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Governor's Budget Proposes Education Cuts to Address Deficit

Gov. Arnold Schwarzenegger on Thursday proposed a 2008-2009 state budget that includes across-the-board cuts in state spending, including reductions at the University of California, to address a projected $14.5 billion state budget deficit. The governor's proposal would increase funding under his "compact" with the UC system, but then apply a reduction of $332 million, or 10 percent - the same percentage reduction proposed for most state General Fund programs. That would leave UC with a net state funding reduction of $109 million, or 3.4 percent, compared with the current year. However, it also would leave state funding more than $400 million below the level of the Regents' proposed budget for 2008-09. The governor's plan provides flexibility to the University in determining the allocation of the $332 million reduction, but anticipates the cut will impact student enrollments, student fees and individual programs. The governor's proposal calls for about 10 percent of the reduction to come from administrative spending and urges that cuts to instructional programs be minimized. The governor's budget does not provide funding for a student fee buyout and assumes a student fee increase of at least 7 percent in 2008-2009. "This budget proposal will have serious impacts on our ability to deliver on our mission for our students and for the people of California," said UC President Robert C. Dynes. "State funding for the University is not an expenditure, but an investment - an investment that produces real returns through an educated workforce, a dynamic economy, job creation and new tax revenue. "We appreciate the magnitude of the state's current budget problem, and we intend to examine this proposal closely in consultation with the Regents, beginning at their January meeting. And then we intend to work energetically with the governor and Legislature in the coming months to minimize the impact, to the greatest extent possible, on the quality, affordability and public benefit of the University's programs." The Board of Regents will begin discussing the state budget and possible responses to the governor's proposal at its regular meeting next week. The board is not expected to act on budget decisions or set student fee levels for next year until a future meeting. The governor's proposal is for the fiscal year beginning July 1, 2008. The Legislature will consider the governor's budget and make proposals of its own during the spring. The governor and Legislature typically adopt a final state budget in the summer. The governor's proposal does not include midyear budget cuts for UC in the 2007-2008 fiscal year. The Regents in November had adopted a 2008-2009 state-funded budget request for the UC system aimed at addressing the University's needs in the areas of student enrollment, research, faculty and staff compensation, graduate student support, academic preparation, student mental health services, and other areas. Under the governor's proposal, however, UC's state funding in 2008-2009 would fall more than $400 million below the amount requested by the Regents. Of that amount, $70 million is assumed in the governor's budget to be backfilled by student fee increases in the 2008-2009 fiscal year. The governor's plan first assumes funding of the "compact" - a 2004 agreement between the governor, UC and California State University that outlines anticipated funding increases for each university over a multiyear period - representing an increase of $223 million. But it then makes a reduction of 10 percent or $332 million. The governor's budget proposes that $32 million of the $332 million reduction be taken from administrative spending at campuses and the UC Office of the President. Raising Student Fees Beyond that, the governor's budget says, "the remainder is unallocated to allow the Regents the flexibility to meet the reduction in a way that minimizes impacts to core instructional programs. It is anticipated that the Regents will address this reduction through a combination of fee increases, limitations on enrollment levels, increased efficiency and reductions to other existing programs, including research, student services, academic support and public service programs." The governor's budget assumes student fee increases of 7 percent in the educational fee and 10 percent in the registration fee in 2008-2009. These would amount to a total increase in mandatory systemwide fees of $490 for resident undergraduates and $546 for resident graduate academic students. It also assumes increases in differential professional school fees already approved by the Regents and summarized here. However, the governor's budget also notes that because of the proposed budget reductions, "it is possible that the Regents will act to increase fees beyond these levels." The Regents will not set fees until a future meeting, the timing of which has not been determined, after deliberating on the budget and considering the availability of financial aid. The governor's budget does not include funding requested by the Regents for additional climate change research and for the "Educational Imperative," a proposed research-based, technology-focused, policy-informing approach to address California's K-12 educational attainment challenge. UC will continue working to develop the initiative and will continue seeking funding sources for it. Outside the area of state general funds, the governor's budget proposes using $5 million in state transportation funds for the multicampus UC Institute of Transportation Studies. This increase is intended to fund development of integrated land use and transportation models that can measure the impact of actions by local governments on greenhouse gas emissions. In addition to the operating budget, the governor's plan includes state funding for capital improvements of $388 million in 2008-2009 for UC facilities needs, subject to legislative approval. These resources would be used to address growth, life safety and infrastructure renewal needs on UC campuses. Of this amount, $336 million requires voter approval of a new bond measure. Recognizing that UC's capital outlay needs far exceed available funding, the governor has proposed that the next general obligation bond include an additional $50 million per year above the $345 million per year that has been provided in recent years, a proposal welcomed by the University. Source: Ricardo Vázquez, UC Office of the President Related Link: Governor's budget