Adriana Maestas

November 17, 2011 | Economy

California on the Brink of Big Budget Cuts

When California Gov. Jerry Brown signed the state budget back in June, a so-called trigger was built in to ensure cuts if revenues did not meet projections.

Well – it looks like those cuts may go into effect as a new report from the state’s Legislative Analyst Office shows a$3.7 billion hole in the current budget – a hole large enough to set off a trigger of cuts in education and social services.

The automatic cuts include $100 million from both the University of California and California State University systems and some $1 billion in cuts from the K-12 school district budgets. The state has said that it will not allow teacher layoffs, but the school year could be trimmed by up to a week to accommodate the budget shortfall.

Cutting the K-12 school year is problematic for a state that ranks next to last in terms of adult population with a high school diploma. Additionally, in 2007, California ranked 14th in the country for college educated workers over 25 years of age, a definite slip from 8th place in 1981.

A new report, Consequences of Neglect, released this summer by the Institute for Higher Education Leadership & Policy at Cal State Sacramento found that California ranks last among states in funding per college student from state appropriations and fees.

Moreover, the state’s college fee increases are eroding the relative affordability of higher education in the Golden State. One extremely grim finding in the report: the current younger generation of working Californians is less educated than the previous one.

Slicing into already scaled back higher education and K-12 budgets will likely not improve the educational climate in the state and could send a message to the public and would-be investors that things are not improving fast enough in California.

Furthermore, a cycle of stagnant income taxes could be a longer term consequence to having a lesser educated pool of workers laboring in lower paid occupations.

In 2010, California State University Chancellor Charles Reed sounded the alarm on this dilemma addressing the larger economic impact of declining higher education funding in The Los Angeles Times:

“[I]f the state doesn’t increase higher education funding, it will have 1 million fewer college graduates than it needs by 2025.

Just how much more is evident from a new study by ICF International. It found that the California State University system’s 1.96 million graduates employed in the state earn an additional $42 billion annually because of their advanced degrees. Losing the economic activity that future graduates would generate could cost California hundreds of thousands of jobs and dilute the most important ingredient in California’s economic success: a highly educated, diverse workforce capable of fostering the innovation and entrepreneurship of the 21st century.”

Right now, it isn’t certain that the automatic cuts will become a reality because the state’s Department of Finance has not yet released its projections. Budget cuts come into play once the Legislative Analyst Office and the Department of Finance both come out with their analyses, but it is unlikely that one office’s projections are completely off the map especially given California’s slow economic recovery. Through mid-2014, the state Legislative Analyst Office is projecting that unemployment will remain above 10%.

College students have been lobbying in Sacramento against any additional fee increases. The push to reform the infamous Proposition 13, which limited property taxes, continues. This week, the California State University trustees approved a 9% tuition hike despite loud protests. And the UC Regents had to cancel its meeting in San Francisco because of a threat of violence from protesters.

As we head into the 2012 election year and as more people become aware of how cuts in public education will personally affect them, look for more student organizing and parents of K-12 students entering the political fray. The future of education in the nation’s largest state is not the only thing at stake. It’s the ability of California’s workers to innovate and successfully propel the economy forward that’s also on the line.

– The Daily Grito