Education

The 2021-22 Budget: University Capital Outlay

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March 5, 2021 - In this post, we focus on university capital outlay projects. We first provide background on university capital financing and project review. We then review capital outlay proposals for the California State University (CSU) and the University of California (UC). Next, we raise some concerns with the previously authorized UC Merced medical school project and make an associated recommendation. We end the post by offering several other recommendations intended to strengthen legislative oversight of university projects.

The 2021-22 Budget: California Institutes for Science and Innovation

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March 2, 2021 - In this post, we describe the Governor’s proposal relating to the California Institutes for Science and Innovation (hereafter referred to as “the institutes”), which are administered by the University of California (UC). We first provide background on the institutes’ activities and budget. Next, we describe the Governor’s proposal. We then offer our assessment of the proposal and make an associated recommendation.

The 2021-22 Budget: UC Division of Agriculture and Natural Resources

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February 26, 2021 - In this post, we analyze the Governor’s proposals relating to base funding for the Division of Agriculture and Natural Resources (ANR) at the University of California (UC). We first provide background on ANR’s operations and budget. Next, we describe the Governor’s ANR proposals and the additional ANR funding included in the February early action package. We then offer our assessment of the proposals and make associated recommendations.

The 2021-22 Budget: UC Programs in Medical Education

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February 26, 2021 - This post analyzes the Governor's proposal to provide a General Fund augmentation to the University of California's Programs in Medical Education. These programs provide medical education focused on health equity and clinical experiences focused on underserved communities.

The 2021-22 Budget: Hastings College of the Law

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February 22, 2021 - This report analyzes the Governor's proposal to provide the Hastings College of the Law a General Fund base increase in 2021-22.

The 2021-22 Budget: California Community Colleges

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February 16, 2021 - This report analyzes the Governor’s major budget proposals for the community colleges, covering base apportionments, enrollment, students’ basic needs, online tools, apprenticeships and work-based learning, instructional materials, and faculty professional development.

The 2021-22 Budget: California Student Aid Commission

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February 8, 2021 - This report analyzes the Governor’s major budget proposals for the California Student Aid Commission, including proposals to expand the Cal Grant program and increase financial aid application rates.

The 2021-22 Budget: Analysis of the Major University Proposals

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February 1, 2021 - This report analyzes the Governor’s major budget proposals for the universities, covering base funding, enrollment, students’ basic needs, faculty professional development, and deferred maintenance.

Update on Community College Reserves

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January 27, 2021 - In this post, we describe community college reserve policies and track local reserve levels over time. We focus on local reserve levels because they are a key indicator of the overall fiscal health of community colleges.

The 2021-22 Budget: Overview of Proposition 98 Budget Proposals

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January 25, 2021 - This handout analyzes the overall architecture of the Governor's plan for school and community college funding, including major spending proposals and underlying estimates of the Proposition 98 minimum guarantee.

Second Round of Higher Education Federal Relief Funds

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January 20, 2021 - The Coronavirus Response and Relief Supplemental Appropriations Act provides the second round of federal relief funding for higher education. In this post, we recap the first round of federal relief funding for higher education, then describe the key elements of the second round of funding. We also compare funding allocations for higher education institutions in California under the first and second rounds of funding.

The 2021-22 Budget: Overview of the Governor's Budget

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January 10, 2021 - This report provides a brief summary and initial assessment of the proposed 2021-22 Governor’s Budget.

Correction 1/11/21: Totals for immediate and early action proposals have been corrected.

California Community Colleges—Managing Cash in a Time of State Payment Deferrals

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December 18, 2020 - To help address the state’s large budget deficit as estimated in June 2020, the 2020-21 budget package deferred a substantial amount of General Fund payments to schools and the California Community Colleges (CCC). In this post, we (1) provide background on community college cash flow and cash management, (2) describe the community college deferrals included in the state’s 2020-21 budget package, (3) explain how the CCC Chancellor’s Office is implementing these deferrals, (4) discuss how community college districts are responding, and (5) present options for the Legislature to consider, particularly given the improved budget outlook.

An Analysis of University Reserves

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November 10, 2020 - The coronavirus disease 2019 (COVID-19) pandemic, the shift to campuses operating re-motely, the economic downturn, and state funding reductions have created fiscal challenges for the California State University (CSU) and the University of California (UC). To help address these challenges, the 2020-21 Budget Act signaled the Legislature’s intent that the universities begin drawing down their core reserves for academic programs. Prior to the pandemic, the most recent data available showed that core reserves totaled $1.7 billion at CSU and $1.2 billion at UC. CSU and UC also plan to use their noncore reserves to maintain their self-supporting pro-grams (such as housing and parking), which have lost revenue due to remote operations. Importantly, though the state viewed the universities’ reserves as a budget tool for mitigating funding reductions this year, state law is silent on the level of reserves CSU and UC are to carry, the purposes of those reserves, and the interaction of those reserves with the state’s reserves. We encourage the Legislature to set clearer expectations regarding the state’s and the segments’ responsibilities for building reserves for future economic uncertainties. Developing a specific policy in this area would benefit from further analysis, as the reserve levels required to respond to any future situation would depend upon many factors (including the magnitude of a future economic downturn and the likelihood the state reduces funding for the universities).

Updated 12/10/20: This post has been updated to reflect new reserve levels at UC Santa Barbara.

An Analysis of University Cash Management Issues

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November 10, 2020 - In contrast to the state, the California State University and the University of California typically do not face cash timing issues. The universities also tend to have relatively larger cash cushions, which have allowed them over time to invest more of their cash in long-term investment accounts and even assist the state in managing its cash challenges. The coronavirus disease 2019 (COVID-19) pandemic and recession, however, have changed these dynamics. While the state has a larger cash cushion compared to previous recessions, the pandemic has resulted in notable revenue declines at campuses, which have weakened their cash positions. To weather the reduction in revenues, the universities have implemented, or are considering, internal borrowing and transfers, shifting more money back into short-term investment accounts, and issuing bonds to help cover operating costs. These actions will help the universities meet the unprecedented challenges wrought by the pandemic, but they come with trade-offs and risks. Given these developments, monitoring the universities’ fiscal condition over the coming years will be especially important for the Legislature.