By Evan Storms
My factional bias against its flagship school aside, the fact stands that this has not been a good year for the University of California system. The decision last November by the Board of Regents to raise student fees by a considerable—some would say unconscionable—thirty-two percent, is only the most obvious and well-publicized of the UC system’s mounting difficulties. Concurrent with the rise in fees has been a sharp rise in staff cuts and a sharp fall in faculty recruitment across the ten UC campuses. Compounding that, state funding for those campuses has fallen by thousands of dollars per student, forcing the universities to curtail course offerings, cut back on student services, and cancel plans for additions and improvements to standing facilities.
The fee hike in particular and the retrenchments in general have been met by protests from students, parents, and faculty. Their general aim seems to be to convince, by means of political pressure, the Board of Regents, and, more broadly, the California legislature, that the UC system needs to remain both as affordable and as well-funded as it had been in better economic conditions. In the words of the dean of the Berkeley College of Chemistry: “Dismantling this institution, which is a huge economic driver for the state, is a stupendously stupid thing to do, but that’s the path the legislature has embarked on.”
In the minds of the protestors, the primary problem facing the UC system is political under-appreciation: the California legislature simply does not understand the value of the UC system. And the solution to that problem is, for them, a popular movement to realign politicians’ values and reestablish funding UC system as one of the state’s foremost budgetary priorities. If only the legislature realized the value of the UC system, these protestors seem to think, then the system could be spared from these short-sighted and unnecessary funding cuts.
On this point, I think the protestors are mistaken. Not that the UC system is not “a huge economic driver for the state,” or that it is unimportant compared California’s other budgetary obligations. But the problem facing the UC system is not political under-appreciation—it is fiscal unsoundness.
The state budget has been alternating between precarious, short-lived balance and deep, systematic deficits for the past decade. Looking to projections by the Legislative Analyst’s Office (LAO), we see that even during period of strong economic growth from 2005 to 2007, the state continued to post multibillion dollar operating deficits leading up to the 2008-2009 recession. And, in large part, the only reason the state was able to finance those deficits was through borrowing backing by expectations that housing prices would maintain their steep upward trajectory since the growth of the housing market was a major source of revenue for the state. Given, then, that the state faced operating deficits while the housing bubble was nearing its peak, it is no surprise that California finds itself with a projected $20 billion deficit for the 2010-2011 fiscal year with the bubble having burst and the ramifications ongoing.
Economic reality demanded that the California government make sizable spending cuts throughout the public sector—demanded, in the sense that the state would otherwise not have the funds to finance its operation. Indeed, although the legislature has managed to enact $30 billion in spending reductions, there are still serious concerns about its ability to repay its debt, concerns which have manifested themselves into lower credit ratings for the state which have in turn made further borrowing difficult.
And it is with that economic reality—rather than with political unconcern for higher education—that the problems of the UC system lie. So long as the fate of the UC system is bound to the state budget, that system will suffer for the fiscal irresponsibility of the California government. The fact is that no recent efforts on the part of protestors or good intentions on the part of politicians could have prevented the fee hike and funding cuts, at least in the long term; the state simply does not have the resources to continue funding the UC system at past levels. In fact, since the state was running budget deficits in part to achieve those past levels of funding, one could argue that it never had the resources to do so.
At this point, then, demanding that politicians not cut funding for the UC system is like demanding that they pull a rabbit out of a hat (preferably a rabbit worth billions of dollars)—no amount of political pressure will make it possible. The funding cuts are merely the inevitable effect for which the fiscal unsoundness of the California budget is the cause. If the protestors wanted to see those cuts avoided, they would have needed to start protesting a decade ago against the state’s continual budget deficits and the lack of political inaction to correct those deficits.
That said, I don’t think protest is uncalled for. Just the opposite. I think those who want to ensure the future of the UC system, and, more broadly, of the state itself, should make every effort to mount political pressure against a budgeting system which has allowed the legislators to position the state so as to be extremely vulnerable to economic downturns. First and foremost, this demands that the state reduce its expenditures, cease borrowing to finance current expenditures, and break from the practice of accounting for expenditures in one year with expectations of revenue in the next. What we ought to protest is not the spending reductions themselves—which amounts to protesting because the state cannot spend money it claimed to have, but never in fact had—but the practices which made those reductions necessary. We ought to understand every unfunded project or expansion as a burden on the state and a threat to those state programs, such as the UC system, which will suffer the consequences should the state be unable to bear that burden.
It is the economic reality of California’s fiscal unsoundness that has brought about the fee hikes and funding cuts that raise questions about the future of the UC system. And it is the economic reality of the state’s fiscal policy in the coming years which will determine how those questions are answered. Anyone waving a sign should take note.