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Universities could take $320 million hit

By   /   Friday, May 22nd, 2009  /   Comments Off on Universities could take $320 million hit

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The results of the May 19 special election are in: Tri-county universities — major engines in the region’s economy — could lose more than $320 million in state funding, while some mental health advocates eked out a small victory.

Voters statewide and in the Tri-Counties crushed five of the six propositions designed to prevent a $21 billion state deficit, rejecting the bundle of legislation that included spending limits, increased reserve funds, sustained tax increases and restored education funding. The only proposition to pass May 19 was 1F, a measure that limits legislative pay increases in deficit years.

“We’re all losers,” said Bill Watkins, executive director of the University of California, Santa Barbara, Economic Forecast Project. “We still have a big budget problem.”

Gene Lucas, executive vice chancellor at UCSB, said campus officials still don’t know the precise extent of the damage but offered a quick estimate. He said that under the previous $15 billion deficit, UCSB would have faced a $240 million reduction in its budget. Under the now $21 billion deficit, that number jumps to $321 million.

“If the propositions do not pass, the deficit will swell to $21.3 billion,” he said before the polls had closed May 19. “It’s been my experience, however, that these types of deficits tend to grow as time goes on, so it could be bigger still.”

The university already froze hiring late last year.

“Everyone planned for cuts this year, assuming we would have cuts next year,” said Lucas, who serves as co-chair of the university’s coordinating committee on budget strategy. “We all know another round of cuts will be extremely painful all across the campus.”

David Garth, president and chief executive officer of the San Luis Obispo Chamber of Commerce, was also worried about the negative effects the measures will have on California Polytechnic State University, San Luis Obispo, and other educational institutions.

“At a cursory glance, the colleges are probably going to have to offer fewer classes and admit fewer new students, so it’ll take longer to get through school,” Garth said. “That’s where the economic impact gets a little murky for San Luis Obispo. We don’t know what to make of it yet.”
Garth said the chamber was so confused by the ballot measures that the board decided not to endorse or oppose anything, even though voters came to the chamber looking for guidance.

“It was too complicated to really understand what all the unintended consequences might be,” he said. “The board came to the conclusion that if the legislature needs 40 MBAs and accountants to figure out the state budget and still has trouble, how are we going to understand it?”

Annmarie Cameron, executive director of the Mental Health Association in Santa Barbara, had a lot at stake in the election. Though hardly cause for celebration, the May 19 results prevented some budget shifting that would have dealt a setback to the group’s efforts to help formerly homeless people get back on their feet.

“Proposition 1E would have transferred funds from the Mental Health Services Act, now known as Prop. 63, to the state general fund,” Cameron said. “Our own Garden Street Apartments were funded in part by this vital funding stream. This housing is just one of the projects — another is El Carrillo — enabling formerly homeless individuals to live in their own homes, address their mental health challenges and begin a life of health and recovery.”

Democrat Pedro Nava, an assemblyman who represents much of Santa Barbara and Ventura counties, said that though difficult and unpopular, the propositions remained better than the alternative — deep cuts.

“Having gone through this process now for a number of years, attempting to fix an $8 billion shortfall is easier” than fixing the new $21 billion hole, Nava told the Business Times before the election. He said rejection of the measures would mean “deeper cuts in all of the programs that people care about.”

“The problem is that we’re trying to change a decade of bad decisions with one special election,” said Watkins, the UCSB economist. “If we don’t have a tax increase, that means that recipients of government goods and services are going to pay part or all of the price.”

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