By Nanette Asimov

Gov. Jerry Brown’s rescue plan for higher education — including his idea to let public colleges and universities decide for themselves how many students to enroll — is flawed, the independent legislative analyst says in a critical new report.

Each year, enrollment levels for the University of California, California State University and the community college system are decided at the state level, depending on what the budget allows.

Brown’s budget proposal for the 2012-13 fiscal year urges lawmakers to approve several changes in how higher education is funded, as well as letting UC, CSU and the community colleges enroll as many or as few students as they wish.

By limiting enrollment, for example, schools effectively would raise the amount of funding available to them per student — something they are hungry for in an era of drastic funding reductions.

Yet Legislative Analyst Mac Taylor recommends that lawmakers reject the enrollment idea, on the ground that it reduces state oversight of higher education.

If schools chose to limit enrollment, for example, the savings might not be used to benefit students, but “could be used to increase salaries for faculty, staff and executives — a goal all three (higher education) segments have expressed at various times,” says the report released Wednesday by Taylor, who advises lawmakers.

Overall, the thrust of Brown’s plan is to give colleges and universities incentives to improve performance in ways not yet specified, while giving them more freedom in how they spend state funds. Enrollment decisions would be just one example of where colleges and universities would have more flexibility in spending decisions.

It’s a philosophy that differs from what the legislative analyst says is prudent, and it’s not yet clear which approach lawmakers will prefer.

Brown wants the state to guarantee a 4 percent yearly increase in funding for four years in exchange for better academic performance. What those improvements would be hasn’t been decided yet, but the governor has suggested they could include higher graduation rates and more students transferring from community colleges to four-year universities.

“The problem is that we haven’t defined how to measure student learning,” said Steve Boilard, higher education director at the Legislative Analyst’s Office. “We haven’t set up targets, and no one is collecting the information. We’re not there yet.”

His office sees other problems with Brown’s proposal.

The governor wants to pay for the funding increases in part by reducing state financial aid, known as Cal Grants, to students at private colleges.

But that could backfire financially at UC and CSU, Boilard said, if many private college students transferred to public campuses so that they could keep a Cal Grant. Or, if the public campuses had no room, then students might avoid college altogether.

‘Bad outcomes’

“Those are pretty bad outcomes,” he said.

H.D. Palmer, a spokesman for Brown, acknowledged the difficulty, but said the state is short of funds.

“We had to find solutions, so the focus is to invest in students who are most likely to graduate,” he said.

Brown is proposing to allocate $9.4 billion to higher education, which would be 21 percent less than it got five years earlier, when the state provided $11.9 billion, the report says.

As part of the plan, colleges and universities would get hammered unless voters approve Brown’s ballot initiative to raise revenue: a five-year income tax hike of up to 2 percent on people earning more than $250,000, and a half-cent sales tax increase.

Failure to pass it would trigger cuts of $200 million each to UC and CSU, and nearly $300 million to community colleges.

The legislative analyst recommends spreading out those cuts among state departments that might be able to absorb a midyear cut better than education, where courses can’t be canceled midstream.

Opposite approach

Or, instead of assuming a best-case scenario with trigger cuts as punishment, lawmakers should take the opposite approach and “build a budget that does not rely on the governor’s tax package,” the report says.

That way, Boilard said, schools would have a clearer idea of how much money to expect.

— Reach Nanette Asimov at [email protected]

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