Following a $100 million trigger cut to the University of California system last month, Governor Jerry Brown announced a state budget plan last Thursday including a tax increase initiative aimed at preventing additional tuition increases.
The governor has already announced new methods that would provide more abundant funding, including a November ballot initiative that partially raises the state sales tax in order to increase the general funds of UC and CSU budgets. Last month, Brown responded to a $2.2 billion shortfall in expected state revenue with last-minute “trigger cuts” to education and social services, including a $100 million cut in the UC’s budget. The UC Office of the President plans to absorb the cut and prevent possible mid-year tuition hikes by taking from employee health care reserve funds.
UCOP spokesperson Dianne Klein said employee healthcare reserve funds will not be used to pay off budget cuts in the future, stating that the measure was an unlikely one and mid-year budget deductions do not occur often.
“We searched high and low and found a way to absorb the cut,” Klein said. “It’s an extremely unusual measure and we won’t do it again. We can’t do it again.”
The finances used to offset the cut were the best source of funding the UCOP could find since they are not usually necessary, Klein said.
“We had [the funds] reserved from the health plan as part of prudent business practices,” Klein said. “If [health] prices rise really unexpectedly, [employees would] have money to handle that. It was formed on a one-time basis.”
In addition to paying off the mid-year cut, Klein said UCOP plans to collaborate with the state government to establish other measures to avoid tuition and fee increases and better fund the UC system.
Without the tax increase, higher education will indefinitely face more budget reductions and raised tuition costs, according to H.D. Palmer, Deputy Director for External Affairs at the Department of Finance.
“In the budget the governor has just proposed, it assumes that voters will approve the new initiative,” Palmer said. “If that measure was not to be approved, then nearly $4.5 billion in trigger deductions would take place. And with that, there will be $200 million cuts to the UCs and CSUs.”
In addition to preventing tuition increases for the next school year, the tax increase would also allow annual 4 percent increases in the general funds of the UC and CSU systems beginning in the 2013-2014 fiscal year, Palmer said.
In the new budget summary, Brown emphasized such increases are the only viable source for funding to save the UC and CSU campuses from additional cuts.
“The stark truth is that without some new taxes, damaging cuts to schools, universities, public safety and our courts will only increase,” Brown said in the summary. “That is why I will ask the voters to approve a temporary tax increase on the wealthy, a modest and temporary increase in the sales tax and to guarantee that the new revenues be spent only on education.”
With Brown pushing increased funding for public education, the power to allow such funding to actually go forward lies in the hands of California voters, according to Associated Students Executive Vice President for Statewide Affairs Ahmed Mostafa.
“If we do end up putting it on the ballot and it doesn’t pass, then we just end up having to blame ourselves as the people of California,” Mostafa said. “We need to let the people decide, if the legislators [are willing to] step up and do it.”