The 2022-23 Budget: Hastings College of the Law

The 2022-23 Budget: Hastings College of the Law MAY 2022 Summary. The Governor’s January budget Hastings’ Total Spending Is $103 Million proposes a $2 million (12 percent) General Fund in 2021-22. Hastings receives its core funding base increase for the Hastings College of the primarily from student tuition revenue (comprising Law (Hastings) in 2022-23. After accounting for about three-quarters of its ongoing core funding other revenue increases (primarily from student in 2021-22) and state General Fund (comprising tuition revenue), Hastings’ total ongoing core about one-quarter). Core funds support Hastings’ budget would increase by $5 million (6.7 percent). core operations, including faculty and staff Generally, we think the Governor’s proposal is a compensation and operating expenses and good starting point for budget deliberations. This is equipment (OE&E), as well as merit-based student because Hastings’ corresponding expenditure plan financial aid. Hastings currently spends around primarily focuses on basic workload adjustments. 30 percent of the tuition revenue it generates from That said, we emphasize that this proposal is a each JD cohort on financial aid. Beyond its core starting point. The Legislature likely will want to operations, Hastings operates self-supporting weigh this proposal against its other 2022-23 auxiliary programs (such as student housing and budget priorities. Moreover, we note that Hastings parking). Hastings also receives some noncore could face higher-than-expected costs in 2022-23 funding from private donations as well as external as part of its recent initiative to change its name. grants and contracts. Of Hastings’ total spending in 2021-22, 76 percent was for core operations Introduction and student financial aid and 24 percent was for This post analyzes the Governor’s January noncore programs. budget proposal for Hastings. The post first State in Recent Years Has Provided General provides background on the law school. It then Fund Augmentations to Help Cover Core Cost describes the Governor’s funding proposal Increases. Each year, Hastings faces pressure to and Hastings’ corresponding expenditure plan. cover cost increases associated with employee The post concludes by raising two issues for compensation, OE&E, student financial aid, and legislative consideration. enrollment growth, among other factors. In recent years, the primary way Hastings has covered Background these increases is through state General Fund Hastings Is a Public Law School. Hastings base augmentations. (Hastings also receives state is affiliated with the University of California (UC) General Fund adjustments for its lease revenue but has its own governing board (known as the bond debt service and, in certain years, specific Board of Directors). Of the school’s approximately program initiatives.) As Figure 1 on the next page 1,100 students in 2021-22, 97 percent are enrolled shows, the size of Hastings’ base adjustments has in Hastings’ Juris Doctor (JD) program (the most varied over the past several years. common degree students pursue to enter the Student Enrollment and Tuition Revenue legal field). The school also offers two law-related Recently Have Grown. In theory, Hastings also master’s programs and, in 2022-23, is launching a could cover operating cost increases by raising third master’s program—a joint Health Policy and additional student tuition revenue. It could raise Law program with UC San Francisco. additional tuition revenue by increasing its student tuition charges and/or enrolling more students. 2022-23 Budget Series 1 Figure 1 State Has Provided Hastings With Base Augmentations Most Years (Dollars in Millions) 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 General Fund base $0.4 $1.3 $1.0 $1.0 $1.1 $1.1 $1.4 -$0.5 $2.1 adjustment Percent change in General 5.0% 15.2% 10.6% 9.5% 9.2% 8.5% 10.3% -3.6% 14.3% Fund support Percent change in ongoing 0.7% 2.3% 1.9% 1.9% 1.9% 1.9% 2.5% -0.9% 3.5% core funding Most years over the past decade, Hastings’ tuition Hastings Anticipates Enrolling More Students revenue, however, has either declined or grown only in 2022-23. As Figure 2 shows, Hastings slightly. This is because Hastings did not increase anticipates its enrollment will continue to grow in JD student tuition charges over this period, and 2022-23 (by 4.4 percent). Growth in its JD program its enrollment level remained roughly flat through would be driven entirely by increases in continuing 2019-20 (hovering between 900 and 1,000 students student enrollment. Hastings currently plans to each year). In the last two years (2020-21 and enroll a slightly smaller first-year cohort in fall 2022 2021-22), Hastings’ tuition revenue has increased (around 390 students) compared to its fall 2021 due to enrollment growth. In 2021-22, Hastings cohort (around 400 students). Hastings’ growth in estimates it is enrolling around 1,100 students. its master’s programs primarily is due to the school According to Hastings, the increases in enrollment implementing the first year of its new Health Policy the past two years are attributable to growing and Law program. student demand in its JD program. Under Governor’s Budget, Hastings’ Base Core Funding Is Increasing. As Figure 3 shows, Governor’s Funding Proposal and Hastings’ higher tuition revenue, together with Hastings’ Expenditure Plan the Governor’s proposed General Fund base Governor Proposes General Fund