Higher Education

The importance of providing access to higher education in California is magnified as the state’s economy grows increasingly dependent on a well-trained workforce, the forging of new knowledge, and the advancement of science. Based on the guiding principles of the Master Plan for Higher Education, California’s segments of public higher education—the University of California (UC), the California State University (CSU), and the California Community Colleges (CCCs)—together provide educational opportunities to all who seek to prepare themselves to succeed in a rapidly changing world. Providing high quality education at an affordable price is the primary goal for all of the segments. The Administration remains strongly committed to this goal.

The Administration has entered into a Partnership Agreement with UC and CSU that underscores the Administration’s commitment to financial support and the segments’ commitments to accountability. The Partnership supports the segments’ efforts to maintain quality while planning for growth. Annual funding is contingent on progress by the segments in achieving their accountability goals.

• The Partnership’s funding components are based on the following principles:
• An average annual increase of four percent to the prior year’s state-funded base.
• Enrollment funding based on a marginal cost formula developed with the State.
• An additional one percent for core areas of the budget that have previously experienced shortfalls (building maintenance, instructional technology, instructional equipment replacement, and libraries).
• Funding for annuitant health and dental benefits.
• Support for general obligation or lease revenue bonds to fund capital outlay.
• One-time funding and funding for new or expanded initiatives that are important to the State as a whole may be provided above the funding in the Partnership, contingent on the State’s fiscal situation.

The Partnership agreement includes accountability measures that the systems will strive to achieve, specifying goals and outcomes in key areas of importance to the State. Figure HIED-1 shows some of UC’s and CSU’s major accomplishments under the Partnership.

For the seventh consecutive year, there will be no increases to systemwide mandatory student fees. Current fee levels at UC and CSU continue to be moderate in comparison to similar institutions nationwide, and students will pay only a fraction of the total cost of their education. The majority of this cost is provided by the State. For UC, the 2001-02 cost of education for a general campus student (using the methodology developed by the California Postsecondary Education Commission [CPEC]) is $16,197; students pay approximately 23 percent, and the General Fund supports approximately 69 percent. For CSU, the average cost of education is $11,045; students pay approximately 15 percent of this total cost, and the General Fund supports 80 percent. A variety of other funding sources make up the difference between student fees and General Fund support. For the CCCs, the General Fund and local tax share is more than 93 percent of the $4,824 cost of education.

For the CCCs, the Governor’s Budget includes funding for enrollment growth above the statutory amount and a full cost-of-living adjustment (COLA) of 3.91 percent for both general apportionments and categorical programs. Regular enrollment fees for the CCCs remain at $11 per credit unit—less than half that of the next lowest state in the nation and less than 25 percent of the national average.

Additional new funding and programs for each higher education segment are discussed below. Enrollments for 2001-02 are indicated in Figure HIED-2. Total funding levels (excluding capital outlay) are shown in Figure HIED-3.

General Fund Increases—The Budget provides a total State General Fund increase of $202.5 million, the net change after accounting for an increase of $310.6 million and a reduction of $107.9 million associated with one-time funding provided in the 2000 Budget Act. Of this total, $245.4 million relates to the Partnership Agreement and includes the following:

• $21.5 million to avoid increases in mandatory systemwide student fees and fees for professional school students.
• $119.7 million for a 4 percent increase to the University’s State General Fund base.
• $52.2 million for enrollment growth.
• $29.9 million to support the third year of a four-year plan to address chronic shortfalls in core areas of the Budget, including building maintenance, instructional technology, instructional equipment replacement, and library materials.
• $20.7 million to fully fund State support for summer instruction at the Berkeley, Los Angeles, and Santa Barbara campuses.
• $829,000 for annuitant health and dental benefits, consistent with the benefit costs for civil service annuitants, and $664,000 for the increased cost of payments for lease purchase bonds.

UC plans to use these funds, supplemented with additional UC income, to support costs associated with enrollment growth, employee compensation, cost increases in non-salary budgets, and building maintenance for new space coming on line, as discussed below.

