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UC fears further State budget cuts

David Scharfenberg
Thursday September 19, 2002

The University of California’s chief budget official said further state cuts and voter rejection of a $13 billion construction bond in November would have grave impacts on the nine-campus system. 

Academic programs and a host of building projects, including the replacement of UC Berkeley’s seismically-suspect Stanley Hall, are in jeopardy. 

“If the bond issue doesn’t pass, we’re going to have a significant problem,” said UC Vice President for Budget Larry Hershman, speaking at the Board of Regents meeting Wednesday in San Francisco. 

The measure, Proposition 47, includes $11.4 billion for the state’s kindergarten through 12th-grade schools and $1.65 billion for higher education. Just over $408 million would go to the University of California. 

Roughly $80 million in construction projects slated for this year, including the replacement of Stanley Hall, will not go forward if voters reject Proposition 47 in November, university officials said. Over $300 million in projects next year would be in jeopardy as well. 

Hershman also expressed fears that UC, which took a relatively modest $108 million cut when Gov. Gray Davis signed the final 2002-2003 state budget earlier this month, may face further reductions. 

The legislature has directed Davis to recommend up to $750 million in additional cuts to “state operations” by January. The university could be a target of the reductions. 

“We’re going to do everything in our power to try to convince the governor and Department of Finance to minimize our cuts,” Hershman said. 

Department of Finance spokesperson Anita Gore said the $750 million in reductions are “still under discussion.” 

Gore noted that the governor has made education a top priority in the past. But she acknowledged that higher education and the prison system are two “big ticket” items that went relatively untouched in the September budget – suggesting that they could face further reductions. 

Hershman said it could be weeks or even months before the university learns if it will face further cuts this year. 

Next year could be even worse, he said, with the Legislative Analyst’s Office predicting a $10 billion shortfall. The Board of Regents, which has held the line on student fees for eight years, may have to consider an increase if the 2003-2004 budget is lean, Hershman suggested. 

A September Field Poll found early support for Proposition 47, with 54 percent of likely voters in favor, 35 percent opposed and 13 percent undecided. 

Field Poll Director Mark DiCamillo warned that only one in three of the voters had heard of the initiative when polled, but said the initial support for the measure is important. Bond measures that face early opposition or a 50-50 split generally fail, he said. 

The major stumbling blocks for Proposition 47 supporters, according to DiCamillo, are the large amount of money involved – $13 billion – and an economic downturn which has eroded voter confidence in the state’s fiscal health. 

These obstacles have UC officials concerned. 

“At this point, the outcome is seriously in question,” said Bruce Darling, UC’s senior vice president for university affairs, at the Board of Regents meeting. 

Darling said supporters, including the university, business leaders and the California Teachers Association have already won $7 million in commitments to fund a “Yes on 47” campaign. 

There is no organized opposition to the measure. But Lewis K. Uhler, president of the Sacramento-based National Tax Limitation Committee, said the state cannot afford such a large bond in a time of rising deficits. 

“Adding to the debt at this time is simply irresponsible,” Uhler said. “We could be up to our eyeballs in red ink.” 

The bond issue, if passed, would provide funding for two years of construction. Defeat would not only eliminate this year’s projects, Hershman said, but jeopardize next year’s plans. 

In the absence of bond money, he noted, the university would have to ask a financially-troubled state government for a direct cash infusion of over $300 million from its general fund. 

A second two-year construction bond, including $10 billion for public schools and $2.3 billion for higher education will go before voters in March 2004.  

A total of $1.3 billion, including the 2002 and 2004 bonds, is at stake for UC. The university would use the money for the replacement and rehabilitation of academic buildings.  

The university typically pays for the construction of housing and other capital projects out of its own budget, although a statewide housing bond on the November ballot includes a small amount of money for higher education housing.