On Jan. 18, UC Vice President of Budget and Capital Resources Patrick Lenz participated in a one-hour webinar, discussing Governor Jerry Brown’s proposed 2013-2014 state budget, which allocates an additional $125 million to the UC after years of state divestment.
Hosted by Larry Salinas of UC’s Office of State Governmental Relations (SGR), topics included the state of the UC’s budget, online education, funding for the UCR School of Medicine and cost-saving maneuvers such as the Working Smart Initiative.
In exchange for a one-year tuition freeze, the UC was promised a tuition buyout of $125 million for 2013-2014. At the same time, the passage of Prop 30 simultaneously prevented a one-time reduction of $250 million. Lenz identified the potential for “fiscal stability” for the UC that will result from additional funding, despite a loss of nearly a billion dollars over half a decade.
“UC received about 28 percent from the funding of the state in 1990 to 11 percent from the general state budget. When you look at the current year budget of $2.3 billion, it’s $900 (million) less than what we made five years ago,” stated Lenz. The UC is serving 70,000 additional students, despite operating on budget levels comparable to the late 1990s.
With high prospects of stable tuition levels and multi-year funding assumptions, Governor Brown’s budget includes an additional five percent increase, or $125 million, from 2013 to 2015 and four percent for the next two consecutive years. The anticipated impact on students include an increased student-to-teacher ratio and the continuing maintenance of campus resources, such as libraries and technological equipment.
The proposed state budget earmarks $10 million for online education, while the remaining $115 million will cover mandatory operating costs made by the UC. Apart from the expected funding, $5 million is already being funneled into the interactive UC online courses for the purposes of marketing. Nearly 1,700 UC students enrolled in 14 online classes within the last year, yet only six non-UC students have enrolled so far, according to the San Francisco Chronicle.
Provisions of the budget include capping UC enrollment at 225 units and halting state-subsidized tuition as a way to encourage expedited graduation rates and increasing class accessibility for transfer students.
Another question involved the possible impact of Senate Bill 15 and Assembly Bill 67—a set of Republican bills introduced in early January—which would freeze UC tuition for seven years, in accordance with Proposition 30. The Legislative Analyst office estimates a $6 billion increase in tax revenue for Prop 30, but it is not entirely guaranteed to the UC and CSU system.
Due to rising energy and health costs, Lenz was weary about the freeze, due to the UC’s history of inconsistent state funding. “I would contend that students and families would benefit from a modest but predictable tuition increase that’s somewhere between the 3 to 5 percent range annually,” he said.
Despite fluctuating student fees seen on an annual basis, the UC has continually catered to low-income households by providing generous financial aid packages. Through the Blue and Gold Opportunity Plan, eligible households making less than $80,000 a year—approximately 45 percent of all UC students—have tuition costs covered.
Disregarding the anticipated funds from the state budget, Lenz noted that, “Any significant economic downturn would increase the overall structural deficit because the assumptions on the general funds revenue just aren’t going to materialize…from the governor’s budget.”
The lack of additional funds for capital facility projects and the UCR School of Medicine (SOM) was also a topic of concern addressed by Lenz. “I think about the kind of provider services and community-based medical delivery that they’re doing and I think that’s extremely beneficial. There’s already two bills that’s been introduced in the legislature to appropriate $15 billion to the School of Medicine,” stated Lenz, along with additional credit that is provided by UCOP; UC President Mark Yudof has pledged to provide support for the medical school.
Based on the UC expenditure plan of $584.3 million, the state budget also assumes a three percent merit increase for all employees. According to Lenz, unfunded pension liabilities—$800 million out of the total UC budget of $24 billion—will undergo reform on July 1, where new employees are expected to fall under a certain retirement age.
Questions were raised over an expanded workload spread amongst a limited number of faculty members, despite increasing class enrollment. Lenz responded, “We are a research university and we need to be mindful that research provides additional funding in times of fiscal trouble. Research is valuable of economical viability of state of California in the future.”
Lenz also emphasized the need for debt restructuring within the span of a decade, expected to generate $80 million in additional revenue for each year. Cost-saving programs, such as the Working Smart Initiative, reportedly save UCOP $281 million over the last two and a half years, through increased efficiencies and reduction of administrative costs.
“We recognize that even with the funding that we’re getting from the state, that it’s not as much as we hope for….so there has to be a balanced understanding of the budget as a whole as we move forward,” stated Lenz, who expressed signs of optimism. “I do believe that we continue to make our arguments about UC’s economic viability to the state, which only generates more tax dollars, which only helps support those other programs other than the University of California.”