Governor’s budget offers no money for growth; regents to consider capping enrollment

Gov. Arnold Schwarzenegger proposes to permanently reduce the UC budget by $65.5 million and pass over the UC regents' request for money to cover enrollment growth and prevent the need for a student fee increase.

 

In response to the governor's budget plan, the regents will hold a special joint meeting via teleconference on Wednesday, Jan. 14, to consider options for curtailing freshman enrollment at UC campuses for 2009-10 due to insufficient state funding. Details of the proposal will be made available online later this week.

 

At their November 2008 meeting, the regents approved a 2009-10 budget proposal that asked the state for money to cover unfunded student growth for 2008-09 as well as the anticipated increase in students for 2009-10. They also adopted a resolution stating that UC freshman enrollments for next fall will be curtailed if the state does not provide sufficient funding. UC currently enrolls 11,000 more students than it receives state funding for.

 

Yudof, the regents and the chancellors got an early peek at the governor's 2009-10 budget when the Department of Finance released a narrative portion of the plan last week. Although the department's analysis does not provide complete details, which are scheduled to be released next week by the governor, it does provide information on major elements affecting UC.

 

The governor's plan would pose further challenges to the campuses, said UC President Mark G. Yudof in a statement released Monday, Jan. 5. But he added, "The outlook is not entirely bleak. The budget avoids dramatically deeper cuts from present levels for the university's core academic operations, and it includes some bond funding for critical facilities projects. I believe these actions signify the governor's understanding of higher education's role in stimulating economic recovery."

Steve Olsen, UCLA vice chancellor of finance, budget and capital programs, remained cautious about the budget outcome. “UCLA is preparing for the possibility of larger state budget cuts than those proposed in the governor’s plan," he said. "The economy remains weak, and the state’s finances are precarious. We need to be ready if more bad news arrives.”

Schwarzenegger's budget plan does provide $20 million to restart the state employer contributions to the UC Retirement Plan. Because of the economic turmoil, the plan is projected to fall below 100 percent funding. However, the $20 million falls far short of the regents' request for $228 million from the state, assuming a 2 percent employee contribution and a 9.5 percent UC contribution, scheduled to resume in July.

Because $20 million would not cover the state's contribution for the full year, the regents will need to revisit the issue and discuss options in February to determine when contributions should start and by how much, Yudof said in a memorandum to the regents and chancellors.

It's clear that the absence of funding in the governor's plan, if adopted, would "create substantial challenges for the university, coming on top of the historic underfunding that has affected all segments of public higher education in California," Yudof said.

In his 2008-09 UC budget plan released in January 2008, the governor proposed a $97.6 million cut for UC. In his revised budget in May 2008, he restored that funding. The final budget for 2008-09 included a one-time cut of $33.1 million. In addition, as part of the special session budget reductions, the governor and Legislature approved a permanent cut of $65.5 million. In his 2009-10 budget plan, the governor proposes to permanently continue the $65.5 million reduction, but to restore the one-time $33.1 million cut.

The total funding package he proposes for UC is $20.2 billion. Of that amount, nearly $2 billion will come from student fee revenue that includes a 9.3 percent increase in mandatory systemwide student fees. That increase would generate $166.1 million.

This will come at a time when many families are struggling, Yudof noted. "The regents will discuss these issues further before settling on final fee levels for 2009-10, and we will continue to pay close attention to the role of financial aid in reducing the 'sticker price' of student fees for many families. We will seek to preserve affordability to the greatest extent possible given the multiple financial pressures on the state and the university."

Yudof also noted that, as in 2008, there is no funding in the 2009-10 plan to support UC's and CSU's compact with the governor. Although on the one hand, the Department of Finance provides UC with $209.9 million in the plan, the department then deletes it as an "unallocated reduction."

"This action will severely constrain the university's ability to fund student access, compensation increases, or funding augmentations for health benefits, energy costs or other instructional budget priorities," Yudof said.

The proposed budget also includes significant reductions in Medi-Cal payments and eligibility, all part of the state and federal health care program for low-income Californians. UC medical centers could lose approximately $14 million if the rates are reduced and another estimated $11 million if program eligibility is reduced.

Medical center administrators are now making a fuller assessment of the impact, Yudof said.

Schwarzenegger's plan also includes $25.3 million in funding to build out an area in the vacated Center for Health Sciences for several elements of UCLA’s telemedicine project.

 

To read Yudof's entire statement on the governor's 2009-10 budget plan, go here.