The Bay Area’s Global Innovation Competitiveness
R. Sean Randolph, CEO
Bay Area Council Economic Institute
California’s budget crisis is not just a failure of governance, or an unconnected discussion among legislators and political leaders in Sacramento. To the contrary, it has direct consequences for the economy and the businesses that have made California an icon for technology and innovation. There are enough issues that should cause concern – from the state’s bond rating (rock bottom) to raids on local government budgets, to uncertainty about future levels of taxation. What we should be particularly concerned about, however, is the hit to education at all levels, which directly threatens the quality of California’s workforce, and ultimately it’s national and global competitiveness.
In FY2010, K12 and community college education absorbed 39% of state budget cuts. The University of California and the California State University systems took a 13% hit. Combined, education accounted for more than half of all state budget cutbacks. The impacts were immediate: a 32% fee hike in the CSU system, a 41% jump in fees at UC, fewer course offerings, larger class sizes, deferred graduation, fewer teaching assistants, faculty furloughs and pay cuts, and increased out-of-state vs. in-state enrollment. While manageable in the short term, in the longer-term sustained cuts of this nature will threaten the pre-eminence of UC as the world’s leading public university, and generally erode the competitiveness of California’s workforce.
Businesses and research laboratories draw directly on California’s institutions of higher education for their workers – from technicians hired out of community colleges, to San Jose State engineering graduates who comprise the backbone of the region’s technology workforce, to PhD scientists from UC Berkeley, UC Davis or UC Santa Cruz who engage in breakthrough research. This is where business meets education directly, and where the impact of changes in the educational system will be moist immediately felt.
Businesses are mobile, and the primary reason why they locate research facilities and other operations in the US and globally is the availability of talent. Increasingly, the search for talent trumps cost as a motivation for where to lovcate, or is at least a close second. California’s current course – if continued beyond the short term – will imperil its innovation engine. While this seems clear, the issues it raises are more difficult: 1) how can California reform and restructure its fiscal and governance processes to ensure a stable balance of revenues and resources, adequate to fund its educational priorities, and 2) how can advocates of sustained spending on higher education make a convincing case that this should be a priority, when legislators face hard tradeoffs – university education vs. spending for mental health or in-home health care, support for vulnerable members of the community, or basic social services?