Is Higher Education a Budget Priority?

The previous edition of California Budget Fact Check analyzed whether K-12 education was a state budget priority.  This edition examines whether funding for California's public colleges and universities is truly a budget priority for the Legislature and the Governor. 

Was Higher Education Cut Due to Lack of Revenue?

Recently at the Capitol, the debate over higher education funding took center stage.  It was argued that declining revenues and the rejection of tax increase proposals have resulted in fee increases and funding cuts.

But a closer look at higher education funding shows that cuts to higher education were not a result of a lack of revenue.  Tax revenue actually increased significantly last year, and is estimated to increase again this budget year. 

Higher education cuts actually came down to a question of budget priorities, both in the majority vote budget plan enacted last summer and in the Governor's proposed 2012-13 budget.

Consider that:

· Higher education funding was targeted for massive cuts in the majority vote budget, $1.7 billion, while funding to fast-growing health and welfare programs was increased by $3 billion.

· The Governor's tax increase proposal will not boost funding for programs in California's public colleges and universities.

· Higher education funding is often targeted because it lacks guarantees in the state constitution or court rulings mandating funding that other budget priorities currently enjoy.

The 2011-12 Budget

The 2011-12 budget assumed that revenues grew $3.5 billion in 2011-12 more than the Governor projected in his January  Budget.  Revenues grew $7.5 billion over the two fiscal years (2010-11 and 2011-12).  While other proposed cuts were shelved in light of the improving economy, higher education took a $1.7 billion hit, the biggest year over year cut of any program. 

The first $1.4 billioni cut was part of the original budget vote in June (Senate Bill 87, Chapter 33, 2011).  The additional $300 million cut was part of the trigger cuts imposed in January (Assembly Bill 121, Chapter 41, 2011).  At the same time, health and welfare spending has grown by $3 billion year over year.ii

The 2012-13 Budget

The University of California and California State University systems will not see any increased programmatic funding even if the Governor's $6.9 billion tax increase is passed by voters.iii  The Governor's budget keeps higher education programmatic funding flat year over year.  (The Governor does propose a $90 million increase for UC.  The Administration notes that this $90 million may be used to offset higher pension costs).iv

Trigger Cuts

Under the Governor's trigger proposal, higher education would again be targeted for significant cuts. (Note: The Governor projects that Big Three tax revenues (sales, income and corporate taxes) are expected to grow $4.8 billion even without tax increasesv. The University of California and California State University systems would not receive any of this anticipated growth in revenue for programs.) Education is targeted for 97 percent of trigger cuts.  The University of California and the California State University systems would each be cut by $200 million.vi 

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i Legislative Analyst's Office

ii Health and welfare spending continued to grow at a rapid pace.  In the 2010-11 budget, health and welfare spending hit $26.6 billion.v  According the Governor's January 2012 budget, adjusted health and welfare spending in 2011-12 has grown by $3 billion, to $29.6 billion.  Under the Governor's plan, $2.9 billion of those expenditures were realigned to local agencies as part of the Governor's realignment proposal in October.  These programs continued to be funded by a portion of the state sales tax that was previously used to fund these very same General Fund programs.  No programs were reduced as part of the realignments.

iii Governor's Budget Summary-2012-13, page 8

iv Governor's Budget Summary-2012-13, page 149

v Governor's Budget Summary-2012-13, page 17

vi Governor's Budget Summary-2012-13, page 9