Friday, November 20, 2009

$20.7 Billion Deficit Projected for 2010-2011 Budget

The Legislative Analyst's Office (LAO) has released its report on the 2010-2011 state budget outlook, warning of continued state budget deficits:

Our forecast of California's General Fund revenues and expenditures shows that the state must address a General Fund budget problem of $20.7 billion between now and the time the Legislature enacts a 2010–11 state budget plan. The budget problem consists of a $6.3 billion projected deficit for 2009–10 and a $14.4 billion gap between projected revenues and spending in 2010–11. Addressing this large shortfall will require painful choices—on top of the difficult choices the Legislature made earlier this year.

The report states:

[T]he scale of the deficits is so vast that we know of no way that the Legislature, the Governor, and voters can avoid making additional, very difficult choices about state priorities. … In the coming years, major state spending programs will have to be significantly reduced. Policymakers will also need to add revenues to the mix.

The report includes forecasts for budget years through 2014-2015. The assumptions the LAO relied upon for its projections include no pay increases for state workers, increased spending on certain programs such as CalWorks and in-home support services, no increased funding for higher education, and a $2 billion increase in prison spending.

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1 comment:

Moravecglobal said...

Just how widespread is the budget crisis at University of California Berkeley? University of California Chancellor Robert J Birgeneau’s ($500,000 salary) eight-year fiscal track record is dismal indeed. He would like to blame the politicians, since they stopped giving him every dollar he has asked for, and the state legislators do share some responsibility for the financial crisis. But not in the sense he means.

A competent chancellor would have been on top of identifying inefficiencies in the system and then crafting a plan to fix them. Competent oversight by the Board of Regents and the legislature would have required him to provide data on problems and on what steps he was taking to solve them. Instead, every year Birgeneau would request a budget increase, the regents would agree to it, and the legislature would provide. The hard questions were avoided by all concerned, and the problems just piled up to $150 million of inefficiencies….until there was no money left.

It’s not that Birgeneau was unaware that there were, in fact, waste and inefficiencies in the system. Faculty and staff have raised issues with senior management, but when they failed to see relevant action taken, they stopped. Finally, Birgeneau ($500,000 salary) engaged some expensive ($3 million) consultants, Bain & Company, to tell him what he should have been able to find out from the bright, engaged people in his own organization.

In short, there is plenty of blame to go around. Merely cutting out inefficiencies will not have the effect desired. But you never want a serious crisis to go to waste. An opportunity now exists for the UC President, Board of Regents, and California Legislators to jolt UC Berkeley back to life, applying some simple oversight check-and-balance management principles. Increasing the budget is not enough; transforming senior management is necessary. The faculty, Academic Senate, Cal. Alumni, financial donors, benefactors await the transformation of senior management.
The author, who has 35 years’ consulting experience, has taught at University of California Berkeley, where he was able to observe the culture and the way senior management work.

(Cal. (UC Berkeley) ranking tumbles from 2nd best. The reality of UC Berkeley) relative decline are clear. In 2004, for example, the London-based Times Higher Education ranked UC Berkeley the second leading research university in the world, just behind Harvard; in 2009 that ranking had tumbled to 39th place.)

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