Base augmentation, would increase the law school’s Augmentation. The Governor proposes a $2 million ongoing core funding by 6.7 percent. After (12 percent) General Fund base increase. As in accounting for enrollment growth, Hastings’ past years, the increase is unrestricted—available ongoing budget would increase on a per-student to support any increases in Hastings’ operations, basis by 2.2 percent in 2022-23. programs, or enrollment. Hastings’ Base Operational Spending Hastings Is Planning to Increase Student Increases Would Primarily Support Workload. Tuition Charges. In addition to the proposed state As Figure 4 on page 4 shows, Hastings’ largest General Fund base augmentation, the Hastings planned expense would be for student financial aid Board of Directors has approved a 3 percent to accommodate enrollment growth in 2022-23. increase in resident JD tuition charges and a Hastings also plans to replace retiring faculty and 7 percent increase in nonresident JD supplemental hire additional faculty—adding, on net, one full-time tuition charges for 2022-23. These increases would equivalent tenure-track faculty member and one reflect the first JD tuition increases at Hastings full-time equivalent nontenure track faculty member. since 2012-13. (As we noted in our recent budget Beyond these two items, Hastings intends to cover brief The 2022-23 Budget: Analysis of Major UC a 3 percent increase to its employee salary pool Proposals, UC also plans to increase student tuition and employee benefit cost increases, as well as charges for 2022-23. At UC’s four law schools OE&E cost increases. Hastings also expects to specifically, resident tuition charges are scheduled incur new costs from launching its Health Policy to increase between 3.2 percent and 8.8 percent.) and Law program. 2022-23 Budget Series 2 Figure 2 Hastings’ Enrollment Is Expected to Continue Rising in 2022-23 Full-Time Equivalent Students Change From 2021-22 2020-21 2021-22 2022-23 Actual Estimated Proposed Amount Percent Juris Doctor Program Resident 813 969 1,004 35 3.6% Nonresident 108 100 99 — — Subtotals (921) (1,069)a (1,103) (34) (3.2%) Master’s Programsb Master of Laws 21 23 24 1 5.2% Master of Studies in Law 3 9 10 —c 4.3 Master of Science in Health Policy and Law — — 13 13 — Subtotals (23) (32) (46) (14) (43.7%) Totals 944 1,101 1,149 48 4.4% a Notable enrollment growth is driven by Hastings enrolling relatively larger first-year cohorts in fall 2020 and fall 2021. According to Hastings, this growth reflects rising law school enrollment demand nationally. b Programs do not have residency classifications. c Reflects increase of less than half a full-time equivalent student. Figure 3 Hastings’ Base Funding Increases Under Governor’s Budget (Dollars In Millions, Except Per-Student Amounts) Change From 2021-22 2020-21 2021-22 2022-23 Actual Revised Proposed Amount Percent Base Core Funding Student tuition and fees $44 $48 $51 $3 5.5% Base General Fund supporta 15 17 19 2 11.9 Other 2 2 2 —a -11.9 Totals $61 $67 $72 $4 6.7% Full-time equivalent students 944 1,101 1,149 48 4.4% Funding per student $64,156 $60,929 $62,270 $1,341 2.2 a Less than $500,000. b Excludes ongoing support for lease revenue bond debt service and one-time funds. Issues for Consideration identified priorities generally appear reasonable, focusing on basic workload adjustments. Proposal Is a Reasonable Starting Point. Moreover, in contrast to his approach for UC, In our recent brief The 2022-23 Budget: Analysis the Governor does not propose committing to of Major UC Proposals, we raise a number of arbitrary outyear increases as part of a multiyear concerns with the Governor’s proposed base compact with Hastings. For these reasons, we increases for UC. We do not have the same think the Governor’s budget proposal for Hastings concerns with Hastings’ proposed base increase. is a reasonable starting point for legislative In contrast with UC, which has not connected the deliberations. That said, the Legislature likely will Governor’s proposal to a specific expenditure want to weigh this augmentation against its other plan, Hastings has provided the Legislature with 2022-23 budget priorities. an expenditure plan for the budget year. The plan’s 2022-23 Budget Series 3 Hastings May Incur Additional Costs From Figure 4 Name Change. In November 2021, Hastings’ Hastings’ Spending Plan Board of Directors approved an initiative to Supports Several Increases change the school’s name. The name change is in Core Spending Increases in 2022-23 (In Thousands) response to evidence indicating that the school’s current namesake, Serranus Clinton Hastings, Spending Component Amount was involved in the killing and dispossession of Student financial aid $1,469 the Yuki people. As the school’s current name is Faculty hiring (two positions) 1,095 codified in state law, an official name change would Salary pool increase (3 percent) 797 require legislation. According to Hastings’ staff, the Funds for budget reserves 536 school likely will incur certain one-time costs from New master’s program 243 changing its name, such as updating building signs. Operating expenses and equipment 241 Benefit cost increases 91 Hastings did not recognize any associated costs Total $4,472 from the name change in its initial spending plan. LAO PUBLICATIONS This post was prepared by Jason Constantouros, and reviewed by Jennifer Pacella and Anthony Simbol. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. 2022-23 Budget Series 4