The University of California Office of the President (UCOP) presented its 2015-16 budget at the monthly University of California Student Association (UCSA) meeting Saturday at UC Riverside.
UCOP Interim Executive Director for Budget and Director of State Government Relations at UC Berkeley Kieran John Flaherty presented the UCOP’s proposed 2015-16 budget and displayed connections between the California State budget and the UC budget. UCSA also reviewed the May Revise of the UCOP Budget Act of 2015, which froze tuition at current levels for a total of six years but allowed for mandatory tuition increases pegged to inflation after the six-year period.
According to State Department of Finance data Flaherty presented, the primary source of state revenue is Personal Income Tax (P.I.T.), the secondary source is Sales and Use Tax (SUT) and additional revenue is from corporate tax. Flaherty said the P.I.T. has increased more than the SUT in recent years because California’s economy is largely based in universities and educational institutions rather than taxable services.
“Nowadays … we don’t have a sales tax on services and our economy in California is very much a knowledge-based economy,” Flaherty said. “Good for us, because we are all in school.”
According to Flaherty, the State now decides its budget in June, as opposed to January in previous years. Flaherty said this change benefits the state but poses a challenge to the UCs, as the universities must plan the yearly budget without knowing the State’s contribution.
“It’s a huge improvement now that the budget is settled in June because the fiscal year starts in July,” Flaherty said. “[It’s] still problematic for the University because in November we are set to approve our budget for the University, we accept students in the spring and we are not really sure how much funding we are going to receive from the State until after that.”
Flaherty also said the relationship between the State and the UC is characterized by “volatility.”
“It’s has been that way pretty much forever,” Flaherty said. “Agreements between UC and the administration in the past, called compacts or partnerships … are things that can’t bring stability and predictability to the UC state budget.”
According to Flaherty, UC partnerships with the Governor are generally multi-year and extend beyond the one-year budgeting cycle that the Legislature appropriates for.
“So a lot of state agencies — so labor unions for instance — a lot of businesses who have advocated for and received a tax benefit, for instance — they like to plan those over a multi-year basis,” Flaherty said.
Flaherty said the State Legislature may oppose multi-year partnerships between the governor and the UC because their decision-making role is bypassed.
“The Legislature is far less fond of these funding frameworks than administrations and the University,” Flaherty said. “The Legislature is basically left out of the process, yet they are asked to approve the funding for it without having had that much input.”
According to Flaherty, the UC budget fell from 103 billion dollars to 87 billion within one fiscal year after the 2008 recession.
“Less revenue resulted in cuts for almost all of the agencies … and all departments, and of course UC, CSU, the community colleges [and] K-12 were not exempt from those cuts by any stretch of the imagination,” Flaherty said.
Flaherty also said the State proposed a 25 million dollar addition to the current UC budget year if the university projects enrollment of 5,000 more undergraduate students by next May.
“The State is attempting to incentivize the University to really grow enrollment by a lot more than we anticipated,” Flaherty said. “Initially back in November … last year we were thinking of growing about 2,200 students, a lot of budgetary uncertainty at that time … so there was basically no growth of undergraduate students or marginal growth of undergraduate students.”
Flaherty said he does not like the term “affordability” when discussing tuition because it is not the only factor in student expenses.
“From a student’s perspective, affordability is a total cost of attendance,” Flaherty said. “It involves housing … it involves the reality of how much support some students provide to their families. It is not just tuition alone.”