@ViewBag.Title
Analysis of the 2008-09 Budget Bill: Education

Introduction: Higher Education

The Governor's budget proposes a net reduction of $261 million in General Fund support for higher education in 2008‑09. This represents a 2.3 percent reduction from the revised 2007–08 amount. For the University of California (UC) and the California State University (CSU), the reductions are almost all unallocated. However, student fee increases would generate significant revenues for the universities. General Fund support for the California Community Colleges (CCC) would be reduced by $40 million in the current year and an additional $112 million in 2008‑09. However, the budget assumes increased property tax revenues in 2008‑09 that could more than backfill this reduction. No fee increase is proposed for CCC. The California Student Aid Commission (CSAC) would receive a net General Fund increase of $48 million, largely to fund increased costs of the Cal Grant entitlement program. The budget would also support 151 capital outlay projects at the three segments, using $1.6 billion in funding from higher education bonds.

Total Higher Education Budget Proposal

As Figure 1 shows, the 2008‑09 budget proposal provides a total of $33.4 billion from all sources for higher education support costs. (This total could change depending on decisions by UC and CSU on fee levels, as discussed in more detail below.) This amount is $401 million, or 1.2 percent, less than the Governor's revised current–year proposal. The total includes funding for UC, CSU, CCC, Hastings College of the Law, CSAC, and the California Postsecondary Education Commission. Funded activities include instruction, research, and related functions, as well as other activities, such as providing medical care at UC hospitals and managing three major U.S. Department of Energy laboratories. (Capital outlay expenditures are discussed at the end of this section.)

 

Figure 1

Governor’s 2008‑09 Higher Education Budget Proposal

(Dollars in Millions)

 

2007‑08
Revised

2008‑09
Proposed

Change

 

Amount

Percent

UC

 

 

 

 

General Fund

$3,260.7

$3,162.2

-$98.5

-3.0%

Fees

2,151.5

2,331.3a

179.8

8.4

  Subtotals

($5,412.3)

($5,493.5)

($81.3)

(1.5%)

All other funds

$12,656.9

$13,210.1

$553.2

4.4%

    Totals

$18,069.2

$18,703.7

$634.5

3.5%

CSU

 

 

 

 

General Fund

$2,970.7

$2,873.1

-$97.6

-3.3%

Fees

1,376.9

1,521.1a

144.2

10.5

  Subtotals

($4,347.6)

($4,394.2)

($46.6)

(1.1%)

All other funds

$2,598.7

$2,550.5

-$48.2

-1.9%

    Totals

$6,946.3

$6,944.7

-$48.2

CCC

 

 

 

 

General Fundb

$4,146.7

$4,034.9

-$111.8

-2.7%

Local property tax

2,051.7

2,196.2

144.5

7.0

Fees

281.4

284.4

3.0

1.0

  Subtotals

($6,479.8)

($6,515.4)

($35.6)

(0.5%)

All other fundsc

$269.4

$257.5

-$11.9

-4.4%

    Totals

$6,749.2

$6,773.0

$23.7

0.4%

CSAC

 

 

 

 

General Fund

$842.9

$890.5

$47.6

5.7%

All other funds

1,160.8

30.8

-1,130.1

-97.4

    Totals

$2,003.7

$921.3

-$1,082.5

-54.0%

Other Agencies

 

 

 

 

General Fund

$12.8

$12.1

-$0.7

-5.6%

Fees

28.7

33.2

4.5

15.6

All other funds

21.5

42.4

20.9

97.1

    Totals

$63.1

$87.7

$24.6

39.0%

Grand Totals

$33,831.5

$33,430.3

$401.2

-1.2%

General Fund

$11,233.9

$10,972.8

-$261.1

-2.3%

Fee revenue

3,838.5

4,170.0

331.5

8.6

Local property tax

2,051.7

2,196.2

144.5

7.0

All other funds

16,707.3

16,091.3

-616.1

-3.7

a  Assumes fee increases of 7.4 percent at UC and 10 percent at CSU. However, the Governor’s
budget makes no specific fee proposal, deferring this decision to the segments.

b  Excludes teachers' retirement funds and bond payments.

c  Excludes other funds maintained in local budgets.

