Overview of the State Budget: UC Portion

We previously posted an overview of the state budget for 2023-24. UC is a small part of that budget, a fact that is easy to forget. It competes with all other potential spending items. Moreover, unlike many other items - e.g., prisons - it has outside revenue, even for core educational services. The governor and legislature know that in a pinch, the Regents can always raise tuition (over the protests of elected officials, of course).

At present, UC has a "compact" with the governor regarding state funding and tuition. We know from past experience that such compacts - to which the legislature is not a party - can melt away in a crisis. But, as we noted in our overview of the state budget, at the moment there is no immediate crisis of the type experienced during the Great Recession of 2008, when a compact with the governor melted quickly and tuition was raised despite protests.

Below is a table dealing with the UC budget, which - as you can see - is edging towards $50 billion in the current year.

Of that close to $50 billion, $4.8 billion is to come directly from the general fund. A roughly comparable amount comes from various federal sources. But most of the UC revenue comes from UC sources such as tuition, hospital revenues, contracts, etc. If we look at all state funds (including the general fund component) flowing into UC, we are talking about $5 billion. So a bit more than a tenth of UC funding comes directly from the state. 

Often you hear about "multipliers" from UC, essentially the economic stimulus from spending on UC. But these can be misleading since if spent elsewhere, the funds would also have multiplier effects. The true multiplier is that by putting in $5 billion, the state gets an enterprise that itself involves almost $50 billion in total direct activity, apart from any spillovers. It's not often you get multipliers of ten for anything.

What about trends? Essentially, in nominal terms, UC has gotten around $5 billion a year from the state for three years, counting the current year. So, in real (inflation-adjusted) terms, UC is getting declining support under the "compact." But as we have noted in prior posts, you will always hear gratitude expressed by the Regents and the UC president, no matter what the trend may be.

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Note: Data for the table come from:

https://ebudget.ca.gov/2023-24/pdf/Enacted/GovernorsBudget/6000/6440.pdf.