Regents discuss multi-year plan with state that may boost UC funding

After three tumultuous years of declining state support followed by tuition hikes, a funding agreement between the University of California and the government is in the works ““ but experts say such a deal may be unproductive.

This new multi-year plan proposes single-digit tuition increases over the next five years, which the legislature could prevent by directing extra funds to the university system in the form of a “buyout.”

Under the plan, the state would also boost the UC’s funding by at least 4 percent each year if the university meets certain accountability measures, like sufficient transfer enrollment or graduation rates.

UC leadership has been negotiating the plan for several months with the governor’s office and the Department of Finance. Last September, the UC Board of Regents rejected a separate long-range proposal that would have raised tuition by 8 to 16 percent annually for four years.

At its bimonthly meeting at UC San Francisco last week, regents critically questioned the current plan. Many regents worried that the proposal did not provide a firm commitment by the state to fund the university.

“I want to know there’s something in this for the University of California,” said Regent Richard Blum.

Concerns stemmed from the fact that funding for the proposed multi-year agreement hangs on the passage of Gov. Jerry Brown’s tax initiative, which also does not guarantee funding for the UC.

The tax measure, which would temporarily raise the sales tax and income taxes for high earners, is collecting signatures to qualify for the November ballot.

The revenue from the tax increases ““ projected to be anywhere from $6.8 billion to $9 billion ““ would flow into the state’s general fund.

The University would then vie for funding against the other services the general fund supports, such as K-12 education and the state’s penitentiary system.

“(The tax measure) takes pressure off the general fund, but does nothing to (directly) support the UC or (California State University) systems,” said Lt. Gov. Gavin Newsom at the regents meeting.

The long-range plan is also even more unlikely to be passed because negotiations currently exclude the legislature, said Daniel Mitchell, professor emeritus at the UCLA Anderson School of Management and the Luskin School of Public Affairs.

“(The governor) himself does not enact the budget,” Mitchell said. “The legislature makes the final decisions.”

University officials will continue to refine the plan through discussions with the government and the regents, said UC spokeswoman Lynn Tierney.

“No one disagrees on the motive, which is securing a commitment from the state for long-term funding and as much relief from tuition increases as possible,” Tierney said.

UC officials said at Thursday’s meeting that a multi-year agreement would provide stability and predictability, allowing both the university and students’ families to plan their finances. Over the past year and a half, the UC has seen its budget cut by $750 million. To cope with part of that reduction, the university raised tuition twice, by a total of 17.6 percent.

However, long-term funding agreements between the government and the UC have generally not worked out in the past, said Steve Boilard, the managing principal analyst for education at the nonpartisan Legislative Analyst’s Office.

The UC established several compacts, which included spending increases and provided for tuition hikes, in the 1990s and mid-2000s. All these fell through when the state was no longer able to support the funding increases, Boilard said.

The state broke the 2004 agreement, which was supposed to last through the 2010-2011 fiscal year, as the 2008 financial crisis set in. In the larger picture, a funding agreement with the UC would also limit the state’s flexibility in allocating funds to other programs each year, Boilard said.

“The state should look each year at what the priorities are and revise the budget as necessary,” Boilard said.

If the governor’s tax measure does not pass, the UC’s multi-year funding agreement with the state would likely have to be renegotiated.

The university would also have to absorb a $200 million trigger cut under the proposed state budget, which would mean sizeable tuition increases, said UC President Mark Yudof at a press conference at Wednesday’s meeting. He declined to specify the amount of a possible hike.

During the meeting, Yudof also announced his support for the governor’s tax measure and said he will ask the board to do the same at a future meeting.

The UC is also looking at other strategies, including private support and lobbying for higher education, to shore up its budget now and in years to come.