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California has the largest economy, the largest population, and the third largest landmass 2 Source: Bureau of Economic Analysis, US Dept. of Commerce; US Census Bureau 2000/2008 data
Strong higher education system California schools represent six of the Top 15 public universities in America 1 UC, Berkeley 2 UC, Los Angeles 3 Univ. of Michigan 4 Univ. of Virginia 5 Univ. of North Carolina 6 William and Mary 7 Georgia Tech 7 UC, San Diego 9 Univ. of Illinois 9 Univ. of Wisconsin 11 UC, Davis 11 UC, Santa Barbara 11 Univ. of Washington 14 UC, Irvine 15 Penn State University 3 Source: US News & World Report
California s Unfunded Liabilities and Debt 450000 400000 350000 300000 250000 200000 150000 100000 50000 Category Unfunded Liabilities and Debt All GO Bond Debt $78.5 CalPERS 147.7 CalSTRS 82.8 UCRS 16.6 Retiree Health Care 59.9 Unemployment Insurance 8.4 Total $393.9 Billion 0 Sum of All GO Debt CalPRS Unfunded Liability CalSTRS Unfunded Liability Retiree Health Unfunded Liability UCRS Unfunded Liability Sum of UI Debt 4 Data Sources: CA Office of the Treasurer, CalPRS, CalSTRS, UCRS, CA Employment Development Department
One year estimates of California s structural deficit 5000 0 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 -5000-10000 -15000-20000 5 Data Source: LAO Fiscal Outlooks Note: Fiscal years shown are predicted revenues minus promised spending from previous year s Fiscal Outlook.
For years, California has relied on unsustainable fixes to balance the budget Borrowing from the financial markets 2003-04 issued $15 billion in Economic Recovery Bonds Borrowing from Special Funds Currently owe $2 billion to state Special Funds Borrowing from local government Prop 1A loan of local property taxes, worth $1.7 billion Borrowing from the federal government Unemployment fund owes the federal government $8.4 billion One time federal stimulus dollars 2009-10 one-time federal stimulus of almost $10 billion Borrowing from K-12/14 education State owes a maintenance factor of $9.5 billion Gimmicks like moving last state payroll from one fiscal year to the next Increasing fees and taxes on a short-term or one-time basis 2009 Vehicle License Fee or sales and income taxes raised for a few years Wishful thinking on anticipated revenue Legislature added $4 billion in expected revenue for 11-12 budget which may not appear 6
Revenue streams are unstable 90% of General Fund revenue comes from three sources Capital Gains make up 4-12 percent of General Fund revenue 7 Source: 2011-12 CA Budget, Figure SUM-01
Incredibly reliant on the Federal Government $79 Billion $86 Billion 8 2011-12 Budget Data Source: California Department of Finance, Chart B
Companies expand outside of California 9
California K-12 per pupil spending has fallen relative to other states California per pupil spending State rank % of US average Year 1960 11 113% 1970 16 106% 1980 22 100% 1990 32 81% 2000 37 87% 2008 35 88% 10 Source: US Department of Education
Educational attainment in California 510,000 California students started high school in 2010 74% Will graduate from high school 26% Will have the credits to attend a UC/CSU 13% Will enroll in a UC or CSU 7% Will earn a UC or CSU bachelor s degree within six years 11 Source: US Department of Education, CA Department of Education & CA Postsecondary Education Commission
Do the math: By 2020 2/3 of US jobs will require postsecondary education America will have a collegeeducated workforce shortfall of Three Million Six Million US high-school dropouts will be unemployed 12 Sources: Georgetown University Center on Education and Workforce, McKinsey Global Institute
What if we had capped General and Special Funds spending increases at inflation plus population growth? 13 Data Sources: LAO Historical Budgets, CA Department of Industrial Relations
What if we had capped General and Special Funds spending increases at inflation plus population growth? 12 Data Sources: LAO Historical Budgets, CA Department of Industrial Relations
Answer: Surpluses, not deficits 13 Data Sources: LAO Historical Budgets, CA Department of Industrial Relations
Answer: Surpluses, not deficits 13 Data Sources: LAO Historical Budgets, CA Department of Industrial Relations