State Budget Stable for Now

Gov. Brown’s 2013-14 budget calls for increased spending towards education and health care, while projecting a rare surplus.

 

Gov. Jerry Brown declared the end of the California budget deficit as the state unveiled its budget for the 2013-2014 year. It will include an $850 million surplus instead, along with boosts in spending for higher education and health care reform, and it has been seen generally as a positive step forward for the state.

Gov. Brown pointed to the budget reductions in the last two years, and the increased temporary tax revenue from Propositions 30 and 98, as key factors in achieving a more stable budget.

Both K-12 and higher education will not be subject to spending cuts for the first time since 2008 in the $97.7 billion general fund budget. Gov. Brown also proposed an additional $250 million each for the University of California and California State University systems. This includes $125 million that had been promised in return for the institutions’ decision to not raise tuition this year, despite a $750 million reduction in state funding.

The Cal Grant program in particular will see an increase from $61 million in 2012-13 to $161.1 million in 2013-14 to reflect increased participation in the program. The budget also attributes $19.5 million of the 2013-14 amount to the first year of implementation of the California Dream Act.

The budget notes that the increased revenue alone from taxpayer dollars will not solve the budget problems for higher education institutions, especially when the cost growth of the UC and CSU outpaces the state’s income growth. State support alone will not be enough to stabilize tuition and fee costs or maintain the quality of education, and the UC, CSU and community colleges must continue to implement reforms in lowering their costs, decreasing the time it takes to earn a degree and increase graduation rates by deploying resources more effectively.

One of the reforms included in the budget is a unit cap for students who receive state General Fund support. While the proposal is geared to shorten students’ “time-to-degree,” reduce costs for the students and the state and increase access to more courses, some students have expressed their uncertainty.

“Our problem is in affording the UC while we are here, not in staying multiple years after we should have been done,” Raquel Morales, University of California Student Association president and fourth-year UC San Diego student, said. “We have questions about the unintended consequences of this proposal and are unsure about the cost savings involved or the impact on students.”

For the long term, the budget lays a foundation for a multiyear stable funding plan for higher education. The state’s General Fund contribution to UC and CSU will increase by 5 percent per year in 2013-14 and 2014-15 and by 4 percent in the subsequent two years. With the combination of the increases in the General Fund and reforms to boost efficiency, the budget projects stable tuition and fee levels over the next four years.

“We share Gov. Brown’s interest in stabilizing tuition and will explore every opportunity to do so while continuing to press forward with efficiencies under our Working Smarter initiatives and pursuing new sources of revenue,”  Patrick Lenz, the UC vice president for Budget and Capital Resources, said.

Lenz also pointed out that tuition revenue covered only about 38 percent of the budget gap resulting from cuts in state funding, and the rest was met through cutbacks and alternative revenue sources. The goal of the university is to provide spaces for “all eligible students wishing to attend UC,” he said, and nearly half of all resident UC undergraduate students pay no tuition.

“In the end, however, the university must always work to assure that the fundamental attribute remains intact, and that is the quality of education, research, health care and public service the state has come to expect from its university,” he said.