California Forum

Every year, CSU and UC must fight for critical state funding. Here is a simple fix

UC Davis students occupy Mrak Hall in 2014 protesting a proposed fee increase. Every year, the state’s inability to better fund the University of California and Cal State systems results in a political fight.
UC Davis students occupy Mrak Hall in 2014 protesting a proposed fee increase. Every year, the state’s inability to better fund the University of California and Cal State systems results in a political fight. pkitagaki@sacbee.com

My father died at the end of August. He never went to college. In fact, he dropped out of school at 16 and didn’t receive his high school diploma until years later. My mom left school in Mexico at 14.

Despite their lack of any higher education, they were able to buy a home in Canoga Park and put three kids through college. But that was the late 1970s and early 1980s.

Dad was in construction and a member of a strong union. UCLA, which we all attended, was only about $200 per quarter. It was still a struggle, but they were able to give us that first boost up the ladder of mobility.

I’ve been on the CSU Board of Trustees for three years and one thing is clear: Nearly every issue we deal with comes down to funding – or the lack of it.

Fast forward 30 years and the picture is much darker. Without a B.A. it’s unlikely that one, or even two parents could provide the same opportunities today.

Union jobs are disappearing and being replaced by low paying jobs in the service or “gig” economy. Automation and globalization have decimated whole swaths of well paying jobs for those with only high school diplomas.

The evidence is clear: A bachelor’s degree is now the minimum requirement for any financially secure future. As political scientist Francis Fukuyama says: “Social class, defined today by one’s level of education, appears to have become the single most important social fracture.”

By studying millions of tax records, researchers from Stanford, Harvard and Berkeley found in the Equality of Opportunity Project that California State University, Los Angeles, is the top booster in the nation of students out of the bottom 20 percent of income ranks into the middle class and beyond to the top 20 percent.

And the Cal State University system as a whole is doing it with less. A recent Public Policy Institute of California report shows that relative to degrees awarded, spending at the CSU has not risen in the past few decades.

The amount of money spent to produce those degrees actually declined by 17 percent from 1987 to 2013. Expenditure per degree fell from $67,000 to just $45,000.

But this is unsustainable. I’ve been on the CSU Board of Trustees for three years and one thing is clear: Nearly every issue we deal with comes down to funding – or the lack of it.

In several meetings, the elected officials on our board have admonished the rest of us not to approve tuition increases to meet growing costs because it would take the pressure off the Legislature and governor to find an enduring solution.

For me, that solution is clear and has been circulating for the past few years in Sacramento.

The idea is straightforward: California’s $2.5 trillion economy is today made up mostly of services, approximately 80 percent. Yet, few services are taxed at all. To do so at a low rate of 2.5 percent would yield an estimated $17.5 billion in annual new revenues. Every 1 per cent tax on this service economy would yield $7 billion.

Not insignificantly, because such a consumption tax would be imposed at the point of sale, more than $2 billion would be collected from out-of-state corporations like lawyers and financial advisers who do business in California.

So the responsible approach to fixing California’s fiscal situation would be to adapt the tax system to our 21st century economy in a way that combines a new sales tax on services with commensurate income tax cuts for the middle class and small business.

Absent action on that front by the Legislature, supporters of the CSU – faculty, employees, students and their families – ought to do for the Cal State what the teacher’s unions did for K-14 in 1988. They passed an initiative, Proposition 98, that guarantees that 40 percent of the state’s general fund goes every year to K-14 schools.

The perpetual funding problem for Cal State could be solved in a similar way – a proposition to pass a 1 percent sales tax on services with revenues dedicated to the CSU. Importantly, if such a reliable stream of funding is established it could also be securitized for borrowing to upgrade and invest in sorely needed new infrastructure, including energy efficiency and earthquake safety.

On a visit to Chico State recently, I and another trustee were berated by a student for not doing our jobs and persuading the Legislature to give the CSU the money we need. It seems to me that we’re always beating around the bush when it comes to finances. And that undermines the ability for forward planning and long-term sustainability.

This most precious asset that is the transmission belt into the middle class for so many Californians is being allowed to deteriorate year after year. Rather than waiting for the Legislature to act, all Californians who benefit from an educated population – and we all do – should act.

All stakeholders should take the initiative and take our case to the public. We are not the bosses, the taxpayers are.

Lillian Kimbell is a trustee of the California State University system and chair of its Education Policy Committee, lillikimbell@calstate.edu.

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