After years of recession, the California government finally has some pocket change to stash away for potential future crises. But the state would get ahead of itself by stocking a rainy day fund when clouds still loom over the University of California.
A recent report by the Legislative Analyst’s Office, which provides nonpartisan fiscal and policy analysis for the California Legislature, projected the state of California willend the 2014-2015 fiscal year with a surplus of $5.6 billion. The same report suggested a possible approach that would set aside nearly $2 billion of the surplus in preparation for potential future recessions.
The news of extra money is a good omen for the University of California, which plans to request $120.9 million of additional funding from the state for its 2014-2015 budget, on top of a five-percent base budget increase already granted by Gov. Jerry Brown in July. But at last month’s meeting of the UC Board of Regents, the governor expressed incredulity that the state legislature would approve the additional request.
After nearly $1 billion in state funding cutbacks over the last five years, $120.9 million is a modest request that only nudges the UC back toward its pre-recession funding level. With a fairly solid budget outlook, the state has few excuses to refuse such pleas.
Investing in a future rainy day fund is smart, but not when the UC, a flagship program of the state, is coping with research cuts from the federal sequester and rebuilding after a protracted bout of state disinvestment.
For example, the UC’s multibillion dollar gap in funds for employee pensions is a problem the University is set to grapple with for years to come.
Currently, the UC’s pension liabilities entirely lack government support, unlike the California State Universities and California Community Colleges, whose pension plans are still funded by the state, said UC spokeswoman Dianne Klein.
As a result, employee contributions to pensions are increasing, and lack of government funding has forced the UC to lay off staff system-wide. If the UC cannot close the gap, eventually there won’t be pensions to offer.
Klein said the University proposes putting more than half of the almost $121 million requested to paying down unfunded retirement liabilities such as UC pensions. The rest of the funds would be split between allowing one percent enrollment growth across the University and reinvesting in academic quality.
Moreover, the requested funds would help cover revenue lost from the lack of a tuition increase in 2014-2015, a freeze supported by Brown.
Ever since the 2011-2012 school year, student tuition and fee revenue has made up a larger portion of the UC’s core budget than state support, meaning that student wallets have suffered because of the state’s inability to provide sufficient funding.
While recent stable tuition rates have certainly been easier on students and their families, the state needs to recognize that a lack of an increase in student revenue must be made up for elsewhere in order to secure the University’s long-term financial future.
Although the UC’s request competes with other state funding demands such as health and social welfare programs, the University and its employees are ultimately a government responsibility. The longer students pay more into the UC than the state does, the more the position of the University as a fully public institution becomes clouded.
With news of the surplus, the state can and should be more accommodating in approving funding requests from the UC. Given the urgency of funding needs such as pension liabilities, a request for just two percent of the projected $5.6 billion surplus is asking for mere bread crumbs, and the state’s newfound financial stability leaves little room for stinginess.
Although the UC and state are certainly on their way to clearer skies, the state must recognize that a rainy day fund is a luxury when there is much work to be done rebuilding California’s education systems.
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“Rainy day fund.”
Definition: Someone píssing on your leg and telling you it is raining.