This morning the governor released his proposed 2017-18 state budget. The entire budget can be found at the Department of Finance (DOF) website. AICCU issued a public response to the governor’s budget.
Among the highlights:
General budget overview
· The General Fund (GF) expenditures for 2017-18 is proposed to be $122.5 billion, $241 million less than the final 2016-17 budget.
· There is expected to be a nearly $2 billion budget deficit, reflecting a drop in revenues.
· Across the board, each of the state’s “big three” revenues—the income, sales, and corporation taxes—are showing weakness and the governor continues to preach prudence.
· The governor proposes to stem the deficit through a pull-back of one-time spending commitments made in last year’s budget.
· The Rainy Day Fund will continue to be invested in, raising the amount to $7.9 billion.
· The budget allocates $2.2 billion in cap-and-trade auction revenues to continue investments programs to decrease emissions.
· The budget proposes a transportation funding package to provide $4.2 billion annually to improve highways and local roads, expand public transit, and improve trade infrastructure.
· Finance Director Michael Cohen noted that this proposed budget is based on current federal policies moving forward. They have, however, been planning for various scenarios—such as major changes to the Affordable Care Act, trade, and immigration—but did not go into detail.
Higher Education Overview
· The Budget proposes total funding of $31.9 billion ($17.5 billion GF and local property tax and $14.4 billion other funds) for higher education. This total reflects both direct funding to the public segments and costs of financial aid students may use at eligible institutions.
· The budget amount reflects about a 1% increase in total expenditures on higher education, though some sectors fare better than others.
Financial Aid News
· California Student Aid Commission (CSAC): As expected, the governor did not include a repeal of the previous cuts to the Cal Grant program for students at an AICCU institution, nor did he permanently repeal the impending 11.3% cut. The 11.3% cut reflects $1,028 cut to each student’s award. AICCU has been working with the Legislature to include these monies and will work with DOF to keep them in the final budget. We will reach out to AICCU member institutions with a grassroots advocacy plan.
· CSAC: The governor proposes to phase out the Middle Class Scholarship. Beginning in 2017‑18, awards will be renewed only for the approximately 37,000 students who received awards in 2016‑17, with no new awards for the program. By 2020‑21, this proposal will reduce annual GF costs by $115.8 million.
· CSAC: A decrease of $52.4 million GF in 2016‑17 and $24.5 million General Fund in 2017‑18 to reflect estimated costs.
Teacher Workforce Overview
· The budget continues funding for existing programs, but does not propose new programs.
Public Higher Education Overview
California Community Colleges
· Chancellor’s Office State Operations: An increase of $378,000 General Fund and two Vice Chancellor positions to assist the Chancellor’s Office’s efforts to improve student success, address equity disparities, and develop the Guided Pathways Program.
· Guided Pathways: An increase of $150 million one‑time Proposition 98 General Fund for grants to community colleges to develop an integrated, institution‑wide approach to student success.
· Increased Operating Expenses: An increase of $23.6 million Proposition 98 General Fund to support increased community college operating expenses in areas such as employee benefits, facilities, professional development, and other general expenses.
· Innovation Awards: An increase of $20 million one‑time Proposition 98 General Fund to provide innovation grants to incent the development and implementation of innovative practices in various functional areas as determined by the Chancellor.
· Online Education Initiative: An increase of $10 million Proposition 98 General Fund to provide system‑wide access to the Initiative’s learning management system.
California State University
· Augmentations for University Operations: An increase of $161.2 million GF that was determined as follows:
o $131.2 million representing the amount provided to the UC.
o $26 million representing the final installment of funds committed when the state made changes to the Middle Class Scholarship Program in 2015.
o $5 million representing the final installment of funds committed when the state made changes to the way in which capital outlay for the CSU is funded.
University of California
· Augmentation for University Operations: An increase of $131.2 million GF representing a 4‑percent increase in funds consistent with the existing agreement between the Governor and the UC President.
· Proposition 2 Debt Funds: $169 million Proposition 2 funds one‑time for the unfunded liability of the UC Retirement Plan. The amount represents the final installment of a total of $436 million in one‑time funds provided over a three‑year period.
The Legislature will now start to hold budget subcommittee hearings on various portions of the proposed budget pertaining to their purview. Typically, the two budget subcommittees that have jurisdiction over the California Student Aid Commission have hearings in March and April. AICCU will keep institutions apprised of hearing schedules and invite campus representatives and students to testify in the hearings.