Budget approved by UC Regents Wednesday unrealistic, governor says

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At its meeting Wednesday, the UC Board of Regents approved the UC’s 2013-2014 budget —  despite objections from Gov. Jerry Brown and Lt. Gov. Gavin Newsom that the plan is unrealistic.

The plan calls for state funding to the University of California to increase by more than $267 million next year — something Newsom said is very unlikely to happen.

“What we’ve basically passed today is a minimum 6 percent tuition increase,” said Newsom. “The budget is unrealistic. I’m concerned that the default to this plan is going to be to raise tuition to levels worse than what we were afraid of if Proposition 30 didn’t pass.”

Last week, California voters passed Prop. 30, which is projected to save the university $250 million this year in trigger cuts built into the state budget that would have gone into effect had it failed. Newsom emphasized that it is a myth that the proposition created new money for the UC system.

Newsom said that even if the state Legislature were able to approve the UC’s request,  the CSU and community college systems would certainly expect similar treatment. Brown seconded Newsom’s concerns, citing the need for alternative solutions for the UC’s revenue problems.

“When you look at this budget, the state would have to increase its funding by 12 percent to the university, and that’s just not likely to happen,” Brown said. “This is a group of bright people around here, and we can figure this out … but you’ve got to change the paradigm. We need reasonable, creative change.”

If state funding is not increased or creative solutions are not found, then tuition increases are inevitable, said Newsom, who expressed frustration over the lack of new ideas at the meeting.

“It’s Groundhog Day for me,” Newson said. “I’d love to be wrong. But it is likely that there will be a request to the UC Board of Regents for a minimum 6 percent tuition increase in the next months … and likely soon again after that.”

UC President Mark Yudof said he recognized that the approved budget is not a finished product but said the plan is not something to which the regents are held.

“I would just like to stress that we are in no way locked in to this plan,” Yudof said. “This is what we would like to do, but there are a lot of contingencies and issues to be worked out here.”

One major revenue-generating aspect of the budget is a debt restructuring that could bring in up to $80 million per year for the next few years.

UC Chief Financial Officer Peter Taylor said that because the UC system has better bond ratings than the state, the university will try to refinance them.

“Think of it as a refinance on a car loan,” said Taylor. “For example, imagine we were paying 5 percent and were able to drop that to 3 percent — the $80 million we are talking about would come from that drop.”

Contact D.J. Sellarole at [email protected]