State Budget

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Despite Apparent Budget Deal, State Continues Indirect Use of UC’s Credit Card

Byuclafaculty

The state has so far managed to avoid handing out registered warrants (IOUs) instead of making payments in cash. As you will recall, a year ago there were such IOUs issued. Part of the way the state has conserved cash is by not having a budget, so that certain payments could not be legally made. And part has been by deferring payments to various entities at other levels of government that it normally would make. Those entities then have to borrow as best they can or use up reserves to operate. Among the programs to which the state has deferred…

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UC and CSU Official Responses to Proposed State Budget

Byuclafaculty

Excerpt from Inside Higher Ed: Under the (budget) proposal, the state would rely upon a combination of general funds and federal stimulus dollars to prop up the University of California and California State University. While Schwarzenegger had proposed $305 million in restored recurring dollars for each system, the budget deal would give $199 million in recurring dollars and rely on $106 million in one-time federal stimulus funds to make up the difference, university analysts said. “Our hope going forward is we could make that $106 million a permanent increase to our base, but in a fiscally challenged year like this…

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Early Information on the State Budget Proposal

Byuclafaculty

There is now an official document about the proposed state budget available at: http://www.senate.ca.gov/ftp/SEN/COMMITTEE/STANDING/BFR/_home/2010conf/ConfAgenda10610.pdf from the state Senate Committee on Budget and Fiscal Review. There is also a preliminary write up about this proposal at: http://blogs.sacbee.com/capitolalertlatest/2010/10/budget-details-released.html It is apparent there is a lot of deferral into next year and assumed money from the feds that may not arrive. There is a pension proposal which appears to be CalPERS-only, i.e., not UC. And there is a rainy day fund proposition to be put on the ballot in 2012. There is some additional money for UC and CSU which is said to…

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Bits and Pieces Leaking Out on State Budget Deal

Byuclafaculty

The spin doctors are leaking out bits and pieces about the state budget deal which is to be unveiled officially tomorrow. (Unveiled is not the same as enacted.) You can find highlights of this leaking – including a really, really profound quote by yours truly – in a Sacramento Bee story at http://www.sacbee.com/2010/10/05/3080001/schwarzenegger-lawmakers-claim.html There will be a suspension of a previously-enacted, but not yet in effect, business tax break. There will be an assumption of more federal revenue. (Yes, I know that an assumption is not the same as actual cash, but that is what the leak says.) There will…

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California Supreme Court Hands Down the Law: State Furloughs & 2009 Line-Item Vetoes Upheld

Byuclafaculty

Like Moses, the California Supreme Court has just handed down the law. And it says that the governor’s furloughs and line-item vetoes of 2009 were valid. As noted in prior posts, UC furloughs were imposed by the Regents, not the governor, and were not an issue in the cases that wound up at the state Supreme Court. However, had the Court ruled against the governor, it would have possibly raised a back pay liability for affected state workers. If state workers received back pay, there would be pressure on UC to do the same. That now will not happen. The…

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State Budget Negotiations Reportedly Hung Up on Pensions Issue

Byuclafaculty

Supposedly, a “framework” for a state budget deal was worked out last week by the “Big-5” (governor + 4 legislative leaders). News reports suggest that public pensions remain a key issue (although the immediate effect of creating a two-tier pension system, etc., on the state budget for this fiscal year is small.) Democrats want the governor to use collective bargaining with state unions to cut a pension deal. The governor wants the legislature to impose a deal. Note that a budget could be passed that on paper assumes the governor bargains a deal with the unions. Whether the governor would…

Some Background As to Why California Has a Chronic Budget Problem

Byuclafaculty

The UCLA Anderson Forecast today suggested California is in for an extended period of sluggish economic performance. Such sluggishness obviously makes coming to some state budget accord difficult. You can find a press release on the Forecast at http://uclaforecast.com/contents/archive/2010/media_91510_1.asp However, tucked away in each quarterly Forecast publication is an updated version of a chart, reproduced here, that gives a long-run perspective. The chart show a long-term trend rate of employment growth that lasted until about 1990. In the early 1990s, while the nation as a whole had a very mild recession, California had a major one. The year 1990 is…

Good News – Bad News on the State’s Cash Situation and the Prospect for IOUs

Byuclafaculty

The state controller has issued his cash report for the first two months of the fiscal year. He reports $6.7 billion in “unused unborrowed reserves,” essentially cash he can use to pay bills. That sum continues to stave off the need for the kind of registered warrants (IOUs) that have been issued in the past. That’s the good news. The bad news is a) there still is no state budget, b) the cash the controller reports is in part available because, absent a state budget, some bills are not being paid (which saves cash), c) the sum is less than…

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UCLA Anderson Self Sufficiency Plan Getting Media Attention

Byuclafaculty

In an earlier post, initial media reports of the UCLA Anderson School’s plan to move away from state funding (“self sufficiency”) were noted. Since that time, there has been a jump in media attention. A public radio report is the latest. You can hear it by clicking on the video (really an audio) below. UPDATE: Coverage in the LA Times http://www.latimes.com/news/local/la-me-uc-bizschool-20100909,0,1340589.story Coverage in Business Week http://www.businessweek.com/bschools/blogs/mba_admissions/archives/2010/09/ucla_anderson_says_no_to_state_aid.htmlCoverage in LA Business Journal http://www.labusinessjournal.com/news/2010/sep/07/ucla-anderson-become-more-self-sufficient/

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Governor’s Press Conference on the Budget Focuses on Public Pensions

Byuclafaculty

The legislative session ended August 31 with votes on Democratic and Republican versions of the budget that were known in advance not to have sufficient votes. Two thirds is required to pass a budget although there will be a proposition on the November ballot to reduce the requirement to a simple majority. Today, the governor held a press conference. Much of it was devoted to his insistence that a budget deal cannot be reached unless there is pension reform. A link to the press conference is provided below. However, the key point for UC is that we remain in danger…