Summary of LAO Findings and Recommendations on the 2010-11 Budget

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Budget Issue
LAO Finding Or

Last Updated
See Detail  University of California and California State University Review of Governor's proposal to augment UC and CSU General Fund support by $305 million each. The Governor's proposal does not specify how the universities should use this funding, along with several hundred million dollars in new fee revenue. Recommend the Legislature provide smaller General Fund augmentations that, combined with anticipated fee revenue, would be sufficient to (1) restore UC's and CSU's per-student funding to pre-recession levels, and (2) serve a specified number of students. 5-04-10
See Detail  University of California and California State University The Governor's April Letter proposals include $442 million in 2010-11 bond authorizations to fund capital outlay projects at UC and CSU. We recommend downsizing the Governor's proposal by funding only the highest-priority projects that address life-safety issues or provide equipment necessary to complete previously funded projects. Funding only these projects would reduce proposed 2010-11 bond authorizations by $222 million and out-year capital outlay obligations by $143 million. 5-03-10
See Detail  California Community Colleges 50 Percent Law Give districts more ability to hire faculty that provide direct support services to students by including expenditures on counselors and librarians as part of instructional costs. Alternatively, suspend the law until 2012-13. 3-04-10
See Detail  California Community Colleges Governor proposes to apply base cuts to two categorical programs and redirect these funds to augment support for the Career Technical Education Pathways Initiative. Reject the Governor's proposed base cuts. Fund the Pathways Initiative through the Quality Education Investment Act only. 3-04-10
See Detail  California Community Colleges Governor proposes to suspend requirements on the number of full-time faculty that districts must employ (the so-called "75/25 law"). Adopt the Governor's proposal. 2-24-10
See Detail  California Community Colleges Governor proposes to place three currently protected categorical programs (Basic Skills Initiative, Extended Opportunity Programs and Services, and Fund for Student Success) in the community college flex item. Adopt Governor's proposal. In addition, place the Financial Aid Administration categorical program into the flex item. 2-24-10
See Detail  California Community Colleges Enrollment Fees Raise student fees from $26 per unit to $40 per unit. Use additional revenues generated by the fee increase to fund "overcap" enrollments and reverse the Governor's proposed negative cost-of-living adjustment. Recommended fee increases would not affect financially needy students (because they are eligible to receive full fee waivers) and would be fully offset for most middle-income students (who qualify for federal tax credits). 2-24-10
See Detail  California Community Colleges Overview of changes in student enrollment levels at community colleges over past several years. The Governor proposes a $126 million augmentation to fund 2.2 percent more enrollment slots. Fund the proposed additional enrollment, but use funding from our recommended student fee increase, rather than a General Fund augmentation. 2-24-10
See Detail  Capital outlay Summary of recent and proposed funding for higher education capital outlay projects. The Governor's budget proposal includes no capital outlay projects for UC or CSU, and proposes a limited capital outlay program of four projects for CCC. The proposal states the administration's intent to propose funding for additional higher education facilities in the May Revision, and likely will seek reappropriations for various projects delayed by the state's interim financing freeze and other factors. We recommend the Legislature exercise heightened scrutiny in reviewing new projects proposed in May and any reappropriation requests, as projects approved in previous years may no longer be high priorities due to the state's fiscal situation and changes in higher education such as declining enrollments. 2-24-10
See Detail  Higher Education Overview of affordability issues (fees and financial aid). The Governor's budget assumes a 15 percent fee increase for UC students, a 10 percent increase at CSU, and no change for CCC students. The Governor also proposes to suspend new Cal Grant awards. We generally find that, even with recent significant increases, fees at all three segments remain well below national averages, and that financial aid has helped offset increased education costs. We recommend no change to the proposed 2010-11 fee increases for UC and CSU. We also recommend a $14-per-unit fee increase for CCC. We recommend rejection of the Governor's Cal Grant cuts, and offer alternatives that would do less damage to the state's financial aid framework. 2-24-10
See Detail  Higher Education Overview of the Governor's Budget Proposal The Governor proposes General Fund augmentations for all sectors of higher education. We summarize the proposal with a variety of figures and tables. 2-24-10
See Detail  Higher Education Overview of changes to higher education funding over past several years. We find that General Fund support has declined, but much of this reduction has been backfilled with revenue from fee increases and federal stimulus funds. 2-24-10
See Detail  University of California and California State University Review of enrollment changes at UC and CSU over past several years. We find that university enrollment has fluctuated over the past two years, with the annual budget acts providing no enrollment targets for the universities. The Governor's proposal would provide $112 million in enrollment augmentations to the universities, but would set enrollment targets below current enrollment levels. Reject proposed augmentations. It does not make sense to fund enrollment growth when enrollment is not growing. However, elsewhere on this list we recommend the Legislature consider augmentations for the university for the purpose of increasing program quality. 2-24-10
See Detail  Student Aid Commission Worksheet: Alternative Financial Aid Reductions We recommend alternatives to the Governor's proposed Cal Grant reductions: 1) Raise minimum GPA for Cal Grant B eligibility to 2.5, 2) Eliminate non-need-based fee waivers, 3) Restrict competitive awards to stipends only. 2-04-10
See Detail  University of California and California State University The Governor proposes a constitutional amendment to (1) require at least 10 percent of annual state General Fund appropriations to be spent on the public universities and (2) limit state spending on corrections to no more than 7 percent of General Fund appropriations. (Note: Subsequent to our publication, the Governor modified his proposal to include Cal Grants in the higher ed funding subject to the 7 percent floor.) We urge the Legislature to reject this proposal because it (1) would unwisely constrain the state's ability to allocate funding where it is most needed each year; and (2) is unnecessary, as the state already has the ability to shift funding among programs without this constitutional amendment. 1-26-10
See Detail  Student Aid Commission Cal Grant Competitive Awards Program Recommend Legislature consider alternatives to Governor's proposed suspension of competitive Cal Grant awards. Alternatives for achieving General Fund savings include: 1) Increase minimum GPA for Cal Grant B eligibility from 2.0 to 2.5. 2) Eliminate non-need-based fee waivers. 3) Limit new competitive awards to fixed stipends ("access awards") These measures could provide comparable savings while preserving the structure of the state's financial aid system. 1-24-10