 

Major Funding Sources

General Fund. The 2008‑09 budget proposal provides $11 billion from the General Fund for higher education. This amount is $261 million, or 2.3 percent, less than proposed current–year funding. The budget also projects that local property taxes will contribute $2.2 billion for CCC in 2008‑09, which reflects an increase of $145 million, or 7 percent, from the revised current–year estimate.

Student Fees. Student fee revenue at all the public higher education segments (including Hastings College of the Law) would support at least $4.2 billion of proposed expenditures. As discussed in more detail below, actual fee revenue will depend on decisions still to be made by UC and CSU.

Other Funds. The budget also includes about $16.1 billion in other funds, which reflects a decline of about $616 million, or 3.7 percent. Almost all ($15.2 billion) of these other funds constitute nonstate revenue—including federal funding and private contributions. The remainder is made up of various state revenues, including lottery and tobacco funds. In addition to the amounts reflected in Figure 1, local community colleges are projected to receive an additional $1.8 billion from locally budgeted resources. (These funds are identified in the “California Community Colleges” section of this chapter.)

Major Funding Changes by Segment

Major funding changes are shown in Figure 2. For UC, the Governor proposes General Fund appropriations of $3.2 billion, which is $99 million, or 3 percent, less than the revised current–year estimate. Of this reduction, $31 million would come from UC’s administrative support budget, while the remainder would be unallocated. The Governor's proposal also includes at least $125 million in new student fee revenue, from a fee increase of at least 7.4 percent. When all fund sources are considered, UC’s budget increases by 3.5 percent.

 

Figure 2

Higher Education
Proposed Major Funding Changes
From 2007‑08 Revised Budget

University of California

General Fund:
Other Funds:

-$98.5 Million
+$733 Million

 

General Fund Reduction: Reduces administrative support by $30.8 million.
The remainder of the General Fund reduction is unallocated.

New Revenues: Proposed augmentations from other fund sources include at least $125 million from fee increases (the exact amount to be determined by UC).

California State University

General Fund:
Other Funds:

-$97.6 Million
+$96 Million

 

General Fund Reduction: Reduces administrative support by $2.4 million.
The remainder of the General Fund reduction is unallocated.

New Revenues: Proposed augmentations from other fund sources include at least $110 million from student fee increases (the exact amount to be determined by CSU).

California Community Colleges

General Fund:
Other Funds:

-$112 Million
+$135 Million

 

General Fund Reduction: The net General Fund reduction is more than offset by a $145 million increase in local property tax revenue.

Programmatic Funding Changes: Includes funding for 1 percent enrollment growth, no funding for a cost-of-living adjustment, and reductions to categorical programs averaging about 7 percent.

 

For CSU, the budget includes $2.9 billion in General Fund support, which is $98 million, or 3.3 percent, less than the current–year estimate. Of this reduction, $2.4 million would come from CSU’s administrative support budget, while the remainder would be unallocated. The Governor's proposal also includes an augmentation of at least $110 million in new student fee revenue, from a fee increase of at least 10 percent. When all fund sources are considered, CSU’s budget remains essentially unchanged.

For CCC, the Governor's budget includes $4 billion in General Fund support, which is $112 million, or 2.7 percent, less than the revised current–year amount. Local property tax revenue (the second largest source of CCC funding) would increase by 7 percent, to $2.2 billion. Fee revenue would provide an additional $284 million, reflecting an increase of 1 percent (due to budgeted enrollment growth).  

Enrollment

As shown in Figure 3, the administration proposes budgeted enrollment growth of 2.5 percent at UC and CSU, and 1 percent at CCC. However, the Governor's budget acknowledges that UC and CSU may decide to enroll less than the proposed level of students as a way to accommodate part of proposed General Fund reductions. We discuss enrollment trends in more detail later in this chapter.

