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By The Way. . .
LAO Rejects Higher Education Compacts. The Legislative Analysts Office (LAO) has completed an assessment of the multiyear funding agreement with the California State University (CSU) and University of California (UC). This agreement, known as the "compact," ensured UC and CSU minimum annual support budget increases and other funding guarantees. In return UC and CSU agreed to pursue a number of program objectives. Now, the two segments are negotiating a new multi-year budget planning with the Administration. The "compact" has impacted community colleges as it relates to the transfer of their students to UC and CSU.
The LAO indicates that a multi-year compact for higher education could negatively affect program performance and the State Budget process. Further, the proposed compact is unlikely to offer additional or better accountability mechanisms that are available under conventional annual budget agreements. The LAO understands that UC and CSU would prefer guaranteed funding levels, however, this additional stability would come at a price to the state as a whole. Specifically, a multi-year funding commitment would reduce the Legislature's annual budgetary discretion, undermining its ability to respond to the state's policy needs in the face of changing fiscal and demographic conditions. As a result, the LAO recommends that the Legislature not endorse a multi-year funding plan for UC and CSU and, instead, maintain the current mechanism already present in the annual budget process to express its policy and budget priorities and hold the segments accountable for performance.