The Legislative Analysts’ Office (LAO) has a new report out
critiquing the governor’s higher ed budget proposals. It comments on his online higher ed proposals
but relative to all the attention paid to that topic at the most recent Regents
meeting, it appears that the LAO doesn’t see them as the solution to
budget problems for higher ed) Much of
the report involves recommendations that the legislature base future funding
increments on meeting performance targets.
Because most of the report deals with all three segments of higher ed,
the target discussion largely is focused on concerns involving CSU and
community colleges such as time to degree, etc.
On retirement funding, LAO repeats its assertion that the state isn’t responsible for the UC pension, but
then seems to acknowledge that if the state doesn’t pay, the cost will come out of
tuition or some university programs. It
seems to suggest funding UC’s pension at the same rate as other state public
pensions. Excerpts and a link to the
full report are below:
...Governor’s Overall Approach Unlikely to Improve System
Justification for More
Funding and Less Legislative Involvement Unclear. Although we believe the
Governor’s budget plan has drawn attention to some notable problems, we have
serious concerns with several of his specific budget proposals. Most notably,
by providing the segments with large unallocated increases only vaguely
connected to undefined performance expectations, the Governor cedes substantial
state responsibilities to the segments and takes key higher education decisions
out of the Legislature’s control. We recommend the Legislature reject the
Governor’s proposals relating to unallocated base increases, combining the
universities’ capital and support budgets, allowing the universities to
restructure their debt, and eliminating enrollment targets. Instead, we
recommend the Legislature allocate any new funding first to meet the state’s
highest existing priorities, including debt service, employee pension costs, and paying down community college
deferrals. If more funding is provided than needed to meet these existing
funding obligations, we recommend the Legislature link the additional funding
with explicit enrollment and performance expectations.
Extended Tuition Freeze
Likely Would Have Negative Long-and Near-Term Consequences. We also have serious
concerns with the Governor’s extended tuition freeze proposal, as it very likely
would result in steep tuition increases during the next economic downturn and
reduced accountability in the near term. Moreover, tuition levels and students’
share of cost currently are low. After accounting for state and institutional
financial aid, the average share of cost paid by California students is about
30 percent at UC and CSU and 6 percent at CCC.
Some Good Ideas but Associated Proposals Need Reworking
Some Problems Likely
Addressed by Redistributing Rather Than Increasing Funding. In some cases, we think
the Governor’s basic ideas are worthwhile but likely could be implemented
within existing resources. For example, increasing the availability of required
courses while reducing the amount of excess course-taking could be done within
existing resources. Likewise, the segments could leverage an existing
repository of online courses developed by faculty and enable students to more
easily access those courses largely, if not entirely, within existing
resources.
Higher Education Funding
Models Up for Redesign. We also think revisiting the ways the
state allocates funding to the segments is worthwhile, but we again have
concerns with the Governor’s specific proposals. The Governor’s approach for
the universities appears to fund neither student access nor success whereas his
approach for the community colleges focuses only on one poor measure of student
success. We envision a better funding model that balances the state’s dual
goals of access and success. Under a redesigned system, instead of basing
funding entirely on enrollment or on vague performance expectations, the
Legislature would establish clear expectations in areas such as program
completions, degrees earned, research activity, and cost reductions…
==
(LAO is) concerned
with the absence of a proposal relating to UC retirement costs…
==
Weak Rationale for Proposed Changes to Capital Outlay Budget
Process. The administration
indicates
the motivation for combining the universities’ capital and support budgets is
to provide the universities with more flexibility, given limited state funding.
The administration, however, has not identified specific problems associated
with the current process used to budget the segments’ capital projects, nor
identified any specific benefits the state might obtain from the proposal. As a
result, both the problems the proposal is intended to address and the benefits
that the proposal offers are difficult to ascertain.
==
Recommend Rejecting (Debt) Restructuring Proposal. Given that restructuring debt would cost more money in the
long term and constrain future budget choices, we recommend the Legislature reject
the Governor’s debt restructuring proposal for the universities. If the
Legislature is concerned that the universities would lose the short-term savings
associated with the debt restructuring, it could consider other strategies for
the universities to increase revenue or reduce costs.
==
(Pension) Payment Obligation. The
state is not legally obligated to provide funding for the university’s
retirement costs. Nevertheless, current retirement costs are largely unavoidable
obligations for the university. Not addressing them means the university would
incur significantly greater costs in the future...
Recommend
Designating $67 Million for UC Retirement. For
these reasons, we recommend the
Legislature
specify $67 million of UC’s proposed 2013-14 base budget increase for pension
costs...
In
addition, consistent with the approach taken by the state in 2012-13, we
recommend the Legislature include language in the budget reiterating that the
state is not obligated to provide any additional funding for this purpose moving
forward. Such language is intended to reinforce that the state is not liable
for these costs.
Future
Considerations for Universities’ Retirement Costs. The
Legislature recently enacted pension-related legislation that could
significantly reduce long-term retirement costs for nearly all public
employers. In the future, the Legislature may want to consider the universities’
retirement costs in light of this legislation. This consideration would be
useful since UC was specifically exempt from the legislation... In the future,
the Legislature could consider providing the universities with funding for
retirement costs comparable with costs incurred by other public employers...
==
Online
Education Can Promote Access, Efficiency, and Student Learning. Online
education has been found to have numerous benefits, including making coursework
more accessible to students who otherwise might not be able to enroll due to
restrictive personal or professional obligations and allowing campuses to serve
more students without a commensurate need for additional physical
infrastructure...
Need
for New Funding to Create More Courses Is Questionable. We
do not see a justification, however, for earmarking $10 million each for UC and
CSU and up to $16.9 million at CCC for the development of additional online
courses...
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