Executive Summary
The Early 1990's
Current Recovery
What Lies Ahead?
Proposed Solutions
Findings from Interviews
Concluding Thoughts
About the National Center

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Page 4 of 11

The Current Recovery

  Figure 2

Figure 2: Click for larger image

  Figure 3

Figure 3: Click for larger image

Fortunately, the economy turned around, and funds have been flowing generously to higher education and to student aid since the 1995-96 budget year. In that year, Governor Pete Wilson agreed to a compact with higher education, covering the final four years of his term in office. Under the compact, the University of California (UC) and the California State University (CSU) were to receive 2% general fund increases in 1995-96, followed by a commitment to provide increases averaging 4% in the following three years.5 In practice, these amounts have been exceeded. Student fee increases were envisioned, with at least one-third of any increase recycled by the institutions as student financial aid. In practice, however, the state has "bought out" fee increases for the last two years; last year, indeed, the state paid for a cut in fees of 5%. Capital outlay funds for UC and CSU were promised at $150 million each per year, figures that have been exceeded. In exchange, UC and CSU promised to increase enrollments by an average of 1% per year, and to achieve productivity enhancements that would save $10 million per year. Community college budgets, meanwhile, had their own guarantee, which was established by Proposition 98; community college budgets increased as the state's revenues grew, and the governor committed to compensating the community colleges for the declines in property tax revenue of the early 1990s. In addition, the number of fee waivers for low-income students in the community colleges was increased. Altogether, the governor's four-year compact was a precedent-setting event, and allowed the institutions to regain fiscal health.

Is all well, then? Should the next governor simply keep the system on autopilot, perhaps renewing the compact in an updated form? In fact, that is largely what the Education Roundtable, representing the institutions, proposes in their recent report, California at the Crossroads. But there are other issues looming on the horizon that make such an approach inadequate. In order to understand these further concerns, we turn now to the several reports.


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