The worst-case fiscal scenario for the California State University (CSU) became even worse Monday when Governor Jerry Brown released his May budget revision. The governor opened up the possibility of a $250 million cut to the CSU next year — $50 million more than what had been on the original budget in January.
The cut’s increase can be blamed on a deficit approximately $7 billion more than what Brown expected in January, Brown said at a press conference Monday. According to the governor, this is the result of less income tax collected than was originally anticipated.
“It’s a difficult budget and reflects the fact that budgets were lower than expected,” Brown said in the press conference.
The CSU budget slash is dependent upon a tax increase voters will face in November. The tax would temporarily raise sales tax from 7.25 percent to 7.5 percent and would increase income tax on those Californians who make more than $250,000 per year.
If voters pass the increase, the $250 million “trigger cut” will not take effect; if it fails, the university will have to find a way to run without the money.
“If the people say ‘No,’ then we’ll have those trigger cuts,” Brown said. “And it will be felt at UCs; it will be felt at all the Cal State campuses.”
The CSU is anticipating the cut as members plan next year’s budget, even though its fate will not be decided until November, university spokesperson Liz Chapin said.
The Cal State Board of Trustees, which discussed potential cost-cutting measures at its meeting last week, will reconvene in July to address the state’s fiscal situation and find ways to address the increase in the possible cut.
“It’s still ongoing,” Chapin said. “So right now, they’re still working to develop strategies regarding the trigger cuts.”
Among the potential strategies discussed is the possibility of closing at least one of the CUS system’s 23 campuses, cutting off state funding to wealthier campuses, discontinuing some academic programs or raising tuition. Some speculated one of the campuses to lose funding could be Cal Poly San Luis Obispo or San Diego State University, but the trustees gave no indication that specific action at one of those campuses was being planned.
Cal Poly is also planning next year’s finances as though the cuts will take place, Vice President of Finance Larry Kelley wrote in an email. According to Kelley, the university will use one-time funding collected this year by higher than expected student retention rates to help offset the potential cut.
“Because of the uncertainty, the plan is to address the possible shortfall in the budget, primarily with one-time funding that is projected to develop from the current year budget,” Kelley wrote.
CSU Chancellor Charles Reed said at last week’s meeting that the CSU needs to increase pressure on the state to fund higher education. He suggested a “trigger on the trigger” that could mean immediate action if Brown’s trigger cuts come into effect, possibly including further tuition hikes.
“Let’s shoot back,” he said. “Let’s pull another trigger.”
But some California analysts predict Brown and Reed may not need to pull their triggers. Cal Poly political science professor and former San Luis Obispo City Councilman Allen Settle said polls show voters will likely pass the governor’s tax initiative in November, provided it stands alone on the ballot.
But the tax increase’s biggest roadblock, Settle said, is the potential of another tax proposal being on the ballot next to the governor’s. This second tax increase would ask voters to pay more for K-12 education in the state by increasing income tax rates across all income levels. Settle said Brown is doing his “damnedest” to make sure voters do not see both taxes on the ballot because it would significantly lower the chance the governor’s tax proposal will pass.
“The economy is such right now that the voters are kind of angry,” Settle said. “They don’t like the size of government. They don’t like the way they’re spending.”
The CSU has taken $750 million in cuts during the past two years, prompting several tuition increases and the implementation of cost-cutting measures, including a systemwide 16 unit cap. If the tax proposal fails and the trigger cuts come into effect, the CSU’s yearly funding will fall to $1.8 billion, a 17-year low for the university system.