Q&A with Patrick Lenz, Vice President for Budget
As Vice President for Budget, you are UC’s lead negotiator in Sacramento for state funds. Can you describe the process? When negotiating with legislators, what can you offer in exchange for better funding?
In any normal year the process begins when the Regents approve the UC budget and we initiate discussions with the Department of Finance and the Governor’s Office in an effort to get as much funding as possible in the governor’s proposed budget in January. By mid-February, the Legislative Analyst’s Office releases their analysis of the budget. Generally, budget subcommittee hearings begin in March and proceed through the May Revise, which is the Governor’s revision to the budget based on updated projections of revenue (from April 15 tax receipts) and expenditures. When negotiating with legislators for better funding, UC can offer student access (enrollment growth); quality faculty and staff; improving student/faculty ratio; improving time to degree; ensuring that state funding is an investment in an educated and highly trained workforce; and stimulating and sustaining economic growth in California.
The California state budget process has been criticized in many circles. Term limits, Proposition 13, and the 2/3 budget rule are often cited as problems. Do you foresee any solutions? What are the keys to success in navigating the pitfalls in Sacramento?
I believe term limits present a challenge to educating policymakers on who we are as a research university and the enormous benefit we provide to the State of California. The budget suffers from an outdated revenue model that was based on the manufacturing economy of the 1960’s, not the economic environment we face today. I believe there needs to be a change to the two-thirds vote on the budget that precludes the budget from being enacted in a timely fashion and holds the state budget hostage while legislators and the governor make deals on other policy issues in ways that are neither transparent nor often times in the best interest of the state.
What do you consider UC’s most critical state funding needs? How do you determine what UC’s budget “ask” will be?
The state is at crossroads; it needs to determine if California should continue to invest in its public universities. Our state funding per student is half of what it was 20 years ago and we are struggling to maintain the fiscal resources to meet our campus funding needs and maintain a quality UC education, even with the dramatic increase in student fees. Determining the “budget ask” is a process that begins in July or August with extensive consultation, a September Regents’ meeting that identifies what UC has achieved in the recent budget process (if the state budget is enacted by September) and additional consultation through the November Regents meeting. While we prepare a “needs budget” for the UC, it is prioritized given the fiscal condition of the state, but representative of the minimal investment that should be supported from the state General Fund.
The proposed budget does not include funding for UCRP. How are you making the case that the state has a responsibility to contribute to UCRP?
We have the support of the Governor regarding the state’s obligation to UCRP as represented by the $20 million he put into the 2009-10 state budget. However, that funding was deleted by the legislature, and statutory language was adopted that says “It is the intent of the legislature that no new General Fund augmentation be made available for contributions to the University of California Retirement Plan.” My mission is to reverse this language through a Budget Trailer Bill that will recognize the state’s obligation to fund its portion of UCRP, now and in the future. We already have the support of the Governor’s Office and the Department of Finance. Now, we just have to get this bill through the legislature.
The Legislative Analyst’s Office (LAO) often takes positions opposite those and critical of UC. How are you working with the LAO to find more common ground?
I’ve spent 28 years doing state budgets and have the highest regard for the LAO, which I see as a vital institutional resource and fiscal/policy advisory body to a term-limited legislature. However, I have disagreed on more than one occasion with their conclusions. We respond to their policy and budget recommendations and work very closely with the LAO staff to educate them about UC budget and policy issues. However, despite what I consider to be a close personal and working relationship, I believe some of their recommendations represent a “short-sighted” view of the University’s funding needs and California’s rate of return for investing in higher education, and particularly in UC.
There have been calls for UC to sell properties and research stations to raise capital, and one state senator has proposed a “Student Protection Act,” which would require UC and CSU to cap student fee increases at a maximum of 10% per year, and provide a 180-day waiting period for any increases. How are you responding to these ideas?
UC evaluates “surplus property” every year and if the conditions are right, we do sell property. Some property comes with specific conditions such as the profits for any donated property that is sold will go to the donor’s heirs or be placed in a special account to support scholarships. In these cases, none of the proceeds of sale would benefit the university budget. The Gump Station is a world-renowned research facility that generates enormously significant oceanic discoveries and research findings to address global warming. No university funds go to support this research facility; it is all dependent on federal and private grants, along with fees charged for the use of the facility.
Any recommendation to cap fees must be accompanied by a guarantee of state General Fund support. This year, the state General Fund support for the UC budget was reduced by 20% or $637 million, yet the 32% increase in student fees will only generate $330 million (net of financial aid). How can UC support any cap on fees when the state dramatically cuts our budget and we can only generate half of the funding cut by the state through an equally dramatic fee increase? Without a guarantee on the level of state support for the university, any “cap on fees” will leave UC with few options but to continue lay-offs, furloughs, and program reductions, and an inability to replace faculty.
How do you make the case for UC and higher education when so many other state funded agencies and institutions also have their hand out?
California needs to ask itself where it wants to be five years from now, not five months from now, and how it should invest the state’s limited General Fund dollars. There is no rate of return on investing in corrections, but for every $1 the state invests in UC, we provide a $4 return to California’s economy. If the state wants to make progress on improving California’s economy and fiscal stability in the future, we need to invest in UC now.
How are you cooperating with the other higher education segments to secure greater funding for all of California public higher education?
Since the arrival of President Yudof, there has been an ongoing and coordinated effort with Chancellor Reed at the CSU and Chancellor Scott at the California Community Colleges (CCC) to secure additional funding for higher education. This has included not only funding of our respective budgets, but a concerted advocacy effort for full funding of Cal Grant financial aid. On April 27th, UC, CSU, and CCC will conduct a joint lobbying day, in Sacramento.
Many faculty express frustration at the lack of budget “transparency” at UCOP. What steps are you taking to make UC’s budget more transparent?
I’d challenge anyone on the “lack” of transparency on the UC budget given the efforts by the Regents, the Office of the President and our campuses to create more budget forums, the many meetings held by me and my staff with faculty, staff, and student groups, and on-line access to budget information. There may be a need for a continuing education process and we stand prepared to help in any way we can, but I believe the days when the UC budget lacked transparency are long gone.
How is your job distinct from the CFO, the Treasurer, and the EVP for Business Operations?
Primarily, I represent the University of California on all support and capital outlay budget issues in discussions or testimony with the Governor’s Office, legislature, Department of Finance, and Legislative Analyst’s Office. It is my role to advise EVP Brostrom and President Yudof on the development of annual budget recommendations to the UC Regents and to provide updates on the Governor’s or legislature’s action regarding the UC budget. In addition, I oversee all non-state funding for capital facility projects, real estate transactions, sustainability, energy issues, and facility maintenance funding. The CFO, Treasurer, and EVP for Business Operations oversee accounting functions, investments, and the overall operation of the Office of the President, including Human Resources matters.
How does your job intersect with the work of External Relations and State Governmental Relations (SGR)?
There is a critical connection between the Budget Office and External Relations in our efforts to strategically prepare our budget message and develop a communications plan to the Governor, Legislature, and the public about the need to invest in UC. I work closely with SGR on both fiscal and policy issues in order to be prepared to state a University position on any issue that come up during the budget subcommittee hearings. I also coordinate with SGR regarding legislator and legislative staff briefings and our advocacy efforts in Sacramento on the UC budget.
How can the Senate best help you in your important work?
The Senate has been incredibly helpful in educating term-limited legislators on the impact of the state General Fund budget cuts. The Senate has pointed to attracting and retaining faculty to UC, the impact of increasing the student faculty ratio, and the need for graduate student support as examples of the impact of reductions in state funding. The Senate is the front line voice from the campus perspective on the need to invest more, not less, in UC. Legislators have told me that the Senate has paid them a visit and provided concrete and valuable information regarding support for the UC budget. I find the Senate critical in our advocacy efforts in Sacramento and the development of budget recommendations to the UC Regents.