Gov. Jerry Brown’s proposed budget for the next fiscal year creates a long-term funding plan that changes the relationship between the state and the University of California by granting the UC more freedom to make financial decisions, according to a recent report by the nonpartisan Legislative Analyst’s Office.
Funding from the state typically comes with restrictions that stipulate how the given funding should be used. These provisions set aside a certain amount of the total funding to a specified project, restricting the UC from using the appropriated sum for any other purpose.
For 2011-2012, the state budget allocated $9.2 million of total UC funding for AIDS research and $52.2 million for UC-based student financial aid, among other restrictions.
But the proposed budget for this year includes no such restrictions. According to the governor’s budget proposal, eliminating these restrictions will provide the UC greater flexibility to manage its funds.
Flexibility of spending is particularly vital at a time when the university is facing a $750 million reduction from the current year, said Patrick Lenz, UC vice president for budget and capital resources.
“We requested some of this autonomy,” Lenz said. “We’re trying to set priorities given the fact that state funding has been reduced, so this autonomy gives us that level of flexibility we need.”
But the state analyst’s office is in disagreement with the proposal. Restrictions on how California public universities use state funding are necessary, said Steve Boilard, the LAO director of higher education.
“At a time that the state finds itself unable to sustain the (current) level of spending, it’s all the more important for the state to be clear about what the priorities are,” Boilard said.
With limited funds, the provisions help the state identify priorities in higher education, he said.
State oversight and control over UC funds is especially important because the UC, unlike most state agencies, is governed by the Board of Regents, a board independent of the state, Boilard said.
Various budgetary decisions are already at the regents’ discretion, including student tuition and employee salaries. Only a small portion of the state funding has been restricted to specified purposes in the past, Boilard said.
“The new budget would expand on this to the point where there are virtually no restrictions at all ““ the regents would make all the decisions,” Boilard said.
The UC believes the Board of Regents is most fit to make the decisions, said Dianne Klein, a spokeswoman for the UC Office of the President.
“The (regents) are the best stewards of the university system,” Klein said. “They should have final say on how our budget is spent, not the legislature.”
In addition, the proposed budget eliminates enrollment targets set by the state. In previous years, state funding to the UC included a provision that would reduce state funding if specified enrollment levels are not met.
Under the proposal, the UC alone would decide how many students to enroll. Theoretically, the university would be able to decrease enrollment in order to cut instructional costs and use those savings for other areas, such as research or higher salaries for faculty.
But legislative analysts concluded that the state should keep the enrollment targets, Boilard said.
“It’s clear the regents want to be able to enroll as many students as possible,” Boilard said. “But there comes a point through these budget constraints when the university may have to reduce enrollment. The legislature should be clear in this budget about what level of enrollment (the state) expects.”
Amid mid-year trigger cuts and a trend of reductions from the state, UC officials have been negotiating with state leaders to develop a more stable, long-range plan to prevent unexpected declines in state funding, Klein said.
Under Brown’s proposed budget, state funding to the UC would increase by at least 4 percent every year until 2015-2016 if the university meets established improvement standards. The standards are not yet defined, but could be factors such as graduation rates and enrollment of transfer students, according to the analyst’s office.
In addition, the proposal states that no new cuts to the UC and California State University systems will be enacted for the following four years.
But state lawmakers should reject the automatic funding increases in the revised budget because they cause an unwarranted constraint of the legislature’s power, Boilard said.
If increases in funding become automatic, the state would have less discretion in allocating funds consistent with changing priorities, he said.
“You can’t prevent where the budget is going to be, so how could you know where to allocate money already?” Boilard said.
The proposed budget is still in its preliminary stages. The state legislature can revise the budget before approving it with a two-thirds majority vote by its June 15 deadline.