How California's Oil and Water Policies Are Bankrupting Higher Education

Oil and water don't usually mix -- except in California politics. Over the last couple of decades, interests representing offshore oil extraction and inland water infrastructure have teamed up, using their muscle to de-fund a once-famous system of public higher education.

On the gubernatorial watches of governors Edmund "Pat" Brown, Sr., a Democrat (1959-1967), and Ronald W. Reagan, a Republican (1967-1975), a bipartisan siphoning of tax dollars earmarked initially for higher education began to flow to the State Water Project (SWP), one of the largest water and power systems in the world. It conveys an average annual 2.4 million acre-feet of water in California through its 17 pumping plants, eight hydroelectric power plants, three pumping-generating plants, 29 dams and reservoirs, and about 675 miles of aqueducts and pipelines.

The money came from a little-known source of public funds: tidelands oil revenue. This energy source, publicly owned, lies off the California coastline, mostly near Long Beach and the state receives a share of the money made from the oil recovered in the tidelands. How this money, which was originally intended to help ensure that Californians could afford higher education, ended up being shifted to the SWP has largely occurred at the margins of the public radar screen.

Education vs. Water

The state's 1960 Master Plan for Higher Education established as a goal that the University of California and California State University system, and the junior (now community) colleges should admit and enroll all eligible California students. Then, higher education was more accessible and affordable than it is now, due in part to the flow of revenue from tidelands oil.

But that didn't last. When Reagan was governor, he boasted that "we'll trade a university for some water," according to author and economist Michael Perelman.

The re-routing of tidelands oil revenue from higher education to the SWP helped to change California's policy priorities and its commitment to upward mobility via post-secondary study. According to data from the California State University system, "The Capital Outlay Fund for Public Higher Education (tidelands oil revenue) was the CSU's primary source of funds prior to fiscal year 1985-86. The revenue from this source diminished significantly and CSU priority needs were beyond the available funds."

Note the use of the passive voice in the last sentence. In fact, the State Lands Commission, state Department of Water Resources and state Legislature shifted (public funds) tax dollars from higher education to water infrastructure construction.

The amount of CSU money from the tidelands oil revenue for the 23 years ending in 1985-86 was $528.3 million, according to the CSU system, $65 million more than the State Lands Commission figures. It is worth noting that a near exact amount, $508 million, flowed from the California Water Fund to finance costs associated with the SWP.

The SWP Boondoggle

According to Mark Arax and Rick Wartzman, authors of The King of California: J.G. Boswell and the Making of a Secret American Empire, Gov. Pat Brown (father of Jerry Brown, the state's current attorney general, past mayor of Oakland and two-time governor), "sought to solve California 's great conundrum: Most of the water is in the north, while most of the people are in the south."

While the SWP sounds good on paper, the actual project has been a boondoggle -- it was sold to the public as a project that would pay for itself, but it never has. In fact, SWP costs have exceeded $6 billion and there is no end in sight.

"The Project was underfinanced since the very start," said Reagan. "It was not my intention to dwell in this, but the people were allowed to believe that the original bond issue would cover the program cost. This was never true."