UC Regents endorse Proposition 1A,
the State Budget Stabilization Act

California voters will be asked to consider Proposition 1A, also known as the Budget Stabilization Act, on the special statewide May 19 ballot. This is one of six ballot measures that the Governor and the state Legislature have put forward as part of a package of actions to address a $41.6 billion state budget shortfall.

At their March meeting, the University of California Board of Regents endorsed Proposition 1A, the May statewide ballot measure that would establish a "rainy day" reserve fund, regulate the level of state spending each year and increase the amount of funding held in reserve to help guard against the dramatic ups and downs that have characterized state spending in recent years.

If approved by California voters, Prop 1A could result in approximately $16 billion in additional revenue to the state's general fund between 2010-11 and 2012-13. If it is not approved, the general fund may once again be in significant deficit, which likely would necessitate further cuts to state-funded programs.

"By helping the state to achieve a more stable financial picture, Proposition 1A enhances the ability of the University of California to secure more adequate state support to fund its core mission in future years," said Richard C. Blum, the Regents' chairman. "Not only will Prop 1A help avoid further deep budget cuts to higher education and state agencies that are subject to discretionary funding actions of the Legislature and the governor, but it also helps smooth out how state funds are spent in future years to avoid the boom and bust cycles California has experienced in the last decade-and-a-half."

The state budget approved in February for the rest of 2008-09 and the 2009-10 fiscal year contained $115 million in new permanent funding reductions for UC and, by virtue of other growing costs not addressed in the budget, extended the university's state budget challenge to $450 million. The total $450 million shortfall for UC consists of the $115 million in new cuts, $122 million in underfunded enrollments and $213 million in unfunded mandatory costs over the two-year period for utilities, employee health benefits and other inflationary costs. In addition, the final state budget included an additional $255 million one-time reduction that the state expected to backfill with federal stimulus funds. In late April, California received its initial share of the federal stimulus’ state stabilization funds, which provided $268 million for UC. These funds offset the $255 million in additional cuts for UC that were included in the final state budget and provided the university an additional $13 million, making the budget shortfall for UC approximately $437 million.

* The University of California does not support or oppose ballot measures. However, it does seek to objectively evaluate a ballot measure's impact on UC and higher education. For legal guidelines for UC participation in ballot campaigns: www.ucop.edu/state/advocacy/ballotguidelines.html