Higher Ed Grapples with Growing Pension Crisis

 The nonpartisan California Legislative Analyst’s Office has released a report entitled “The 2013-14 Budget: Analysis of the Higher Education Budget.”  In this report the Governor’s budget is criticized, among other things, for proposing to restructure debt at exorbitant cost and failing to link budget outlays to improvements in academic performance.  And, as expected, escalating pension costs are overtaking the higher ed budget, with little leftover for everything else.

 Release of the report was accompanied by the following remarks:

 “In the 2013-14 Governor’s Budget Summary, the Governor expresses major concerns about higher education in California. Most notably, the Governor is concerned about escalating higher education costs, funding models that promote neither efficiency nor effectiveness, and generally poor student outcomes.

 “To address these issues, the Governor lays out a multiyear budget plan. The main component of the plan is large annual unallocated base increases for all three higher education segments. The Governor loosely links these base increases with an expectation the segments improve their performance.

 “Although we believe the Governor’s budget plan has drawn attention to some notable problems, we have serious concerns with several of his specific budget proposals. By providing the segments with large unallocated increases only vaguely connected to undefined performance expectations, the Governor cedes substantial state responsibilities to the segments and takes key higher education decisions out of the Legislature’s control.

 “We recommend the Legislature take a different approach and allocate any new funding first for the state’s highest existing education priorities, including debt service, pension costs, and paying down community college deferrals. If more funding is provided, then we recommend the Legislature link the additional funding with explicit enrollment and performance expectations.”

 What do you think of the LAO’s recommendations?

Tagged as: California Higher Education, california pension crisis