In addition, $5.6 million in permanent funding above the University’s basic budget is provided for initiatives in the areas of graduate and professional school outreach, student retention services, and ASSIST—Articulation System Stimulating Inter-Institutional Student Transfer. The Budget also provides $57 million in one-time funding for several initiatives including research, start-up costs associated with the Merced campus, Internet2, deferred maintenance, instructional equipment, and library materials. All of these initiatives, as well as the major programs in the Budget, are described in the following sections.

Student Fees—For the seventh consecutive year, the Budget provides funds ($21.5 million) to avoid an increase in mandatory systemwide student fees. Annual mandatory systemwide fees for California undergraduate students will remain at $3,429 and at $3,609 for graduate students. The total cost to avoid fee increases includes $20 million to avoid mandatory systemwide student fees and $1.5 million to avoid an increase in professional school fees.

Student Enrollment—The Budget provides UC with $52.2 million to increase enrollments by 5,700 full-time equivalent (FTE) students in 2001-02, for a total budgeted General Campus and Health Sciences enrollment of 179,688 (including the 3,422 summer FTE students referenced in Year Round Instruction below). UC plans to target growth of about 1,000 budgeted FTE in the fields of engineering and computer sciences for a total of approximately 20,000 FTE. This is the fourth year of an eight-year plan to increase enrollment in these fields to about 24,000 FTE students by 2005-06. The Budget also assumes enrollment growth of 450 FTE students associated with UC’s plan to more than double the number of students who graduate from UC with education credentials over the next several years. This represents an increase of about 50 percent over the number enrolled in 1999-00 in these programs.

Year-Round Operations—The Budget includes $20.7 million to fund the full cost of existing summer enrollment (3,422 full-time equivalent students) at the Berkeley, Los Angeles, and Santa Barbara campuses at the agreed-upon marginal cost of instruction. The State provided funds in the 2000 Budget Act to reduce fees for summer students at all eight UC general campuses (San Francisco is a health sciences campus). As a result, fees charged for UC-matriculated students who attend a summer term will now be equivalent to fees paid during the regular academic year. UC plans to increase summer enrollment over time as one way of accommodating the dramatic enrollment growth anticipated during the next decade. Funding provided in the 2001-02 Budget is the first step in a multi-year plan to phase in State-supported summer instruction at all UC general campuses, with priority given to severely impacted campuses.

Employee Compensation—Using available Partnership funding, UC will engage in collective bargaining negotiations to determine appropriate adjustments to faculty and/or staff salaries.

Price Increase—UC plans to allocate $25.7 million to offset the impact of inflation on its non-salary budget. This will assist the University in maintaining the purchasing power needed to buy commodities necessary for the operation of the campuses.

Strengthening the Quality of Undergraduate Education—The University’s spending plan includes $8 million for the second year of a multi-year plan to improve the quality of undergraduate education. The University will move toward restoration of the University’s student-faculty ratio to its historic level of 17.6:1, the ratio that existed before the budget reductions of the early 1990s. The student-faculty ratio is an important indicator of quality in higher education institutions. The University’s current student-faculty ratio is 18.6:1, which is higher than that of comparable public and private institutions. The University will use the funds to hire additional faculty, reduce class sizes, offer additional seminars, provide increased opportunities for undergraduates to work with faculty on research projects, provide additional instructional support funds to academic departments and faculty, and increase academic advising for students.

Core Budget Needs—In 1999-00, the Governor supported the first year of a four-year plan to address chronic funding shortfalls in core areas of the Budget. The UC budget plan includes funding for the third year of this four-year plan, providing $11 million for ongoing building maintenance, $12 million for instructional technology, $2 million for instructional equipment replacement, and $5 million for library materials. All four of these core areas of the Budget are critical to maintaining the quality of education at UC. The Budget provides an additional $20 million in one-time funding beyond what is called for under the Partnership for deferred maintenance, instructional equipment, and library materials.

UC Research—The California Master Plan for Higher Education designates UC as the primary State-supported academic agency for research. Industry depends heavily on university-based research; it provides the foundation of knowledge and scientific advancement through which new industries are born and expanded, sparking economic growth that benefits the entire state. Investment in research and development and the creation of a highly educated workforce have become statewide imperatives, as a result of the emergence of knowledge-based industries and the globalization of California’s economy.

California Institutes for Science and Innovation—In 2000-01, the Governor launched a bold initiative to provide UC with $75 million annually for four years to develop three world-class centers for cutting-edge research in science and technology. State funds are to be matched on a two-to-one basis by non-State funds. UC anticipates that the match will actually be significantly higher—closer to three dollars for every State dollar. The science institutes will advance knowledge and train the high-tech workforce needed in fields representing key sectors of California’s economy. After a University-wide competition, the three most outstanding proposals were selected, as follows:

• The California NanoSystems Institute, at UCLA in collaboration with UC Santa Barbara, will enable design and construction of functional devices and materials with components that measure no more than a billionth of a meter.
• The California Institute for Telecommunications and Information Technology, at UC San Diego in collaboration with UC Irvine, will develop innovative new materials and devices to radically expand the capacities of communications and information infrastructures.
• The California Institute for Bioengineering, Biotechnology and Quantitative Biomedicine, at UC San Francisco in collaboration with UC Berkeley and UC Santa Cruz, will bring together scientists in biomedical research, engineering, and physical sciences to seek breakthroughs in diagnosis, treatment, and prevention of disease.

The 2001-02 Budget provides the second $75 million increment of funding for these three institutes, and includes $33 million as the first increment in a three-year plan to develop a fourth institute, a Center for Information Technology at UC Berkeley. At the end of the three years, funding for the fourth institute will equal the funding provided for the first three institutes and will also be matched on a two-to-one basis by non-State funds.

Other Research Investments—The Governor proposes an additional $35 million in one-time funding to invest in research aimed at areas of key economic importance to the state, including:

• $5 million in one-time funds to support cutting edge research efforts in engineering and computer science to help keep California’s high-technology industries vital in a highly competitive international marketplace. The funds will be used to provide support for graduate student researchers—those training to be the state’s next generation of scientists.
• $5 million in one-time funds to support environmental science research that will help assess the impact of generation, utilization, and distribution of energy on California’s atmosphere, and transform environmental field stations into UC observatories for California’s environment. One-half of the funds will be used to support graduate student researchers.
• $3 million in one-time funds to support research into long-term solutions to Pierce’s disease, an insect-transmitted bacterium that threatens California’s wine, table, and raisin grape industry. One-half of the funds will be used to support graduate student researchers.
• $18 million in one-time funds to continue development of Internet2, a high-speed national data transmission network, to assure that faculty and students have the access they need to encourage cooperative research initiatives within UC and with other countries. UC has used permanent funding provided in previous budgets to complete the link between the northern and southern "hubs" of the network, as well as to improve the campus infrastructure needed to provide direct access to Internet2.
• $4 million to continue biomarker research through the Center for the Medical Investigation of Neurodevelopmental Disorders (the MIND Institute). This research will attempt to determine whether specific biomarkers are present at birth in children who later develop certain neurodevelopmental disorders.
• $2 million to increase the permanent research budget for the MIND Institute to support related investigations in the areas of animal models, immunology, brain damage, molecular biology, and genetics.

Outreach—The Budget includes $1.5 million to expand graduate and professional outreach programs intended to identify potential candidates and help them prepare for and apply to graduate and professional programs; and $1.1 million to expand ASSIST—Articulation System Stimulating Inter-Institutional Student Transfer—a computerized information system that provides counselors and students with detailed course transfer and articulation information on-line to help them plan their academic careers, facilitate a seamless transfer process, and reduce the number of redundant courses they take as they move from community colleges to universities.

Student Retention Services—The Budget includes $3 million to expand programs aimed at retaining students in postsecondary education institutions so they complete their degrees and are better prepared to pursue advanced studies. Funding will be used to expand the Mathematics, Engineering, and Science Achievement (MESA) undergraduate program and the Science, Mathematics, and Technology Program, as well as other services that provide counseling and career guidance, tutoring, services to students with disabilities, summer bridge programs, and orientation services.

Merced Campus—The University is planning to open the Merced campus by Fall 2004, consistent with the timeline requested by the Governor. This campus will provide greater access to UC for students in the Central Valley and will stimulate the economic growth potential of the Central Valley. Previous planning had aimed at opening doors to the first on-campus students by 2005-06. The Administration has requested that State agencies and local governments work with UC officials to accelerate that opening by one year. UC is now developing plans to begin offering for-credit courses to enrolled students before 2004-05. In recognition of the accelerated opening date, the 2001-02 Budget includes $160.4 million General Fund for construction of the initial infrastructure and the first two buildings on the Merced campus, and $2 million in one-time funding for start-up expenses associated with recruiting faculty in time for the accelerated start date.

Capital Outlay—In addition to funding for Merced and the Institutes, the Budget provides $203.3 million from bond funds for the 2001-02 capital improvement program to be supported by general obligation bond Proposition 1A, which was approved by voters statewide in November 1998. This amount includes funding for UC to equip six projects for which construction has already been approved by the State, and $193.2 million to fund 26 major capital projects. Of the 26 major capital projects, funds will support construction or design completion and construction for 11 projects, as well as initial or continuing design on 15 projects. Projects are needed to meet seismic, life-safety, and infrastructure requirements and provide for facilities required for planned enrollment growth.

The Budget provides $10 million for the development of the Heckmann Center for Entrepreneurial Management in Palm Desert, near the Riverside campus. The Center is intended to develop global business leaders and conduct research relevant to the expansion of a global understanding of the entrepreneurial process. Programs will be interactive among UC Riverside, CSU San Bernardino, and College of the Desert.

The Budget provides $30 million in capital funding to support a Fresno facility to house the UCSF/Fresno Medical Center teaching program. This facility will replace academic training space that will be lost due to the closure of the University Medical Center at the former county hospital, which must be vacated by October 2001. Additionally, this project consolidates faculty and services currently located at the local Veteran Administration’s hospital and the Area Health Education Center.

General Fund Increases—The Budget provides a total State General Fund increase of $215.9 million, the net change after accounting for an increase of $267.8 million and a reduction of $51.9 million associated with one-time funds provided in the 2000 Budget Act. Of this total, $201.6 million relates to the Partnership Agreement and includes the following:

CSU plans to use these funds, including enrollment income, for costs associated with enrollment, employee compensation, operating costs, and expansion of K-12 academic preparation programs, and strategic academic programs in agriculture, nursing, computer science, engineering, and certain biochemistry and biotechnology fields.

In addition, $44.2 million in permanent funding above the Partnership is provided for the following activities:

• $17.5 million to fully fund 1,000 annual Governor’s Teaching Fellowships, which provide nonrenewable graduate teaching fellowships to students who agree to teach at low-performing schools for four years.
• $18.5 million for the Governor’s K-12 Technology Training Initiative to train teachers to use technology in the classroom to improve student performance.
• $3 million to fully fund permanent fixed costs for start-up of the Channel Islands campus.
• $3 million to expand applied research efforts in the areas of agricultural research, biotechnology (CSUPERB), and marine studies ($1 million each).
• $1 million to expand the Diagnostic Writing Service, which provides feedback to high school students about the strengths and weaknesses of their writing skills.
• $650,000 for a Central Valley Economic Incubator at CSU Fresno to develop a high-technology industry base in the region.
• $500,000 to backfill federal Goals 2000 funds for the California Center for Teaching Careers (CalTeach).

Student Fees—For the seventh year in a row, there is no increase in systemwide mandatory fee rates. CSU’s undergraduate fee level of $1,834 compares even more favorably than a year ago with the 2000-01 average of $3,946 at 15 public institutions used for salary comparisons (see Figure HIED-4). The total cost to avoid fee increases is $16.6 million.

Student Enrollment—The Budget provides CSU with $55.7 million to increase enrollments by 3 percent (8,760 full-time equivalent [FTE] students) in 2001-02, for a total of 303,878 FTE students (including 3,138 summer FTE students; see Year Round Instruction).

Year-Round Instruction—The Budget includes $12.4 million to convert the San Diego, Fullerton, Long Beach and San Francisco campuses (a total of 3,138 FTES) to year-round instruction. As additional campuses approach capacity, funding will be provided to allow them to provide year-round instruction.

Employee Compensation—Using available Partnership funding, CSU will engage in collective bargaining negotiations to determine appropriate adjustments to faculty and/or staff salaries.

Workforce Preparation and Academic Development—CSU plans to allocate $10 million to enhance the quality of, and the number of graduates from, various strategic academic programs, including agriculture, nursing, computer science, engineering, biochemistry, and biotechnology.

Core Budget Needs—CSU plans to allocate $23 million, consistent with the Partnership, to address chronic funding shortfalls in the areas of instructional equipment, library materials and deferred maintenance. The Budget includes an additional $20 million in one-time funding beyond that required by the Partnership, to address these needs.

Research—The Budget includes $3 million for CSU to expand its applied research efforts, including $1 million each for the Agricultural Research Initiative, the CSU Program for Education and Research in Biotechnology, and marine studies research. The Budget also provides $650,000 to develop a Central Valley Economic Incubator at CSU Fresno.

The Budget proposes over $6.2 billion in total funding for the CCCs, reflecting a 7.7 percent increase over the $5.8 billion provided in 2000-01. This funding increase provides the resources for districts to address the following priorities:

• Expansion of access to meet the expected college population demand over the next few years.
• Increased local accountability to prepare a well-trained, competent workforce capable of competing in the job market.
• Additional investment to improve access to disadvantaged residents through programs for the physically disabled and economically disadvantaged.
• Reducing barriers to efficient transfer between all campuses and four-year segments.

In accomplishing these objectives, the Budget also ensures the CCCs continue to be the most affordable higher education system in the nation, regardless of income level. Student fees will remain at $11 per credit unit, the lowest in the nation. Figure HIED-4 compares California’s annual enrollment fees to fees nationwide for 2000-01. The chart shows that the national average for student fees at community colleges is nearly five times the fees paid in California. Additionally, the Budget includes funds to offset the associated fees waived for all needy students.

As Figure HIED-5 shows, total funding for the CCCs in 2001-02 is over $6.2 billion.

Figure HIED-6 shows the funding sources and their proportions from 1999-00 through 2001-02.

Major Budget Year Adjustments—The Budget proposes the following permanent increases for the general apportionment and other programs for 2001-02:

• Growth in Enrollment—$111.9 million for a 3 percent growth in enrollment and categorical programs. This level exceeds the 1.82 percent change in adult population, the current statutory index for system growth. This growth funding will support an additional 30,870 FTEs, bringing the estimated FTEs level to 1,059,899.
• COLA—$153.7 million for a 3.91 percent COLA to fully fund cost of living increases for both general purpose funds and categorical programs.
• Part-Time Faculty Compensation— $62 million to assist districts in making part-time faculty salaries more comparable to full-time faculty salaries for similar work.
• Part-Time Faculty Office Hours—$7.9 million ($3.2 million for 2000-01 and $4.7 million for 2001-02) to expand the number of part-time office hours funded at a 1:1 (state to local) matching ratio. The Administration will propose legislation to reinstate equal participation in funding by both the State and local community colleges, consistent with the Governor’s request.
• Cal Grant Expansion Implementation— $11 million to assist districts with ensuring that all eligible students have access to Cal Grants. Of this amount, approximately $2.7 million will be distributed equally ($25,000 each) to all 108 colleges, and $8.3 million will be allocated proportionally to colleges based upon their number of Pell Grant recipients.
• Teacher and Reading Development—$5 million to expand the number of colleges (from 33 to approximately 50) participating in this program, which encourages students to pursue a career in teaching. Specifically, colleges provide stipends for students working in lower elementary classrooms, develop teacher preparation courses, improve articulation with four-year institutions, and enhance partnerships with other educational sectors.
• Economic Development—$5 million to increase the number of Industry Driven Regional Collaboratives specifically addressing high demand for information technology, nursing, and biotechnology workforce development services.
• Apprenticeship Hours—$800,000 to meet the demands of industry by increasing the number of apprentice training hours from 2.5 million to 2.7 million.
• Disabled Students Programs and Services—$800,000 for live captioning to provide real-time services to hearing-impaired students and to comply with federal equal access requirements.
• Instructional Equipment and Library Materials—$10 million to assist CCCs with replacing worn out, obsolete or inadequate equipment and instructional materials. These funds will be matched at the current rate of one local dollar for every three State dollars provided.
• Scheduled Maintenance and Special Repairs—$10 million to augment base resources available for scheduled maintenance and special repairs, hazardous substances removal, and Americans with Disabilities Act compliance projects.
• Joint Baccalaureates Program—$1 million in one-time General Fund for the San Mateo Community College District (Cañada College) to develop a joint baccalaureates program with San Francisco State University. The proposal consists of $375,000 to design a four-year degree program and $625,000 for tenant improvements, equipment, and modernization.
• State Operations—$1.1 million General Fund and two new positions to address workload demands in the Chancellor’s Office. Included in this amount is funding to fill four existing vacant positions. Specifically, the funds will be used to (1) augment staffing for compliance review, legal affairs, Extended Opportunity Program and Services, and Cooperative Agencies Resources for Education programs technical assistance, and (2) add staffing and consulting services for collecting baseline data on the Teacher Math and Reading Program (one-time), centralizing enrollment management functions for providing families and high school students with more useful information about community college opportunities, and automating much of the additional facilities data collection needed for compliance with the California Infrastructure Planning Act authorized by Chapter 606, Statutes of 1999.

