UCLA Forecast Chart Tells the Underlying Story

Above you see my favorite chart from the UCLA Anderson Forecast. It appears each quarter in the publication that accompanies the Forecast conference. This version is from the most recent Forecast conference which took place on campus in Ackerman last Wednesday. (My brilliant cellphone photo of the conference on the left reminds us that there is – after all – space on campus to hold big conferences, but that is another story.)

What the chart tells us is that California has essentially never recovered from the recession of the early 1990s. The trend line is the Cold War employment growth path for California that prevailed until 1990. After 1990, even at the peaks of the dot-com and housing booms, we get further and further away from the old trend.

Our state political system has never adapted to the new reality. When we had super-normal growth fueled by federal Cold War spending in California, there was always money for roads, schools, social programs, etc. Now there isn’t. UC’s budget is easier to chop in that environment than many other programs because we have an independent source of revenue: tuition.

So far, no one seems willing to inform voters that the fed-fairy went away 21 years ago. Now, if you want more X from state government, you need to pay for it – or give up Y. The result of this failure to inform is the kind of dysfunction in Sacramento we have seen in recent days. And that is why UC needs to develop a new funding model, working as best it can with the legislature, governor, Dept. of Finance, Legislative Analyst, and interest groups.

Or we can just go with the flow in Sacramento: