California students fall into state budget gap

After maintaining a 4.2 GPA and beefing up her transcript with 11 AP classes, Ani Kazaryan thought there would be no doubt as to where she'd be signing up for classes in the fall. But a letter from the University of California, her dream college, sank the high school senior's spirit.

"Regrettably, state funding cuts are preventing the University from offering all qualified applicants like you a space in our fall 2004 freshman class."

Instead, Ani and nearly 7,600 others were offered the choice of spending two years at the community college of their choice before transferring to UC.

The rebuff is a sharp change in direction for the university system that has for 40 years promised a commitment to providing all qualified state residents a higher education. In a race to balance the budget by the end of the this month, Republican Gov. Arnold Schwarzenegger has made a deal with the university system to cut enrollment by 10 percent for the coming year. In exchange, the nine-campus UC system would receive money for enrollment growth beginning in 2005.

Because the university has long been regarded by many as the top state system in the US, and one of the world's great research universities, the tradeoff of short-term enrollment cuts for long-term stability is stirring concerns that go beyond the current crop of college-age Californians.

"Nearly every state university system in America is struggling with how to address the short- and long-term effects of cutbacks in state funding," says Nils Hasslemo, president of the Association of American Universities. Mr. Hasslemo says the bigger trend nationwide is away from investment in public universities altogether - from corporate and private sources - in addition to federal cutbacks. "The question to watch [in California] is how does this play out, and will it injure the system in the long term?"

Leading state Democrats are responding by using the higher education cuts as their go-to-the-mat issue. Needed education funds, they say - about $200 million - is a drop in the bucket to the state's overall budget of $103 billion.

Governor Schwarzenegger and state officials argue that the plan will preserve room for future university growth.

"After several years of budget cuts and fee increases we are trying to prevent more instability at the university that will jeopardize its long-term health," says Brad Hayward, chief spokesman for UC. In the past four years, student enrollment has risen 16 percent while state funding has fallen 16 percent, he says. The result has been substantial fee increases, student course and program cutbacks, and erosion of pay for faculty and staff.

In exchange for withholding admission for nearly 7,600 qualified students, Schwarzenegger and the presidents of the state's two university systems have agreed to a compact that will guarantee lower fee increases in coming years.

"We need more predictability in fees and funding for moderate growth and ability to pay salary increases," says Mr. Hayward. "Instability does real damage to an institution that has huge economic impact on the state economy, its workforce, its and ability to provide public-service programs."

With both legislative houses dominated by Democrats, each has proposed restoring more than $200 million to the UC budget - enough to reverse the exclusion of the state's thousands of qualified UC students that were given the two-year community college option. It's unclear if the reversal would allow deferred students 2004 admission to the university system.

"We feel the university's lifelong promise to its state residents is a top priority," says Darrell Steinberg, head of the Assembly budget committee. "California has always prided itself as a state of opportunity reflected in the finest university system in the world. We told our youth that if you work hard your whole life you get in. We should hold to that, period," he says.

But while governor and legislature haggle over what course to take and how much to fund, many observers say serious damage is already done. According to figures released last week, 1,357 students have accepted the so-called GTO (guaranteed transfer option) and 6,243 have rejected it. Many students have chosen schools in other states, at higher costs.

"This has hurt the credibility of the UC system in a big way," says one college-admission liaison of a leading private school in Los Angeles who requested anonymity. "The kids are unhappy, parents are unhappy, and counselors are unhappy because it has turned an already chaotic process on its head," she says.

With the Senate and Assembly bills now in conference committee, most observers say some version of a bill restoring funds will reach Schwarzenegger's desk within days. But others say the governor has left himself little wiggle room in his agreement with UC and CSU - and he has promised Californians a balanced budget by June 30 with no new taxes.

"There will be those who try to undo the compact which governor Schwarzenegger has agreed to with both universities," says H.D. Palmer, spokesman for the state department of finance. "At a time when California is racing [against] the worst fiscal crunch in recent memory, he has sat down with both presidents and forged an agreement that provides predictability and stability. For now he thinks that [compact] makes the most sense."