 

Figure 3

Higher Education Enrollment

State-Supported Full-Time-Equivalent Students

 

Actual 2006‑07

Budgeted 2007‑08

Proposed 2008‑09

Change

 

Amount

Percent

University of California (UC)

 

 

 

 

 

Undergraduate

159,781

160,824

164,469

3,645

2.3%

Graduate

24,280

25,400

26,455

1,055

4.2

Health Sciences

13,030

12,231

12,531

300

2.5

  UC Totals

197,091

198,455

203,455a

5,000

2.5%

California State University (CSU)

 

 

 

 

 

Undergraduate

292,032

294,175

301,530

7,354

2.5%

Graduate/postbaccalaureate

48,362

48,718

49,935

1,218

2.5

  CSU Totals

340,394

342,893

351,465a

8,572

2.5%

California Community Colleges

1,137,144b

1,171,258

1,183,541

12,283

1.0%

Hastings College of the Law

1,264

1,250

1,225

-25

-2.0

     Grand Totals

1,675,893

1,713,856

1,739,686

25,830

1.5%

 

a    The Governor’s proposal indicates that UC and CSU may accommodate a portion of unallocated General Fund reductions by reducing proposed enrollment levels.

b    Department of Finance estimate.

 

Student Fee

As shown in Figure 4, student fees would be increased at all segments except for CCC. For UC and CSU, the figure reflects increases of 7.4 percent and 10 percent, respectively. These amounts reflect fee increases envisioned by the segments when they developed their budget plans in the fall. However, the Governor's budget does not formally propose any specific fee level, acknowledging that the segments may increase their fees above their initially envisioned levels in order to backfill some or all of the proposed unallocated General Fund reductions.

 

Figure 4

Annual Education Fees for Full-Time Resident Studentsa

 

Actual
2006‑07

Actual
2007‑08

Proposed 2008‑09b

University of California (UC)

 

 

 

Undergraduate

$6,141

$6,636

$7,126

Graduatec

6,897

7,440

7,986

Hastings College of the Law

$19,725

$21,303

$26,003

California State University (CSU)

 

 

 

Undergraduate

$2,520

$2,772

$3,048

Teacher education

2,922

3,216

3,540

Graduate

3,102

3,414

3,756

California Community Colleges

$690d

$600

$600

 

a  Figures do not include campus-based fees.

b  For UC and CSU, reflects increases of 7.4 percent and 10 percent, respectively. Governor's budget notes that actual fee levels would depend on how the governing boards decide to accommodate unallocated General Fund reductions.

c  The UC charges special fee rates for 12 professional programs, such as medicine and nursing. Most of these fees would increase by roughly 7 percent, with proposed 2008‑09 fee levels ranging from $3,685 to $22,049.

d  Reflects average fee over the academic year. Actual fees were $26 per unit in fall 2006 and $20 per unit, beginning in spring 2007.

 

Financial Aid

Funding for the Cal Grant entitlement programs would be augmented to accommodate projected enrollment growth and fee increases in excess of the levels noted above. However, the Governor proposes to fund no new grants in the Cal Grant competitive programs in the budget year and beyond, for estimated General Fund savings of $57 million in 2008‑09. Students receiving a grant in the current year would still be eligible for renewal awards. As these students graduated over the next several years, the competitive programs would be phased out.

The proposed budget also authorizes 7,200 new awards in the Assumption Program of Loans for Education (APLE), as well as 100 new warrants each for the State Nursing APLE and the Nurses in State Facilities APLE.

Capital Outlay

As shown in Figure 5, the Governor's budget proposal includes about $1.6 billion in new capital outlay funding for 2008‑09. In addition to this funding, the budget provides $418 million in carryover and reappropriated funding that was originally appropriated in prior years. For CSU, the budget also includes $50 million in bond funding for special repairs that is counted as part of CSU’s support budget.

All of the proposed funding would come from general obligation bonds. Under the Governor's proposal, $457 million would come from bonds authorized by Proposition 1D and $1.1 billion would come from a proposed bond that would be placed before voters in November 2008.

 

Figure 5

Governor's Proposed
New Higher Education
Capital Outlay Appropriations

2008‑09
(In Millions)

 

 

University of California

$388

California State University

358

California Community Colleges

894

  Total

$1,640

 

 

Return to Education Table of Contents, 2008-09 Budget Analysis
Return to Full Table of Contents, 2008-09 Budget Analysis