Capitol Alert

Jerry Brown’s budget plan will hold line on higher education spending

Gov. Jerry Brown uses a chart to explain his budget a year ago. He presents his first 2015-16 budget Friday.
Gov. Jerry Brown uses a chart to explain his budget a year ago. He presents his first 2015-16 budget Friday. Sacramento Bee file

Gov. Jerry Brown plans to propose a $113.3 billion general fund state budget Friday that holds fast in response to the University of California’s threat to raise tuition unless the state gives the university system more money.

The budget includes the same, modest annual funding increase – $120 million – that Brown has previously proposed for UC, on the condition that tuition remain flat, a source said.

The California State University system, which has not threatened a tuition increase, is also expected to receive a $120 million budget increase, as well as $25 million in one-time money to help with degree completion efforts.

K-14 education is the big winner in the plan, with Brown expected to propose an increase of about $8 billion, including $1 billion for community colleges, the source said.

The response to UC’s tuition proposal comes in a budget plan that formally opens months of budget talks at the Capitol. The spending plan comes four days after Brown was sworn in for a historic fourth term and includes ongoing funding for high-speed rail and California’s expanding Medi-Cal program, while increasing reserves and paying down debt.

The spending plan is expected to reopen a persistent conflict between Brown and the Democratic-controlled Legislature over how much money to spend on health and human services programs cut during the recession. Brown’s budget includes more money to cover increased caseloads, but no significant spending for new social service programs.

The state’s fiscal situation has improved markedly since the depths of the recession that took hold in 2008. The budget assumes a $4 billion increase in revenue through June 2016, according to a source.

The Brown administration has said the governor’s budget plan will include a proposal to reduce California’s nearly $72billion in unfunded retiree health obligations. The budget proposal was described by the source as a call to bargain with labor unions to reduce costs.

In addition, Brown said in his State of the State address Monday that cities and counties will soon get $533 million toward paying off unreimbursed state mandates. That is more than double recent estimates.

Brown also called Monday for more money for road improvements, though it is unclear how extensively he will address that proposal Friday or if it will take shape over the coming weeks and months.

The budget proposal will include $2.4 billion from the newly approved Proposition 2, half for the rainy-day fund and half to pay down debt. The rainy-day fund would total $2.8 billion by June 2016.

On Monday, Brown said schools will receive $65.7 billion, a 39 percent increase from four years ago. Besides more money, Brown’s past two budgets have included major policy changes in school finance.

In 2013, Brown presented his plan to revamp the state’s system of school funding and to target extra money for the state’s neediest students, known as the Local Control Funding Formula. His January 2014 proposal included his plan to begin paying down more than $74 billion in unfunded teacher pensions.

The pot of state bond money to help pay for new school construction and to modernize existing facilities is almost empty, and Brown has called for major changes in the program. Driving home that point, the governor last August helped scuttle fast-moving legislation to place a $4.3 billion borrowing measure for schools on the November ballot.

Department of Finance spokesman H.D. Palmer said this week that the administration still wants to revamp the school facilities program. He declined to comment on whether Friday’s plan will include a new approach – or any money to help pay for it.

The source said Brown does not plan to include any significant new money for school facilities in the budget, but will seek increased flexibility for local funding measures, as well as changes in law to provide future funding for certain facilities.

Brown and lawmakers last year pledged future proceeds from the state’s carbon-reduction program to help prop up California’s $68 billion high-speed rail project.

The agreement includes 25 percent of future revenue from cap and trade – money industries pay to offset air emissions – and the budget is expected to estimate total cap-and-trade revenue of $1 billion in 2015-16, the source said.

Even before the budget’s release, the administration has warned of a likely increase in future Medi-Cal costs.

Palmer said President Barack Obama’s recent executive action to shield 4 million unauthorized immigrants from deportation nationally will cost California millions of dollars. More definite costs are not expected for several months.

Call Jim Miller, Bee Capitol Bureau, (916) 326-5521. Follow him on Twitter @jimmiller2. Christopher Cadelago and Laurel Rosenhall of The Bee Capitol Bureau contributed to this report.

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