Governor's Budget - Proposed Workload Budget

The workload budget reflects total funding of $21.7 billion, including $15.1 billion General Fund and Proposition 98 sources for all major segments of Higher Education (excluding infrastructure and stem cell research), which reflects an increase of $1.6 billion ($1.3 billion General Fund and Proposition 98 sources) above the revised 2007-08 budget. These amounts represent an 8-percent total funding increase, including a 9.2-percent increase in General Fund and Proposition 98 sources above the revised 2007-08 budget. The major workload adjustments for 2008-09 include the following for each segment.

HIGHER EDUCATION COMPACT
For the UC and the CSU, the workload budget is based on the Higher Education Compact (Compact) that was initiated in 2004. The Compact provides a six-year resource plan to address annual base budget increases including general support increases of up to 5 percent, enrollment growth of 2.5 percent, student fee increases that may not exceed 10 percent, and other key program elements through 2010-11. In exchange for this fiscal stability, the UC and the CSU committed to preserving and improving student and institutional performance in numerous program areas including program efficiency, utilization of systemwide resources, and student-level outcomes. The resources provided through the Compact enable the UC and the CSU to accomplish their missions outlined in the Master Plan for Higher Education.

UNIVERSITY OF CALIFORNIA
Budget Year

$123.8 million increase (4 percent) for basic budget support consistent with the Compact.
$31 million increase (1 percent) for core instructional needs including library material replacements, deferred maintenance and instructional equipment consistent with the Compact.
$56.4 million increase (2.5 percent) for enrollment growth consistent with the Compact. This would fund an additional 5,000 state-supported students.
$124.8 million increase in fee revenue associated with the Regent's planned 7.4-percent mandatory fee increase for undergraduates, graduates, and professional school students. Fees for certain professional programs will increase between 7 percent and 19 percent. One-third of the revenue generated by the fee increases for undergraduate and professional programs and 45 percent of the revenue generated by the graduate fee increase would be set aside for financial aid.
$10 million in one-time funds for costs associated with sustaining UC Merced operations for a total funding level of $20 million (reduced from the $24 million in 2007-08 due to an agreement to phase down one-time funds as enrollments at Merced increase).
$975,000 increase for the next cohort of 65 students for the PRIME Program, which targets prospective medical doctors for underserved populations.
$11 million increase for annuitant health benefits.
$970,000 increase for lease purchase payments.

Current Year

$13.2 million reduction for lease purchase payments.

CALIFORNIA STATE UNIVERSITY
Budget Year

$116.8 million increase (4 percent) for basic budget support consistent with the Compact.
$29.2 million increase (1 percent) for core instructional needs including library material replacements, deferred maintenance and instructional equipment consistent with the Compact.
$70.1 million increase (2.5 percent) for enrollment growth consistent with the Compact. This would fund an additional 8,572 state-supported students.
$109.8 million increase in fee revenue associated with the Trustees planned 10-percent mandatory fee increase for undergraduate, graduate, and teacher credential candidates. One-third of the revenue generated by the fee increases would be set aside for financial aid.
$124,000 increase (4 percent) for the Capitol Fellows Program consistent with the Compact.
$8.6 million reduction to continue the decrease in retirement costs in the current year.
$4.9 million reduction in lease purchase payments.

Current Year

$8.6 million reduction in retirement costs.
$6.6 million reduction in lease purchase payments.

$171.9 million increase (3 percent) for enrollment growth for Apportionments. This would fund more than 35,000 additional full time equivalent (FTE) students. This level exceeds the minimum 1.5-percent change in the adult population, equally weighted between the 19-to-24 and the 25-to-65 age groups, pursuant to the statutory index included in Chapter 631, Statutes of 2006.

$291.7 million increase for a cost-of-living increase (4.94-percent COLA) for general-purpose Apportionments.

$28.5 million increase for Categorical Program enrollment growth and COLA (3 percent and 4.94 percent, respectively), including Matriculation, Disabled Students Programs and Services, Campus Childcare Tax Bailout, Apprenticeship, and Extended Opportunity Programs and Services.

$8.7 million increase to reflect anticipated lease-purchase debt obligations.

$6.2 million reduction to reflect increased fee revenue and other workload adjustments.

$139.8 million reduction to Apportionments to reflected estimated growth in local property taxes.

$374,000 net increase for the Chancellor's Office state operations for standard baseline adjustments and an increase of $200,000 and two positions for workload associated with nursing and career technical education program local assistance increases resulting from the 2007 budget actions.

$26.7 million increase over the revised 2007-08 level for anticipated growth in the Cal Grant Program, reflecting anticipated undergraduate fee increases of 7.4 percent and 10 percent at UC and CSU, respectively.

$80 million additional increase for Cal Grants as a placeholder amount in the event the UC and CSU raise fees beyond the segments' anticipated fee levels described above. This amount is subject to adjustment after the governing boards take final action in context of potential reductions to balance the budget.

$281,000 net increase in loan assumption payments over the revised 2007-08 level for workload change in the Assumption Program of Loans for Education (APLE), National Guard APLE, State Nursing APLE, and Nurses in State Facilities APLE programs.

Authorization for a total of 8,000 new warrants for the APLE program, 100 new warrants for the State Nursing APLE program, and 100 new warrants for the Nurses in State Facilities APLE program. No new warrants for the National Guard APLE program are proposed.

A net increase of $436,000 for state operations including standard baseline and one-time cost adjustments. This amount also includes an increase of $2 million and up to 11 new positions to enable the Commission to replace shared services assuming the sale of EdFund, the Commission's auxiliary non-profit loan guaranty agency that implements the state's federal student loan guarantee function. This augmentation is offset by a reduction of 6 positions and approximately $1 million associated with CSAC's Federal Programs Division which would no longer be necessary under the sale. Both adjustments are subject to adjustment in the spring when more is known about the timing of a sale, the details and actual resource needs.

$331,000 in anticipated federal funds is proposed to fund the Cash for College program pursuant to Chapter 741, Statues of 2007.

$30.2 million in savings in the Cal Grant and APLE programs due to revised projections of need.

$157,000 net increase in state operations associated with standard baseline adjustments.

The budget also assumes a $500 million reduction in anticipated one-time General Fund revenues from the pending sale, or other arrangement, of the state's Federal Family Education Loan (FFEL) program guaranty agency, EdFund. Chapters 182 and 189, Statutes of 2007, authorized the state to sell or enter into another arrangement that would maximize the value of this asset for the state. At that time, it was estimated that a sale would result in approximately $1 billion of revenue. Since that time, federal legislation has reduced the primary income streams for guaranty agencies, including the account maintenance fee and the collection/retention fee, that support guarantee functions nationally-thereby reducing the value to prospective purchasers.

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