Katie Shepherd: UC should look past state budget for funds

California’s government cannot reliably predict the amount of funds that will be available for the University of California in the distant future.

Although increases in funding for the UC are a welcome offer after years of devastating cutbacks, Gov. Jerry Brown’s recent proposal for a multiyear budget for the UC will likely not be an exception to the pattern of failed compacts between the UC and the state.

A compact is a long-term agreement between the university and the state stipulating that the university will meet certain performance goals in exchange for funding.

As such, the UC should prioritize “outside-the-box” solutions to the university’s funding problem, rather than depend on uncertain multiterm budget plans from the state.

The UC should consider Brown’s long-term proposal with an understanding that the state cannot guarantee future funding. With the budget re-evaluated on a yearly basis, the only reliable agreement is one settled for the current year.

The UC Board of Regents and the UC Office of the President should place more focus on finding other solutions to the UC budget deficit.

In their September bimonthly meeting, the UC Regents discussed numerous ideas to add revenue to the UC budget, from restructuring existing general revenue bonds to consolidating infrastructure and clinical services at UC medical centers. The UCOP does not plan to increase tuition as a source of revenue in the coming year, said Dianne Klein, a UC spokeswoman.

Monetizing parking is one such measure that could offer the UC high financial benefit and has demonstrated evidence of success. The UC could institute a concession lease, which would increase parking fees and allow the university to receive more payment for their parking assets. The increase in fixed-rate fees for parking would impact visitors, students and employees who use parking. Ohio State University successfully monetized their 37,000 parking spaces and created $483 million in revenue.

With approximately 121,000 parking spaces, the UC could expect to generate even more revenue to reinvest in its budget.

Though monetizing parking is a lengthy, complicated process, it worked for a campus in the past. This example of success warrants the UC’s attention.

The state and university aim for long, multiterm budgets because, in theory, they offer stability. The promise of continued funding increases keeps top-notch faculty committed to the university and offers tuition stability that eases doubts of students and families concerned about their ability to pay for their education.

Gov. Brown has the best intentions in his proposal to reinvest funds into the UC. Unfortunately, the history of failed compacts simply does not give his proposal enough credibility to warrant the UC’s dependence on a long-term budget.

Former governors Arnold Schwarzenegger and Gray Davis each established long-term budget agreements between the UC and the state.

Both governors then instituted budget cuts to the UC that violated their compacts.

Moreover, Jonathan Stein, the 2012-2013 UC Student Regent, said he is unsure whether the governor’s proposal will go into effect at all, as the state legislature has yet to pass it.

“(Gov. Brown) is only one piece of state government,” Stein said. “It remains to be seen whether the rest of state government is going to embrace the UC the way that (Brown) has.”

Even if the state legislature approves the multiterm plan, it will be subject to change if state funds fall short of the expected revenue increases.

The University’s support for Brown’s proposal is founded on the expectation that new sources of revenue will materialize from the passage of Proposition 30, Klein said.

The proposed budget promises a 5 percent increase this academic year, a 5 percent increase for next year and a 4 percent increase for the next two consecutive years, Stein said.

While these increases would ease financial strain on the UC, depending upon sources of funding contingent on state revenue from Proposition 30 is misguided. Proposition 30 does not specifically earmark any money for the UC, Klein said. The growth in tax revenue does not guarantee additional funding – in fact, the state cannot even guarantee a continued growth in tax revenues over the next few years.

Although the increase in funding from the state is a welcome change, until the state has proven its ability to follow through on a compact with the university, the UC’s central governance should focus more on changes to the funding model that can be implemented immediately and depend less on the state budget for success.

Email Shepherd at [email protected]. Send general comments to [email protected] or tweet us @DBOpinion.