In The 2020-21 Budget: Analyzing UC and CSU Cost Pressures, the non-partisan California State Legislative Analyst’s Office looks over financial challenges facing the two state university systems.
Here is a teaser description from an email announcing the report:
The state operates two university systems: the University of California (UC) and the California State University (CSU). As it crafts its 2020-21 budget, the state will face pressure to fund numerous university cost increases, including salary and benefit increases, facility projects, enrollment growth, and program expansions. To assist the Legislature in developing its 2020-21 budget plans, this report examines these cost pressures.
We have three main messages regarding university spending in 2020-21. First, the Legislature likely will have sufficient budget capacity to fund inflationary increases. Second, after covering inflationary increases, were the Legislature interested in providing additional funding to UC and CSU, we encourage it to give high priority to addressing the universities’ unfunded liabilities. The universities have billions of dollars in unfunded liabilities relating to pensions and facilities. Accelerating pay down of these liabilities would reduce the burden on future generations to pay these costs and improve the fiscal health of the state and the university systems. Third, the Legislature has options within the universities’ budgets that would allow it to expand budget capacity and cover additional cost pressures or reduce the amount of state funding required to address identified priorities. These options include raising tuition levels, pursuing efficiencies in university operations, and using university reserves to meet strategic goals.
In my opinion, the State Legislature should not fund “inflationary increases” (salary and benefit increases, facility projects, enrollment growth, program expansions) before curing “unfunded liabilities relating to pensions and facilities.”
I predict, however, that State Legislators will do the more enjoyable thing that will please the educational lobby, rather than the more responsible thing.