Capital Outlay—The Budget proposes $143.6 million for the CCC from general obligation bonds for capital outlay expenditures. This amount includes $122.3 million for the CCC to complete 53 previously approved projects at 43 campuses and $21 million to allow the CCC to address 23 new major projects at 19 campuses.

The Budget ensures access to higher education for all meritorious students regardless of family resources and continues the Administration’s commitment to providing special programs geared toward students who choose teaching as a career. Financial aid grants from the General Fund and new fee revenue will increase by $147.7 million over 2000-01 (see Figure HIED-7). In addition to these funds, students may access a variety of grants, loans, and work-study programs through federal, private, and other sources. Over 70 percent of UC students and over 58 percent of CSU students currently receive financial aid.

Cal Grant Expansion—By signing into law the single largest expansion of financial aid in California history (Chapter 403, Statutes of 2000), Governor Davis underscored the Administration’s commitment to ensuring access to higher education. Students who apply within one year of high school graduation, are financially needy, and have a grade point average of 3.0 or above will be entitled to a Cal Grant A tuition award for an amount equal to the mandatory systemwide fees at UC or CSU, or up to $9,703 at a private institution. Students who apply within one year of high school graduation, are financially needy, and have a grade point average of 2.0 or above will be entitled to a Cal Grant B subsistence award of up to $1,551 annually for up to four years along with a tuition award in years two through four. Cal Grant C awards of up to $2,592 for tuition and fees plus up to $576 for training-related costs will continue to provide educational opportunities to students who choose short-term occupational or training programs. Cal Grant T awards in an amount equal to the mandatory systemwide fees at UC or CSU, or up to $9,703 at a private institution, will continue to provide support for students who are working toward a teaching credential. The Budget maintains funding for Cal Grant T awards at $10 million. The Administration will propose trailer bill language requiring grantees to begin the associated teaching service requirement within two years following the year in which their award was paid.

The Budget provides a total of $631.5 million for all types of Cal Grants, an increase of $127.9 million, or 25 percent, over the $503.6 million budgeted in 2000-01. In addition, based on a feasibility study report approved by the Department of Information Technology and the Technology Investment Review Unit within the Department of Finance, the Budget provides $4.5 million to the Student Aid Commission (SAC) to make its Grant Delivery System capable of supporting the expanded Cal Grant program.

Assumption Program of Loans for Education (APLE) Website Enhancements—The APLE program assumes up to $19,000 in student loans for up to 6,500 students each year who agree to teach in underserved schools. The Budget includes $253,000 for growing APLE workload and a related efficiency study at the SAC. The SAC will also enhance its website to offer information tailored to students who wish to apply for APLE, including a single application form that may be used as part of the application process at any participating institution of higher education.

Eligibility for Higher Education—The Budget includes $66,000 for California Postsecondary Education Commission (CPEC) to continue the second year of a four-year study examining the eligibility of California’s high school graduates for admission to the state’s public universities. The study will reveal the extent to which the class of 2001 is admissible to UC and to CSU, and whether actual eligibility is consistent with the guidelines set forth in California’s Master Plan for Higher Education.

Outreach Programs—The Budget includes $300,000 in one-time funding for CPEC to survey state outreach programs intended to increase college-going rates to examine how state resources are currently allocated and the extent to which overlap between the programs exists.