Capitol Alert

More than money at stake in University of California budget negotiations

Assembly Speaker Toni Atkins, Lt. Gov. Gavin Newsom, Gov. Jerry Brown, and University of California President Janet Napolitano listen to students speak during the UC Regents meeting in San Francisco on Nov. 20, 2014.
Assembly Speaker Toni Atkins, Lt. Gov. Gavin Newsom, Gov. Jerry Brown, and University of California President Janet Napolitano listen to students speak during the UC Regents meeting in San Francisco on Nov. 20, 2014. The Associated Press

It started like any number of budget debates at the Capitol: The University of California argued that it has been shortchanged and students will have to bear more of its rising costs if the state doesn’t pay up.

But this year’s back-and-forth with Gov. Jerry Brown and lawmakers not only has unleashed unprecedented fiscal scrutiny of the 10-campus system, it has also placed on the table the previously unthinkable option of stripping UC’s constitutional independence.

“Part of this is money,” said Steve Boilard, executive director of the Center for California Studies, who oversaw higher education policy in the Legislative Analyst’s Office for 14 years. “But there’s a more fundamental issue, which is who gets to call the shots. ... It’s a showdown.”

The outcome could change the university and its relationship with state government for years to come. Backlash to UC’s proposed increase and enrollment policies has evolved into a broader philosophical clash, with state officials seeking more control over the direction of the university, its spending and educational decisions.

Brown, since returning to the governor’s office in 2011, has regularly attended meetings of UC’s governing board to agitate for online classes and other changes he believes will save money. Term limits, meanwhile, have brought new, less experienced legislators who regard UC as an institution more akin to any other government program, Boilard said, and not deserving of the special status its autonomy has allowed.

“The constitution says we can rein in the University of California when we’re concerned about the safety and security of our funds,” said Assemblyman Roger Hernández, D-Baldwin Park, who introduced a bill capping compensation for any UC employee at $500,000. “We’re now exercising that power and that role.”

The conflict sparked in November when the UC Board of Regents conditionally approved five years of tuition increases over Brown’s objections. More recently, UC President Janet Napolitano told lawmakers that, without more money, the system will be forced to cap enrollment of California residents next year but allow more high-paying out-of-staters in the door. Brown has subsequently dispatched budget teams to UC campuses to scrutinize their operations, and legislators have suggested “zero-based budgeting” for the university in future years and drafted a series of bills addressing spending and admissions.

Napolitano said the university is happy to comply with the inquiries and already provides the state with accountability reports on its finances.

“I think they want to satisfy themselves that we are as concerned about cost as they are, and we are,” she said. “Do they want to help pay for the education of more California undergraduates? I think that’s the discussion, a key discussion, that the Legislature has to have.”

The intense legislative focus this year, and UC’s “nuclear option,” represent a “real shift” in how the state government and the university handle one another, Boilard said.

For decades, conversations generally focused on what augmentation the Legislature should make at the margins of UC’s budget, he said. Enrollment growth and inflation drove budget proposals, with an assumption that the base of funding was already accounted for.

Boilard said there was a deference to the university’s autonomy and a sense of trust that UC was policing its own spending.

The Legislature’s philosophy was, “We’re not going to spend a whole lot of time looking inside the black box that is the University of California and just make sure they have funding to grow,” he said. When the state cut almost $1 billion from its appropriations to UC during the recession and the university nearly doubled tuition, “the Legislature kind of looked the other way.”

Many lawmakers now seek a greater role in UC’s operations.

Assemblywoman Shirley Weber, D-San Diego, leader of the budget committee, would like to see more legislative oversight of enrollment, tuition and other administrative functions, similar to the California State University system. A former San Diego State University professor, Weber said she was unaware of how much independence UC has from the state when she was first elected.

“The time is probably right to rethink the relationship between the state and the university,” she said. “We want to help Californians believe they own these institutions.”

Proposed bills range from guaranteed admissions for every eligible student to a constitutional limitation on the percentage of out-of-state students UC could enroll.

