Ménage à Trois Budget Negotiations Reveal Pluses and Minuses for UC

Legislative Democrats have released a version on the 2012-13 budget that differs from the governor’s May Revise, mainly in featuring lesser cuts to social welfare programs and a smaller reserve projected for the general fund a year from now (June 30, 2013).  This release is part of a negotiation process between legislative Dems and the governor, partly in the media and partly behind closed doors.  Because a simple majority can pass a budget under rules approved by voters in 2010, the GOP is effectively not part of the negotiations.

Back in the day when a two-thirds vote was required, budget deals used to be cut by what was called the Big 5 (the four legislative leaders – majority and minority – and the governor).  But now we have a Ménage à Trois with only the two majority leaders and the governor. From the UC perspective, below is what can be gleaned from the newly-released legislative budget:

University of California Excerpt (page 38 of budget document)

* Elimination of Programs Earmarked in UC's Base Budget.  Denies the Governor's January proposal to eliminate state prioritized programs and reinstates budget bill language with current year funding levels.

* Elimination of Enrollment Targets. Denies the Governor's January proposal to eliminate the budget bill language that sets the university's enrollment target for the budget year.

* Long-Term Funding Flexibility Proposals.  Denies the Governor's January proposals to provide the university with extensive flexibility to: 1) create a new "Funding Agreement," and, 2) change the General Obligation bond payment and Lease Revenue Bond structure that would have made the budget year the last year in which the university received funding adjustments.  Approve budget bill language expressing intent to approve future adjustments.

*Funding Augmentation for the University's Retirement Plan. Approves $51.5 million in General Fund support to the university and budget bill language specifically to earmark contributions to the University of California Retirement Plan (UCRP) for state General Fund and tuition-funded employees, with the recognition that this funding does not constitute a state obligation to providing funding in future years and that any future funding, if any, will be determined by the Legislature.

*Trigger Reductions. Approves the Governor's May Revise proposal to increase the University of California's trigger reduction to $250 million, in the event that the November tax initiative fails passage by voters.

The full legislative proposal for a budget is at:

http://abgt.assembly.ca.gov/sites/abgt.assembly.ca.gov/files/Subcommittee%20Reports%202012-13%20BudgetFinal.pdf

The general thrust of the legislative budget as far as UC goes is to drop provisions that relax legislative control of UC activity.  Notable in that regard is the negative language regarding a long-term “funding agreement” which UCOP has been discussing with the governor and touting to the Regents.  The legislature is saying that a deal with the governor is not a deal with the legislature. 

Language related to the pension includes funding which is earmarked for the pension (apparently a deviation from the governor’s version which allowed UC to use its allocation for the pension) but reiterates that the state has no obligation in the future to contribute anything more. Net, this is an advance on the governor’s version.

The trigger cut of $250 million if the governor’s tax initiative in November doesn’t pass remains.  Since the legislature and the governor agree on this point, it will be in the final enacted budget.  In theory, if the initiative doesn’t pass, the legislature could at that time revise the trigger but the odds of changing the UC cut are slim.

As noted in a prior post, the legislative deadline for enactment of a budget is Friday.  See http://uclafacultyassociation.blogspot.com/2012/06/june-15.html for more information.

We'll soon see who in the Ménage à Trois controls the state's money: