California Budget Passes
As many of you may already know, the United States as a nation faces many tough challenges which may affect all Americans over the next several years. The ongoing war in Iraq/Afghanistan, the energy crisis, growing concerns of global warming and other environmental concerns, and a recession which has stunted economic growth. The real estate market bust and subsequent economic crisis has made the headlines of newspapers for months. President Obama and his administration face a billowing debt of $1.3 Trillion dollars. Californians have had the added uncertainty of not having a budget for this year.
The good news: California legislators have finally agreed and successfully voted on a budget for California for this year. The bad news? Unfortunately, we may be finding out the extent of the bad news of trying to bridge a gap for the $42 Billion dollar deficit. The budget is complicated, but here are some of the basics that we do know at this point. A few temporary taxes will help create more revenue until the 2013-2014 fiscal year. Taxes will be raised by the following:
1. An increase of the sales tax by 1 cent on the dollar will raise $5.8 Billion through the next year
2. Raising the vehicle license tax from .65 percent of the vehicle's value to 1.15 percent. This will raise $1.5 Billion, of which $602 Million will be dedicated to law enforcement.
3. .25 percent raise in personal tax income will generate $3.7 Billion over the next year
4. Lowered rate people can claim on dependent care credit from $300 to $100 will save $1.4 Billion.
New taxes alone will not bridge the gap. Cuts in the budget will coincide with tax increases. Budget cuts are done to save over $15 Billion in spending. Administrations and school boards I have been in contact with have been preparing for the worst case budget scenario for the past few months. Although they now have some certainty in their fiscal future, the good news stops there. Unfortunately, education and social programs will take the brunt of the cuts:
1. K-12 education will be cut by $8.6 Billion. Cuts will likely force districts to lay off teachers, possible lower salaries, and put off any spending on books and materials, and stop any pending site construction.
2, CSU's and UC's will take a 10% spending cut.
3. The state will continue state worker furloughs, creating more unpaid days for thousands of state employees.
4. Social programs such as CalWORKS, Medicare, and other programs designed to help the elderly, will see their budgets shrink.
5. The state will borrow $5 Billion from projected lottery sales to bridge the rest of the deficit.
All current and future college students will be affected. UC's and CSU's have been hit hard. Because both systems have been hit with an across-the-board 10% cut, both systems are forced to reduce admissions for next year. UC's will admit 10% fewer students into the system statewide. For the first time, CSU's are looking to cap admissions. Up until now, California had guaranteed admission to a student with a B average--this is in jeopardy. Class sizes may increase, and class selection may decrease. Some adjunct staff will most likely be laid off to meet the demands of the cuts. Community colleges face cuts as well, but will fare better than CSU's and UC's. Community colleges will likely face layoffs of some adjunct staff, and see some classes cut from the schedule. Last, but not least, most schools will increase tuition.
Current students will likely have fewer choices of classes going forward for the foreseeable future. Students will most likely see fewer student services available. Students will need to be aware of decreased enrollment at UC's and CSU's. Because of layoffs and poor economic conditions, more people are exiting the workforce to return to school to receive additional education to increase their value (to the employer) to prepare for re-entry into the workforce. Admissions boards will be faced with an increase in applicants for fewer open spots.
I have inundated you with facts that paint a bleak picture. If this is upsetting, you are not alone. The reality is that the economy is in a slump, and will likely be in one for some time. These poor economic times will affect us all, if it has not already. All is not lost: there remains plenty of opportunity for those that are well-prepared. The aim of this blog is to better prepare you for entry into the workforce. The next post will contain some ideas on how to do so.
JV
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