Wednesday, May 20, 2020

LAO Proposes Lesser Reduction in UC Spending

{Click on image to clarify}
The Legislative Analyst's Office (LAO) summarizes the governor's May Revise proposed cuts to the UC budget relative to January proposal in the table above, which it puts at $628.2 million. (This figure is slightly different - for reasons not explained - from the governor's total of $625.6 million.) By the LAO's calculation, the governor is proposing a cut from the current year in nominal terms of about 16%. LAO then proposes mitigating these cuts by the methods listed on the table below:
{Click on table to clarify}
Under the LAO's proposal, the cuts would be lessened by $338 million. Such a reduction in spending would be somewhat over 7% relative to the current fiscal year. LAO assumes there is around $100 million of unspent funds from this year that could be reallocated to next year. (It's not clear that this supposition is correct.) It also refers to targeted budget reductions, but doesn't enumerate what they are. So the proposed reduction in the cut is really $301 million, not $338 million, with that adjustment. It then proposes reductions of core operations (again not enumerated) of $96 million. So, when you get down to it, it really is calling for use of UC reserves (drawing them down) by $100 million and sliding whatever is unspent and still available from this year into next (which could be much less than what LAO thinks might be left over).

Bottom line: LAO is really mainly proposing use of reserves to cushion the cuts. There appears to be less here than initially meets the eye.

You can find the LAO document from which the tables above were drawn at:

No comments: