Litigators go to court to undo cuts made by legislators and the governor. The state is spending billions of dollars fighting the lawsuits and dealing with increasingly unfavorable rulings.
By Evan Halper
From the Los Angeles Times
August 10, 2009
Reporting from Sacramento — Well-connected lobbyists, political pressure and a good turnout at committee hearings used to be the special interest recipe for protecting turf in the state budget. Now, a potent new ingredient is being increasingly thrown into the mix: top-shelf litigators.
Lawyers are being drafted in droves to unravel spending plans passed by the Legislature and signed by the governor. The goal of these litigators is to get back money their clients lost in the budget process. They are havingconsiderable success, winning one lawsuit after another, costing the state billions of dollars and throwing California's budget process into further tumult.
In the last few months alone, the courts added more than a billion dollars to the state's deficit by declaring illegal reductions in healthcare services, redevelopment agency funds and transportation spending. Another ruling threatens to deprive California of all its federal stimulus money if the state does not rescind a cut to the salaries of home healthcare workers.
Lawyers are scrambling to prepare additional suits related to the budget plan the governor signed last month. On Friday, Senate Leader Darrell Steinberg (D-Sacramento) -- who negotiated the budget -- announced that even he plans to sue. Steinberg said the governor illegally made more than $500 million worth of cuts in the budget plan passed by lawmakers.
"We are seeing more lawsuits and more victories by the groups filing them," said Bob Hertzberg, a former Assembly speaker who now is chairman of California Forward, a think tank focused on reforming the budget process. "They don't want to compromise. . . . It's easier to hire lawyers than lobbyists, and you probably get better outcomes."
The attorneys are seizing on state laws that were drafted in sunnier economic times, some of which were put in place by citizen initiative. They created new programs or expanded existing ones and contained language intended to solidify the place of those programs in state government. Now, the state is broke, and lawmakers and the governor are finding their attempts to take money from the programs rebuffed by the courts. Just the lawsuits themselves cost the state millions of dollars in attorney salaries and other legal fees.
"It's the nature of trying to navigate a budget that has become more and more complicated and more and more difficult to make changes in," said Michael Cohen, a budget expert at the nonpartisan Legislative Analyst's Office, to which lawmakers look for advice on fiscal matters.
He said ironclad assurances that programs will be funded have been etched into the law by lawmakers and voters who "can't always see the future in terms of changing priorities or different circumstances that might come along later."
Lawsuits are one reason most in Sacramento expect a quick collapse of the spending plan the governor signed last month to wipe out a deficit of about $24 billion. There is talk of the governor needing to call an emergency session in the fall so lawmakers can get back to work keeping the state solvent.
Even before last month's signing, multiple groups announced their intention to sue. No sooner was the ink on the budget dry than the California Redevelopment Assn. posted an alert on its website calling for members to sign on as plaintiffs in a lawsuit that was being drafted by the law firm of McDonough, Holland & Allen.
The suit would challenge, among other things, a shuffling of state funds away from redevelopment and into school districts. If the association's litigation succeeded, it would throw the budget out of balance by as much as $2 billion.
That suit would join more than a dozen other big ones pending against the state.
Among them is one in which a court ruled in June that several past raids of public transit money were illegal. The decision did not force the state to return funds, but it blocked taking any more.
Josh Shaw, executive director of the nonprofit California Transit Assn. and a lead plaintiff, said the suit "strikes at the heart of the gimmicks that have been employed year after year in putting together the state budget."
The ruling left lawmakers and the governor scrambling to find a replacement for up to $1 billion of the money they had hoped to use to wipe out the deficit.
The alternative they came up with was to take other transportation funds. But the new pot of money lawmakers wanted to raid was sacred to local governments. They use the funds for road maintenance, street sweeping and other services. The proposal died under the weight of city and county opposition during the all-night legislative session last month when lawmakers passed the budget, leaving a billion-dollar hole in their spending plan.
Medi-Cal doctors, meanwhile, this year have managed to roll back a $1.1-billion cut in their reimbursements. A federal appeals court declared illegal a 10% cut in what physicians are paid by Medi-Cal, the government healthcare program for the poor, that was implemented in July 2008. The court ruled the cut would drive doctors out of the program, endangering the ability of patients to get care and thereby violating minimum federal standards for the program.
Some analysts say that although interest groups have become savvier in their use of litigation, state officials have also invited the suits through their desperate and often sloppy budgeting.
The lawsuits are "a product of the desperation of the people trying to forge budget agreements," said Jean Ross, executive director of the California Budget Project, a think tank that analyzes the effects of spending policies on low-income Californians. "All of the easy solutions are gone. The choices are hard, the gap is wide. People look to riskier and riskier options to come up with savings."
It is hardly a secret in the Capitol that lawmakers sometimes approve budget measures despite their dubious legality because it buys them time. The hope is that by the time the appeals process is finally exhausted -- which can take years -- the economy will have rebounded, filling the gap with new revenue. It's a kind of borrowing.
Such was the case with a plan a few years ago to put off some payments into the pension fund for government workers.
The plan was passed in 2004, on the tail end of the last budget crisis. It stayed on the books for several years. By the time it wound its way through the litigation process, state revenues were on the rebound and there was enough cash to take the plan off the books.
"These cases can go on for a while," said Daniel J.B. Mitchell, a professor of public policy at UCLA. "It's a way of pushing liabilities into the future."
http://www.latimes.com/news/local/la-me-lawsuits10-2009aug10,0,6482327.story
evan.halper@latimes.com
Showing posts with label California budget. Show all posts
Showing posts with label California budget. Show all posts
Monday, August 10, 2009
Sunday, August 9, 2009
Decline of Caifornia Higher Education
California's higher education system could face decline
The state's budget cuts to the three-tiered system -- UC, Cal State and community colleges -- may threaten the system's world-class reputation and the future of a generation of students.
By Larry Gordon, Gale Holland and Mitchell Landsberg
July 31, 2009
California's master plan for higher education, the product of an era of seemingly limitless opportunity, was nearly 30 years old when Nicolette Lafranchi was born in 1988. By the time she turned 20 last year, the plan was working well for her, just as it had for tens of millions of students before her.
That's less true now.
In the wake of massive cuts in California's three-tiered system of public colleges and universities, Lafranchi discovered that she can no longer transfer from Santa Rosa Junior College to San Francisco State University in December, as she had planned, because midyear admissions were eliminated.
Nor is that necessarily her biggest problem. A fall statistics class she needs is full. Without it, she faces the possibility of forfeiting her health insurance, which requires her to carry at least 12 college credits. A scholarship she had been receiving was eliminated.
"It's a lot at one time," she said. "You know, it's kind of sad. You think it's the state of California and we're the next generation, we have to take over from the baby boomers, but we're going to be a group of uneducated people.
"It's not kind of -- it is sad."
California's higher education system, created to offer the opportunity for advancement to any resident, rich or poor, has seen hard times before. But the deep cuts imposed by the Legislature and Gov. Arnold Schwarzenegger this year are raising the question of whether the University of California, the California State University system and the nation's largest community college network can maintain their reputations for quality, or whether a public higher educational system that has been lauded as the world's finest may be in serious decline.
"This notion of the California dream, the idea that every adult could go to college, we've been hacking away at that during every recession for the past 25 years, and this year may well be it," said Patrick M. Callan, president of the San Jose-based National Center for Public Policy and Education. "We're coming out of this really tarnished."
The governor and legislative leaders acknowledge that the cuts will be devastating, but say they have no choice.
Already, campuses from Humboldt to San Diego are raising fees, shedding courses, slashing enrollment, and compelling faculty and staff to take unpaid furlough days. Class sizes are up, library hours are down, and long-held dreams for new programs and schools are on hold.
It's a far cry from the master plan's sweeping ambitions.
The state's college and university systems, which educate 2.3 million students annually, have roots in California's early days, but their modern history begins in 1960, when the educational plan was approved. It called for all state residents to have access to a tuition-free, public higher education, and outlined the mission of the three levels of colleges.
The higher education system has been credited with helping to shape and nurture California's economy and draw striving migrants from around the world.
"It had a magnet effect here for people who had ambitions for their children, that they could come to a place with good and virtually free public education all the way through college," said Richard White, an American history professor at Stanford University.
But White, who earned his bachelor's degree at UC Santa Cruz, said he is worried that the budget cuts and higher student fees could jeopardize that tradition. The state's public universities will remain "perfectly good universities but not what they were before." And that, he said, "is a real tragedy."
So how bad is it?
According to the Department of Finance, the state is expected to spend about $8.7 billion in general revenue funds on UC, Cal State and the community colleges in the coming fiscal year. That would be a 17% drop from two years ago, the department reported.
Federal stimulus money will offset some of that, but there remains much uncertainty about the level of funding from Washington, and how long it will last.
UC's state general revenue fund budget of $2.6 billion will be 20% less than it was two years ago. Cal State is seeing a similar percentage drop to about $2.3 billion.
California's community colleges are not taking quite as big a hit as the two university systems -- down 7% from the past two years, according to the state Legislative Analyst's Office. But they are feeling the pain too. And the reductions come just as the recession is driving newly laid-off workers to their doors.
Students at UC and Cal State say they worry that the cutbacks will lengthen the time it takes to graduate.
UCLA civil engineering major Jesse Diaz, 20, had hoped to finish his bachelor's degree in four years, with one extra quarter, but now expects it will take him five years.
"It's a trickle-down effect and now I have to wait to get those classes," said Diaz, who grew up in Covina.
Critics of the UC administration contend that UC is purposefully aiming the cuts at undergraduates to increase political pressure, and should instead tap other income sources, including endowments and research grants.
"I think it's a really dangerous game and the students are already going to suffer," said Bob Samuels, a UCLA lecturer who is president of UC's American Federation of Teachers union. This week, Samuels was among 67 UCLA lecturers who received warnings that they might face layoffs next year.
Several analysts said they expect raids on UC's blue-chip faculty, many of whom face up to 10% salary cuts.
"Don't be surprised if they leave," warned Barmak Nassirian, associate executive director of the American Assn. of Collegiate Registrars and Admissions Officers. "There's a big difference between having 10 Nobel Laureates on campus and having none." (Actually, UC Berkeley now has seven, the most among the UC system's 10 campuses.)
UC's enormous reservoir of federal and private research grants, hospital revenues and its formidable fundraising operations shield it more than Cal State from the pain of the state's deficits. State funding accounts for less than one-sixth of the UC system's overall operating budget.
California State University has been complaining about funding shortfalls and rising student fees for most of the decade, but the main issue until this year was lack of support for growth.
Now, Cal State Chancellor Charles B. Reed frets about plans to reduce the system's enrollment by 40,000 over the next few years, from a current population of 450,000.
Cal State also has raised student fees by a total of 32% for the coming school year and is imposing 24 furlough days for all employees, including college presidents.
The University of California system has taken a series of belt-tightening steps, including reducing freshman enrollment by 6% and hiking undergraduate fees by 9.3%.
"Everything's being looked at. Everything's on the table," said UCLA Chancellor Gene Block. "It will be a different place in a few years. We will be offering a smaller program."
He said he hoped that could be accomplished without diminishing the overall strength of the education, but said course offerings will be reduced about 10% this fall. Average class sizes will be about 60, up 20% from three years ago.
Throughout the UC system, which enrolls about 225,000 students and employs 180,000 faculty and staff, other austerities are underway. UC Davis is ending a program that trained veterinarians to become professors. UC San Diego has frozen faculty hiring. UC Berkeley has reduced library hours. And UC Riverside is considering delaying its plans for a new medical school.
UC President Mark G. Yudof said such painful steps do not mean the system has collapsed. "I don't think the sky has fallen yet," he said, "but I look at these trends and ask myself how long can you reduce course offerings and still hold your head up and say you are still offering students a high-quality education?"
Yudof and others say this is a time to consider fundamental changes in how UC works. Russell Gould, the Board of Regents chairman, is launching a commission to examine the university's future, including such ideas as: Should its campuses grow or shrink? Should they specialize in certain academic areas? Should majors or departments be reduced, merged or eliminated?
For now, UCLA chemistry professor Robin Garrell said, the campuses will live through this year's cuts.
"But," she said, "it's going to be hard to emerge whole or able to maintain that sense of optimism, the aggressive pursuit of discovery and innovation, and offer the innovative and wonderful experience for our students."
larry.gordon@latimes.com
gale.holland@latimes.com
mitchell.landsberg@latimes.com
The state's budget cuts to the three-tiered system -- UC, Cal State and community colleges -- may threaten the system's world-class reputation and the future of a generation of students.
By Larry Gordon, Gale Holland and Mitchell Landsberg
July 31, 2009
California's master plan for higher education, the product of an era of seemingly limitless opportunity, was nearly 30 years old when Nicolette Lafranchi was born in 1988. By the time she turned 20 last year, the plan was working well for her, just as it had for tens of millions of students before her.
That's less true now.
In the wake of massive cuts in California's three-tiered system of public colleges and universities, Lafranchi discovered that she can no longer transfer from Santa Rosa Junior College to San Francisco State University in December, as she had planned, because midyear admissions were eliminated.
Nor is that necessarily her biggest problem. A fall statistics class she needs is full. Without it, she faces the possibility of forfeiting her health insurance, which requires her to carry at least 12 college credits. A scholarship she had been receiving was eliminated.
"It's a lot at one time," she said. "You know, it's kind of sad. You think it's the state of California and we're the next generation, we have to take over from the baby boomers, but we're going to be a group of uneducated people.
"It's not kind of -- it is sad."
California's higher education system, created to offer the opportunity for advancement to any resident, rich or poor, has seen hard times before. But the deep cuts imposed by the Legislature and Gov. Arnold Schwarzenegger this year are raising the question of whether the University of California, the California State University system and the nation's largest community college network can maintain their reputations for quality, or whether a public higher educational system that has been lauded as the world's finest may be in serious decline.
"This notion of the California dream, the idea that every adult could go to college, we've been hacking away at that during every recession for the past 25 years, and this year may well be it," said Patrick M. Callan, president of the San Jose-based National Center for Public Policy and Education. "We're coming out of this really tarnished."
The governor and legislative leaders acknowledge that the cuts will be devastating, but say they have no choice.
Already, campuses from Humboldt to San Diego are raising fees, shedding courses, slashing enrollment, and compelling faculty and staff to take unpaid furlough days. Class sizes are up, library hours are down, and long-held dreams for new programs and schools are on hold.
It's a far cry from the master plan's sweeping ambitions.
The state's college and university systems, which educate 2.3 million students annually, have roots in California's early days, but their modern history begins in 1960, when the educational plan was approved. It called for all state residents to have access to a tuition-free, public higher education, and outlined the mission of the three levels of colleges.
The higher education system has been credited with helping to shape and nurture California's economy and draw striving migrants from around the world.
"It had a magnet effect here for people who had ambitions for their children, that they could come to a place with good and virtually free public education all the way through college," said Richard White, an American history professor at Stanford University.
But White, who earned his bachelor's degree at UC Santa Cruz, said he is worried that the budget cuts and higher student fees could jeopardize that tradition. The state's public universities will remain "perfectly good universities but not what they were before." And that, he said, "is a real tragedy."
So how bad is it?
According to the Department of Finance, the state is expected to spend about $8.7 billion in general revenue funds on UC, Cal State and the community colleges in the coming fiscal year. That would be a 17% drop from two years ago, the department reported.
Federal stimulus money will offset some of that, but there remains much uncertainty about the level of funding from Washington, and how long it will last.
UC's state general revenue fund budget of $2.6 billion will be 20% less than it was two years ago. Cal State is seeing a similar percentage drop to about $2.3 billion.
California's community colleges are not taking quite as big a hit as the two university systems -- down 7% from the past two years, according to the state Legislative Analyst's Office. But they are feeling the pain too. And the reductions come just as the recession is driving newly laid-off workers to their doors.
Students at UC and Cal State say they worry that the cutbacks will lengthen the time it takes to graduate.
UCLA civil engineering major Jesse Diaz, 20, had hoped to finish his bachelor's degree in four years, with one extra quarter, but now expects it will take him five years.
"It's a trickle-down effect and now I have to wait to get those classes," said Diaz, who grew up in Covina.
Critics of the UC administration contend that UC is purposefully aiming the cuts at undergraduates to increase political pressure, and should instead tap other income sources, including endowments and research grants.
"I think it's a really dangerous game and the students are already going to suffer," said Bob Samuels, a UCLA lecturer who is president of UC's American Federation of Teachers union. This week, Samuels was among 67 UCLA lecturers who received warnings that they might face layoffs next year.
Several analysts said they expect raids on UC's blue-chip faculty, many of whom face up to 10% salary cuts.
"Don't be surprised if they leave," warned Barmak Nassirian, associate executive director of the American Assn. of Collegiate Registrars and Admissions Officers. "There's a big difference between having 10 Nobel Laureates on campus and having none." (Actually, UC Berkeley now has seven, the most among the UC system's 10 campuses.)
UC's enormous reservoir of federal and private research grants, hospital revenues and its formidable fundraising operations shield it more than Cal State from the pain of the state's deficits. State funding accounts for less than one-sixth of the UC system's overall operating budget.
California State University has been complaining about funding shortfalls and rising student fees for most of the decade, but the main issue until this year was lack of support for growth.
Now, Cal State Chancellor Charles B. Reed frets about plans to reduce the system's enrollment by 40,000 over the next few years, from a current population of 450,000.
Cal State also has raised student fees by a total of 32% for the coming school year and is imposing 24 furlough days for all employees, including college presidents.
The University of California system has taken a series of belt-tightening steps, including reducing freshman enrollment by 6% and hiking undergraduate fees by 9.3%.
"Everything's being looked at. Everything's on the table," said UCLA Chancellor Gene Block. "It will be a different place in a few years. We will be offering a smaller program."
He said he hoped that could be accomplished without diminishing the overall strength of the education, but said course offerings will be reduced about 10% this fall. Average class sizes will be about 60, up 20% from three years ago.
Throughout the UC system, which enrolls about 225,000 students and employs 180,000 faculty and staff, other austerities are underway. UC Davis is ending a program that trained veterinarians to become professors. UC San Diego has frozen faculty hiring. UC Berkeley has reduced library hours. And UC Riverside is considering delaying its plans for a new medical school.
UC President Mark G. Yudof said such painful steps do not mean the system has collapsed. "I don't think the sky has fallen yet," he said, "but I look at these trends and ask myself how long can you reduce course offerings and still hold your head up and say you are still offering students a high-quality education?"
Yudof and others say this is a time to consider fundamental changes in how UC works. Russell Gould, the Board of Regents chairman, is launching a commission to examine the university's future, including such ideas as: Should its campuses grow or shrink? Should they specialize in certain academic areas? Should majors or departments be reduced, merged or eliminated?
For now, UCLA chemistry professor Robin Garrell said, the campuses will live through this year's cuts.
"But," she said, "it's going to be hard to emerge whole or able to maintain that sense of optimism, the aggressive pursuit of discovery and innovation, and offer the innovative and wonderful experience for our students."
larry.gordon@latimes.com
gale.holland@latimes.com
mitchell.landsberg@latimes.com
Tuesday, July 14, 2009
State Senator Loni Handcock on Budget Impasse (July 10)
Subject: Senator Hancock's Budget Update
Date: Fri, 10 Jul 2009 17:00:34 -0700
From: Senator.Hancock@senate.ca.gov
Dear Friend,
Last week, as California's budget collapsed, the state Controller began issuing IOUs. This week, California's largest banks say they will soon stop accepting them. We have been brought to this place by the reckless and unnecessary choices made by Governor Schwarzenegger.
In June, Democrats passed a $23 billion budget reduction package - the Governor vetoed it. The package had more than $11 billion in heartbreaking cuts which no Democrat wanted to make. However, we refused to shred the safety net for millions of human beings, as the Governor demanded. We recognized the crisis and made more than a good-faith attempt to address hard economic times and meet the Governor halfway.
After the veto, Democrats attempted a second compromise. We proposed a $23 billion package, this time without taxes - just as he demanded. It included cuts to almost every health and welfare program but still protected the safety net for millions of Californians, although at a very
minimal level. We were able to do this without new revenue by re-allocating $1 billion of redevelopment funds and using $1 billion of reserve funds. A rainy day fund of $3 billion remained. Once again, the Governor refused to meet us half-way.
Then, as June came to a close, the Governor rejected the Legislature's attempt at a short-term solution that would have taken us through the summer and avoided the need to resort to IOUs. With that irresponsible act the Governor dug the state into an even deeper hole, adding at least $3 billion to the deficit. That means that more money will need to be cut from schools, cities, parks and health care.
Now the Governor is demanding long-term policy changes that have been repeatedly turned down by voters through the initiative process and that he cannot get approved through legislation. The Governor is insisting on his way or the highway, and refusing to compromise.
As a result millions of Californians will suffer - and I'm learning that it takes a lot of human suffering to reach even $1 billion in cuts. It didn't have to come to this. California has reasonable and legitimate options to raise revenues: An oil extraction tax (California is the only oil producing state without one) and a tobacco tax, for example, are two such options.
Additionally, we have the largest cash reserve the state has had in 20 years. If reserves are meant to be used on a "rainy day", now is certainly the time to use them. But, the Governor says no.
Rather than move toward compromise, the Governor's position seems to have hardened in recent days, veering away from working together to find a reasonable solution. As a result, we will pay millions more in interest payments and families and small business people throughout the state will face hardship and an uncertain future.
If you would like to see more detailed information about the inaccuracy of the Governor's statements regarding the state's safety net programs, I recommend an analysis prepared by the California State Association of Counties. [loads in Safari but not in Firefox]
Additionally, Assemblywoman Noreen Evans, Chair of the Assembly Budget Committee, has provided a comprehensive analysis of what's wrong with the Governor's so-called "reform" proposals.
I hope that you will continue to make your views known to the Governor on this crucial matter. As always, I look forward to hearing your comments and suggestions.
Sincerely,
Senator Hancock
9th District, California State Senate
Date: Fri, 10 Jul 2009 17:00:34 -0700
From: Senator.Hancock@senate.ca.gov
Dear Friend,
Last week, as California's budget collapsed, the state Controller began issuing IOUs. This week, California's largest banks say they will soon stop accepting them. We have been brought to this place by the reckless and unnecessary choices made by Governor Schwarzenegger.
In June, Democrats passed a $23 billion budget reduction package - the Governor vetoed it. The package had more than $11 billion in heartbreaking cuts which no Democrat wanted to make. However, we refused to shred the safety net for millions of human beings, as the Governor demanded. We recognized the crisis and made more than a good-faith attempt to address hard economic times and meet the Governor halfway.
After the veto, Democrats attempted a second compromise. We proposed a $23 billion package, this time without taxes - just as he demanded. It included cuts to almost every health and welfare program but still protected the safety net for millions of Californians, although at a very
minimal level. We were able to do this without new revenue by re-allocating $1 billion of redevelopment funds and using $1 billion of reserve funds. A rainy day fund of $3 billion remained. Once again, the Governor refused to meet us half-way.
Then, as June came to a close, the Governor rejected the Legislature's attempt at a short-term solution that would have taken us through the summer and avoided the need to resort to IOUs. With that irresponsible act the Governor dug the state into an even deeper hole, adding at least $3 billion to the deficit. That means that more money will need to be cut from schools, cities, parks and health care.
Now the Governor is demanding long-term policy changes that have been repeatedly turned down by voters through the initiative process and that he cannot get approved through legislation. The Governor is insisting on his way or the highway, and refusing to compromise.
As a result millions of Californians will suffer - and I'm learning that it takes a lot of human suffering to reach even $1 billion in cuts. It didn't have to come to this. California has reasonable and legitimate options to raise revenues: An oil extraction tax (California is the only oil producing state without one) and a tobacco tax, for example, are two such options.
Additionally, we have the largest cash reserve the state has had in 20 years. If reserves are meant to be used on a "rainy day", now is certainly the time to use them. But, the Governor says no.
Rather than move toward compromise, the Governor's position seems to have hardened in recent days, veering away from working together to find a reasonable solution. As a result, we will pay millions more in interest payments and families and small business people throughout the state will face hardship and an uncertain future.
If you would like to see more detailed information about the inaccuracy of the Governor's statements regarding the state's safety net programs, I recommend an analysis prepared by the California State Association of Counties. [loads in Safari but not in Firefox]
Additionally, Assemblywoman Noreen Evans, Chair of the Assembly Budget Committee, has provided a comprehensive analysis of what's wrong with the Governor's so-called "reform" proposals.
I hope that you will continue to make your views known to the Governor on this crucial matter. As always, I look forward to hearing your comments and suggestions.
Sincerely,
Senator Hancock
9th District, California State Senate
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