State Budget

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Ah Ha! State Beginning to Acknowledge UC Pension Liability Claim

Byuclafaculty

The State of California is about to sell $2 billion in general obligation bonds.  To do so, it must issue a prospectus detailing the terms of the bond but also the fiscal condition of the state.  The prospectus that has been issued on a preliminary basis includes information on other state liabilities including pensions.  Much of the information is about CalPERS and CalSTRS.  However, the disclosure contains the following statement on page A-82 (which is pdf page 122 at the link towards the bottom of this blog entry): “The University of California maintains a separate retirement system. The state’s General…

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Trigger May Limit Appeal of Governor’s Tax Initiative

Byuclafaculty

There could be as many as three tax initiatives on the November ballot.  The Field Poll just released posed all three to registered voters and reported the results.  One of the three is sponsored by Governor Brown.  Another is sponsored by the California Federation of Teachers – CFT.  (CFT is the smaller of the two teacher unions in California.)  A third is sponsored by Molly Munger, a wealthy individual.  The sponsors of all three have the financial resources to get pay signature-gathering firms to get their initiatives on the ballot. Brown is convinced from focus groups and polling that his…

Latest State Cash Statement

Byuclafaculty

There will be headlines about the latest cash statement – July 2011-January 2012 – issued by the state controller. Somewhat less revenue came in than forecast in the governor’s January budget proposal (which contains estimates for 2011-12 as well as a proposal for 2012-13). But expenditures were a bit less than forecast, too, although some of that reduction was due to delayed payments by the controller.  Nonetheless, it is still quite possible that the current fiscal year’s budget will be in rough balance, using common English parlance (inflow = outflow).  The issue remains of financing the past negative balance in…

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State Out of Cash?

Byuclafaculty

You may see some headlines about the state running out of cash.  The state controller today sent a letter to the legislature supporting passage of a bill allowing for more internal borrowing.  What does this development mean? As we have noted in past blog posts, in the current fiscal year and the past two years, in common English parlance the general fund of the state has been in rough balance, i.e., inflow = outflow.  But prior to that there were big deficits that ultimately left the state with a negative reserve in its general fund. When the general fund has…

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Obama on Higher Ed Tuition and State Support

Byuclafaculty

In the State of the Union address last night, President Obama called on states to enhance their higher ed budgets and universities to hold down tuition.  Whether the California state legislature is going to heed that request is another matter, of course. The President talked about less federal aid if tuition goes up, although in what form that would come about was not clear.Video clip below. “When kids do graduate, the most daunting challenge can be the cost of college.  At a time when Americans owe more in tuition debt than credit card debt, this Congress needs to stop the…

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Bit of a Departure from UC Regents History

Byuclafaculty

Once upon a time, the Regents were a relatively placid group, even when there was controversy.  The photo on the left shows them in 1950 dealing with the loyalty oath issue.  But nowadays, we learn that “the University of California Board of Regents will rally on the steps of the state Capitol in May alongside students, faculty, staff, alumni and other UC supporters, chair Sherry Lansing announced Wednesday (Jan. 18).  In remarks opening the regents’ two-day meeting at UC Riverside, Lansing said the regents will meet in Sacramento May 16 and 17. She said the rally at the state Capitol…

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Plenty of Nothing

Byuclafaculty

Here is a quote from the governor’s recent budget proposal: “The University of California (UC) will receive an increase of $90 million General Fund for base operating costs, which can be used to address costs related to retirement program contributions.” Question: What does it mean?  Answer: Nothing.  UC has always been free to take its general revenue and put it into the pension fund.  Indeed, since the state has so far refused to resume paying the employer contribution for state-funded employees into the pension fund, that is what UC has been doing. Question: If it means nothing, why are you…

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Not Worth a Mention?

Byuclafaculty

Gov. Brown delivered his “State of the State” speech yesterday.  Click below for the speech.  Lots of topics are discussed.  Higher ed, however, is not one of them.  An earlier post noted that UC is like a flea on the back of an elephant when it comes to state budgeting and such.  That message was reinforced yesterday.  But perhaps our absence will make the governor’s heart grow fonder.  Valentine’s Day is coming up after all.  The governor did mention his public pension plan in the speech – which would sweep UC into a larger state change.  With regard to that…

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UC Like a Flea on an Elephant in Latest LAO Budget Report

Byuclafaculty

Maybe the biggest lesson to take away from the Legislative Analyst’s Office latest report on the state budget – responding to the governor’s budget proposal – is that UC is a flea on the back of an elephant.  We are hardly mentioned, other than a reference to possible trigger cuts next year if Governor Brown’s tax initiative isn’t passed by voters. Much of the report focuses on the world of Prop 98, i.e., K-14 schools, not surprisingly since that is such a large chunk of the budget. The LAO is concerned about possible over-optimism in Brown’s budget projections.  Just a…

Don’t Panic About News Stories on State Cash Flows

Byuclafaculty

You may see some headlines about revenues falling short of expectations for the first six months of the fiscal year, based on the state controller’s latest statement.  The legislature assumed phantom money in June so it could pass a budget more or less on time.  Now, however, all of the major taxes are performing within a margin of error relative to estimates made in connection with the latest budget proposal.  Forecasting is not an exact science, even when done without phantoms. Spending is also running about as now forecast. The real problem the state faces is that revenues are short…