Monday, October 19, 2015

LAO Puts Out a Reminder

The Legislative Analyst's Office (LAO) has just published its annual review of the state budget: "The California Spending Plan." If you look at the change in reserves (regular + rainy day under Prop 2), total reserves rise by $1.5 billion. So you can think of that fact as pointing to a surplus of that amount. Since Prop 2 includes some funding for debt repayment, it could be argued that you should add such repayment and if you do the surplus rises to $3 billion. So by that measure, the state is doing OK. Total reserves are expected to come to $4.6 billion by the end of the current fiscal year. That's a reserve-to-spending ratio of around 4% which would be quickly swallowed up by any downward economic movement.

Perhaps the most important thing from the UC viewpoint is a reminder. UC is doing all kinds of revamping of its pension plan for new hires to qualify for what its officials keep saying is a multiyear deal for pension funding. But this year UC gets only $96 million on a one-time (not multiyear) basis with no guarantee that the later years negotiated with the governor, but not the legislature, promise. To remind everyone of that fact, LAO makes it explicit:

The appropriation in the 2015-16 budget for unfunded liabilities of the University of California Retirement Plan (UCRP) does not constitute an obligation on behalf of the state to appropriate any additional funds in subsequent years for UCRP. (page 29)

You can find the new report at 
Note: There is a typo in the budget tables. Where it lists "encumbrances" of $97 million, the amount should be $971 according to the original budget documents. (The error may eventually be corrected in the version online.)
A summary of the higher ed budget is at:

1 comment:

Michael Meranze said...


I would also point out that the LAO includes that one time payment in claiming that UC got a very high increase in general fund support. If people don't pick apart the actual discussion they will think the deal is better than it is.