Hernández’s $500,000 compensation cap would extend to every UC employee, not just the campus chancellors whose “private-school-level” salaries are often criticized, but also wealthy coaches and doctors that the university says are not paid with state dollars.

“The university has not provided the Legislature with clear and convincing evidence” of how public funds are being used, Hernández said.

He chided top administrators for living “elite” lifestyles that are a “stark departure from public service.” His bill would pull “that leadership back toward its core mission,” he said, and save an estimated $80 million per year.

“Undoubtedly, this is an effort to make sure that the University of California stays on the rails of its original intent,” Hernández said.

At the same time, state officials have dug into UC’s expenditures, looking for efficiencies that could free up money for the university without any additional funding.

Assemblyman Kevin McCarty, D-Sacramento, is leading a new zero-based budgeting process that seeks to account for the entirety of UC’s budget, which also draws from such sources as tuition, grants and its medical centers, and asks the university to justify its expenses.

While not a new idea, it’s never been done before. “We spend too much time looking at the proposed increases and not enough time looking back,” McCarty said.

In one public hearing so far, lawmakers focused on growth in administrative pay; rapidly increasing out-of-state enrollment, which they worry is crowding out California students; and UC’s generous pension system, with double the pensionable salary limit of the state retirement fund.

The committee is unlikely to meet all of its goals before the June budget deadline, however, and work will have to continue into future years.

“There’s not a $200 million suitcase hidden under a couch in the office of the president,” McCarty said.

No proposal is more aggressive than the constitutional amendment to strip UC’s autonomy, introduced by state Sens. Anthony Cannella, R-Modesto, and Ricardo Lara, D-Bell Gardens, last December.

Cannella has been an outspoken critic of UC’s tuition plan. He furiously points out that fee increases during the recession already generate more revenue than the state cut during that time, most of which has since been restored.

“I can’t think of a single other entity that we give that much money to where we have so little oversight,” he said.

Napolitano has dismissed the notion that UC is so “radically broken” it must lose its independence, but Cannella argues that his approach will allow the Legislature to keep the university in check.

“This governor has shown he’s a very strong negotiator, and he’s been able to do some very good things,” Cannella said. “But who knows about four years from now?”

Call The Bee’s Alexei Koseff, (916) 321-5236. Follow him on Twitter @akoseff.

UC budget dance

Key dates in the showdown over the University of California:

Nov. 6 – Just days after the election, UC President Janet Napolitano surprises Gov. Jerry Brown with a five-year plan to raise tuition by up to 5 percent annually, unless the state kicks in more money than already promised.

Nov. 20 – As student protests rage outside, UC’s governing board pushes through the tuition increase over Brown’s objections. Annual fees could ultimately reach $15,563 in 2019-20, up from $12,192 currently.

Dec. 2 – A new session begins with Senate Democrats introducing a plan to buy out the tuition increase and expand enrollment. While also amenable to more funding for the university, Assembly Speaker Toni Atkins calls for a “zero-based budgeting” approach to probe UC’s massive financial resources.

Dec. 4 – State Sens. Anthony Cannella, R-Modesto, and Ricardo Lara, D-Bell Gardens, put forward a constitutional amendment that would strip UC of its constitutional autonomy.

Jan. 9 – In his January budget proposal, Brown conditions any increase in UC funding on a tuition freeze and a cap on lucrative out-of-state students.

Jan. 21 – Brown and Napolitano form a “committee of two” to privately discuss cost reductions and the future of the university.

Feb. 17 – The Assembly begins a series of hearings taking an unprecedented look inside the system’s $27 billion budget.

March 3 – Napolitano raises the stakes again when she announces that, without more money, UC will have to keep California enrollment flat next year and admit more out-of-state students. A rush of legislative proposals follows, including a cap on employee compensation, an admissions guarantee for all eligible students and a constitutional limit on out-of-state enrollment.

Related stories from Sacramento Bee