CA 2025: PPIC Study Projects Future Of The State, Identifies Key Challenges

If Trends Persist, State Won’t Meet Demand for Educated Workers

SAN FRANCISCO, June 1 — The Public Policy Institute of California (PPIC) today released “CA 2025,” a comprehensive study of the major trends and forces that will shape California in the next two decades. The full body of research will be available online at www.CA2025.org on June 2. The project was supported with funding from the William and Flora Hewlett Foundation.

“One of the limitations of the political climate in Sacramento today is that what’s in crisis now is often what gets the attention. Meanwhile, critical decisions that will shape California’s future get pushed to the back burner,” says Mark Baldassare, PPIC’s director of research. “This report shows that, while we haven’t reached a crisis point yet, now is the time to start asking the right questions—and the tough questions—so we can tackle the complex, long-term challenges that will determine the future of the Golden State.”

CA 2025 identifies a number of challenges, opportunities, and a few surprises about the future of the state. On the positive side—and contrary to some common assumptions—the state isn’t going to grow as fast as in the past or as much as expected. In the last decade, California has actually spent as much per capita on infrastructure as the rest of the nation. Not only is the economy going to grow, but it is going to continue a shift to industries that put less pressure on water, roads, and energy resources. Besides that, there are options and mechanisms in place for managing ever-increasing demands for education, water, and transportation.

But all is not rosy: The state wasn’t able to keep up with the phenomenal population growth of the previous two decades and has a serious physical infrastructure backlog. Even though growth won’t be as great over the next two decades, the state will be adding a population the size of Ohio’s—the nation’s sixth largest state. There is a mismatch concerning the state’s human infrastructure, with the economy demanding a more educated workforce than the state is likely to provide. The state has huge finance problems and a degree of debt that will make it hard to sell bonds for building the future. On top of all that, the public’s distrust of government and lack of consensus about problems and priorities is increasing the political paralysis in Sacramento.

Some of the findings on specific sectors and issues:

• Population growth and change: By 2025, the state will add 8 to 10 million new residents. Whites will account for a third of the population and Latinos for nearly half. By 2025, almost a third of the population will be foreign-born. The percentage of children won’t change much, but the number of college-age residents will increase dramatically, peaking in 2015. One in seven Californians will be over age 65.
• Economic growth and demand for education: Employment will reach almost 20 million jobs by 2020, and the economy will continue to shift from manufacturing to service-related industries. Although these industries put less pressure on some infrastructure, they will increase the demand for more-educated workers. The kinds of service-related industries that will grow the most (for example, business, educational, health, and legal) require a highly educated workforce. The percentage of jobs requiring a college degree is expected to rise to 39 percent, but only 33 percent of California workers are projected to have that degree.
• Education: Despite the need for greater access to higher education, there is a predicted shortfall of higher education space for over 686,000 students by 2013, equal to about a third of current full-time enrollment. The community colleges are expected to have enough bond funds to cover facilities needs for more than a decade. Not so the other branches: UC may have enough funds for seven-to-nine years, and CSU will probably be running out of building funds in less than four years. And despite the increase in bond funds for K-12 and higher education, overall funding will still be a problem for the state because facilities account for only about 10 percent of all expenditures.
• Water resources: In 2000, California used about 83 million acre-feet (maf) of water for all purposes. By 2030, population growth could increase demand by as much as 3.6 maf. Another 1 maf will be needed for wildlife protection. California must also reduce its use of Colorado river water by 0.8 maf. The study points out, however, that the state has numerous supply and demand management options to meet water demand growth. The state’s biggest water funding challenge is for environmental and ecosystem restoration projects.
• Transportation: The picture is grimmest for transportation. Congestion will cause travel time in the state to increase by 48 percent by 2025. From 1980 to 2000, highway lane miles driven increased 87 percent but the state added only about six percent to its stock of highway lane miles. From 1965 to 1980, real capital outlay per vehicle-mile traveled declined by 79 percent. California continues to spend less per capita than the rest of the country.

“We hope to use this study as a launching pad for a statewide discussion that begins with this simple question: ‘What kind of California do you want?’ ” says Baldassare, who coauthored CA 2025: It’s Your Choice with research fellow Ellen Hanak. Their analysis was based in part on the findings of a larger report, California 2025: Taking on the Future, involving a multidisciplinary team of eleven researchers. Over the next several months, PPIC will host a series of forums with political, business, and community leaders across the state to brief them on the project’s findings and stimulate a dialogue about planning for the future.

About the Public Policy Institute of California
PPIC is a private, nonprofit organization dedicated to improving public policy through objective, nonpartisan research on the economic, social, and political issues that affect Californians. The institute was established in 1994 with an endowment from William R. Hewlett. PPIC does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office.