It took the California legislature 100 days to pass an $87.5 billion state budget, which Governor Schwarzenegger says will erase the state’s current deficit of $19 billion.
Over $8 billion are being cut from this year’s budget, but no new taxes will be raised. The other $11 billion are being saved with federal funding as well as fund shifting throughout the state.
California’s higher education is actually seeing an increase in funding.
A $1.2 billion boost brings the total support to about $12.6 billion for higher education. California Community Colleges will receive nearly $4.4 billion from state funding while the Cal State system will be getting about $2.8 billion. University of California will collect about $3 billion.
But K-12 education took another hit in this year’s budget, which will be effective as of July 1, 2010. Cuts include about $2 billion from K-12, bringing the total funding to about $58 billion this year.
Other major cuts consist of pension reform for public employees. California Public Employees’ Retirement System (CalPERS) had brought on $550 billion in employee retirement debt to the state – a 2,000 percent increase over the last decade – while revenue only increased 28 percent during that time.
In accordance with the reform, the retirement age has been pushed from 50 to 55 years for law enforcement and first responders and 55 to 60 years for all other state employees. The state plans to spend $6.5 billion in retirement benefits this year alone.
“We also took action to eliminate the outrageous practice of pension spiking, saving billions of dollars,” said Schwarzenegger at a press conference Friday. “This will save the pension system up to $100 billion in the years and decades to come.”
Another major feature of the plan is a constitutional amendment for budget reform. To go before voters in 2012, Schwarzenegger says the reform sets up a “rainy day fund” of 10 percent of the general fund.
“Transfers to the fund will be mandatory, not voluntary and money will only be taken out when there is truly a rainy day,” Schwarzenegger said. “Our budget is like a roller-coaster ride where people have to hold on for dear life. This is no way of running a state.”