COVER STORY: Holding Out a Tin Cup in the Golden State
It was back in April that the Public Policy Institute of California issued a report about the state’s education skills gap that contained some good news and some bad news.
The bad news was that the state was facing a yawning gap between the number of college graduates and the future supply of jobs requiring a college education. By 2025, the study said, the state would face an education skills gap of 1 million college graduates.
The good news, the institute said, was that with merely a modest investment, the gap could be cut in half by boosting college attendance and improving community college transfer rates.
“California faces a critical challenge,” said Hans Johnson, PPIC associate director and co-author of the report, when it was released. “But the good news is the state can dramatically improve its prospects for economic growth and the futures of its young adult residents with relatively modest investments in the pathways students take to college graduation.”
But that was before a cascading series of events threw the nation’s most populous state into unprecedented budget tumult and slashed education spending at a rate never seen before.
Since the PPIC report was issued, the news has been nearly universally bad:
The California economy cratered due to a dismal housing market and high unemployment, creating a huge budget gap. Personal income fell this year in California for the first time in 70 years, leading to a 34 percent plunge in income tax revenue during the first half of the year. California’s unemployment rate was 11.6 percent in June, the highest in modern record-keeping.
Voters overwhelming rejected $16 billion in new taxes in a May 19 special election. Gov. Arnold Schwarzenegger — who originally said the state’s budget gap must be closed by a mix of cuts, new revenues and moves to stimulate the economy — then reversed course and insisted that the budget be balanced with steep spending cuts and no new taxes.
The state began issuing IOUs instead of checks to contractors.
Months-long negotiations culminated with an all-night legislative session in Sacramento during which lawmakers cut $26 billion from the state’s $100 billion general fund budget, meaning cuts will be felt throughout the state, including record reductions to the state’s renowned community college system, the largest in the nation. The process was spiced by the governor flashing an oversize knife while talking about cutting government spending in a YouTube video.
The budget deal struck by lawmakers and signed into law by Schwarzenegger cut $6 billion from public school districts and community colleges on top of nearly a billion in cuts enacted in the last fiscal year. Another $3 billion was slashed from the state’s university system.
And while the pain of budget cuts will be felt in all corners of the state, higher education has been hit especially hard.
For community colleges — whose 110 institutions enroll 70 percent of all higher education students in California — the cuts are undermining the very mission that defines them: access to higher education for all, especially the poor and disadvantaged, college leaders said. Officials predict that 250,000 students will be turned away from community colleges when classes start later this month.
Chancellor Jack Scott has said the system is at the breaking point, and analysts agree.
“These cuts are real,” said Patrick Murphy, a fellow with the public policy institute. “They will have a real effect on people in terms of access. California doesn’t have the large number of private colleges that states back east have. People depend on the community college system. It’s really kind of sad.”
In an article written for the Modesto Bee, Cheri Cruz, executive director of the Central Valley Higher Education Consortium, succinctly summed it up.
“California’s community colleges and public universities face the worst budget crisis they have ever faced,” she wrote. “Hundreds of millions of dollars have been slashed from budgets. Faculty members and employees have been laid off, and some faced furloughs and pay cuts. Class offerings and enrollments have been cut. Fees have been increased, and student aid reduced.”
Constance Carroll, chancellor of the San Diego Community College District, said students will shoulder the biggest burden of the budget crisis. Not only was the per-unit fee increased from $20 to $26 — still the cheapest in the nation — but access will be severely curtailed.
“We understand the need for cuts,” said Carroll, whose system enrolls 120,000 students. “But some of the cuts are really regrettable. We have had to cut 1,400 class sections. Our enrollment is projected to increase by 20 percent this year. Despite the cuts, demand is off the charts.”
For Carroll’s district, the latest round of budget cuts means a reduction of $26 million, more than 10 percent of its $240 billion budget. To cope, the district has downsized its offerings. It has told students they can take a 16-unit maximum each semester, down from 20, in an effort to open up more academic slots.
But the bottom line is that access to higher education will be reduced, Carroll said. The San Diego system and others are already feeling the effects. Student service counselors report long lines and waits.
“We have been trying to maintain quality as our resources have been shrinking,” she said. “But it comes at the expense of access. The brunt of these cuts will be felt by students who won’t have access.”
Smaller colleges in California also are facing hard times.
Bill Scroggins, president of the College of the Sequoias in California’s Central Valley, is coping with a $6 million reduction on his $58 million budget. The college already was feeling squeezed by earlier state policy decisions. While enrollment at the college is 13,000 students, the state only pays for 10,000, Scroggins said.
“Ten percent of our budget has just evaporated,” he said. “We have to come up with a strategy to deal with it. Our goal is to serve as many students as possible, to protect our full-time employees as much as possible and to remain fiscally sound.”
The college anticipated the downturn and has taken steps to cut spending. It was behind the passage of three bond issues over the last three years, allowing needed facilities to be built and computers to be upgraded without draining the school’s general fund. It moved to reduce health insurance costs for its employees. New energy efficiency systems saved $110,000. The school is trying to negotiate wage concessions with its employees.
“With all that said, we still don’t have enough resources,” he said.
The college had to reduce its academic offers by 25 percent this summer and by 5 percent this fall, despite the fact that enrollment is climbing in the Central Valley, where the need for higher education is acute as the economy is rebuilt.
Unemployment in the region is 17 percent, among the highest in the nation, Scroggins said. Only 40 percent of students enrolled at the college speak English as their first language. Most students are the first in their families to attend college.
In addition, Fresno State University, the nearest four-year institution, has cut its course offering by 21 percent and capped enrollment. The students shut out of Fresno State are expected to head to community college.
“The economy is an information- and technology-driven economy,” Scroggins said. “The jobs will require an education. At the current level of educational attainment of the next two generations, we will not be able to replace the people who are aging and leaving the workforce. If things don’t change, it will be the tin cup state instead of the Golden State.”
According to the public policy institute, the crisis in California is being fed by a pair of demographic trends affecting community colleges across the country: the retirement of the large and relatively well-educated baby boom generation, and the population shift toward groups with historically low rates of college attendance and graduation, particularly Latinos.
The institute reported that at a time when the economy is demanding more highly educated workers, California lags behind many other states in graduation rates. In 1960, the state ranked eight in the percentage of of adults aged 25 to 34 with a baccalaureate degree. In 2006, it had fallen to 23rd place. Only 56 percent of the state’s high school graduates go directly to college. By comparison, in New York, the percentage is 74 percent.
Those numbers create a dire scenario for California.
“All Californians should be worried about the long-term implications of the budget cuts,” the San Jose Mercury News opined in an editorial. “The state will bear a heavy price for rationing and retreating from a commitment to higher education.”
The situation has raised anew questions about whether California needs a sweeping restructuring of its budget processes. Since the passage of Proposition 13 in 1978, the state has relied on volatile income taxes, business taxes and sales taxes to raise revenue. Proposition 13 capped property taxes at 1 percent of a property’s full cash value and required a two-thirds majority vote in both legislative houses for any taxes to be increased.
Scott Lay, executive director of the California League of Community Colleges, said the pain of the budget cuts might be widespread enough to end the era of Proposition 13 and the reliance on Sacramento for nearly all revenue.
“I really don’t think the middle class has borne the brunt of past budget cuts,” she said. “But this might be a seminal year when people realize what has to be done. You can’t balance the budget with cuts alone. As the public gradually finds out what is happening, it might be a wakeup call.”