Financial Fate of UC in State of Limbo

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As state leaders craft a revised budget for May aiming to fill an $18.6 billion hole, the University of California eagerly awaits its future, hoping to avoid the $637 million cut it faced last summer.

This cut led the UC Board of Regents to reduce student services, furlough faculty and increase student fees by 32 percent last November.

In response to these measures, approximately 5,000 people rallied on Sproul Plaza on Sept. 24, and on Nov. 20, the day after the increase was approved by the Board, 43 protesters staged an occupation of Wheeler Hall, while a number of supporters among an estimated crowd of 2,000 clashed violently with police outside of the building.

The decisions of state lawmakers regarding the state budget in the next few months will carry vast fiscal implications for the university.

Faced with California's $18 billion deficit, Gov. Arnold Schwarzenegger and the state department of finance will re-craft his proposed January budget after an estimated $10.5 billion in personal income tax revenue comes in during the month of April, according to department spokesperson H.D. Palmer.

The state's fiscal future will depend largely on the amount of tax revenue that comes after April 15, the deadline for turning in tax returns. This "big surge" in personal revenue will shape Schwarzenegger's new budget, Palmer said.

"It's the cruelest month for the tax payer and the most crucial month for the state," Palmer said.

Though State Controller John Chiang's office has projected a $2.3 billion increase in state general fund revenue compared to March 2009, the new funds will do little to change the bleak fiscal outlook for state, according to Mac Taylor, the state's non-partisan legislative analyst.

"Even if everything breaks in California's favor in the coming weeks-a gas tax swap agreement is reached, revenues surge and the federal government delivers more funds-the budget problem that the Legislature would need to address would only be reduced by about $7.5 billion," Taylor said in a letter to the legislature's budget committee.

Up to 60 percent of any new revenue that the state generates will automatically go to K-12 schools, in accordance with Proposition 98, which guarantees a funding minimum for primary schools. This will leave all the other state services vying for the remaining funds, Taylor said in the letter.

Beyond the Tipping Point

Going into the revision of the budget, the UC system, along with the California State University system, fare better than other state services.

Schwarzenegger's January budget restored close to $370 million in cuts to the University of California from the 2009-10 budget year but fell short of the $913 million in funds the university had requested from the state in November.

Nonetheless, UC President Mark Yudof called the restoration of the cuts and a proposed constitutional amendment that would guarantee at least 10 percent of the state general funds for higher education "clear evidence that (Schwarzenegger) understands the vital role public higher education plays in California."

In an interview with The New York Times, Susan Kennedy, Schwarzenegger's chief of staff, called the student protests that erupted throughout the state in the fall the "tipping point" in making the decision to prioritize the state's university's systems.

UC officials hoped to harness the energy of the student protests when they joined the University of California Student Association's annual lobby day on March 1.

Students and officials from the UC, CSU and community college system are meeting with lawmakers again April 27.

"There is a lot of solid support for the university (in the legislature)," Yudof said in an interview leading up to the lobby day. "We have really paid our dues. We haven't just appeared with an empty bowl and said 'more, more.' We have taken some tough actions and improved our legitimacy."


Javier Panzar covers higher education. Contact him at [email protected]

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