, in order to accommodate projected enrollment growth, UC will need to move to YRO. UC intends to begin operation of a State-supported summer term by the summer of 2001 and will request funding for the instructional program, using the marginal cost of instruction, just as for the regular year, at a projected cost of $50M. The YRO program will be phased in over a three-year period, bringing different campuses in at different times. Resolving the YRO issue is a very high priority for budget negotiations this spring.
He concluded his statement on the LAO report by saying that adopting the recommendations would “signal to the University and to the State that higher education is not a priority in California, despite the wave of enrollment increases already occurring. Such a signal would be a major setback to recruiting and retaining the best faculty and staff and ensuring an excellent education for our students. It is even more puzzling that such recommendations would occur in a year when the state’s economy is booming and revenue is exceeding expectations.” He urged adoption of the Governor’s budget.