Report on the UC Budget Discussions--April 2003

Discussion of  the UC budget is heating up in legislative budget hearings and in meetings of the UC Regents. While testimony is being taken, no real action is expected until after the May Revise. In addition to  concerns about enrollment funding and student fees, the other issues being seriously discussed in the Legislative hearings are the cuts to Outreach and the Subject Matter Projects in the Governor's budget and the funding for UC Merced.  The LAO (Legislative Analyst's Office) continues to cite the opinion that UC should increase the student/faculty ratio as a means of cutting enrollment costs, but I do not see any serious discussion of this issue. Nonetheless, I felt you would like to review some of the most salient points being made by UC  in reference to faculty interests. The full report of President Atkinson and V.P. Larry Hershman's comments to the Legislature and to the Regents are available on the following link.  http://www.ucop.edu/regents/regmeet/mar03/502.pdf

Faculty Salaries and Merits:

UC continues to place a high priority on faculty (and staff) salaries despite the fact that the Gov's budget provides no funding for either. It is particularly noteworthy that UC recognizes the need to pay faculty merits (due, at least in part, to the lawsuit in which  the Faculty Associations  played a major role when the merits were denied in the early 90's).  However, no one has said where the funding will come from. Here is what UC does say in the report:

" In a survey conducted by the University spanning the last half of the 1990s, the reason most often cited by first-offer candidates for not accepting a UC appointment was that they had received a better salary offer elsewhere. Nothing is more certain to undermine quality than a persistent inability to offer competitive salaries. The University must be able to compete for the best faculty if its quality is to be maintained. This is particularly important during a time
of unprecedented enrollment growth when campuses must hire thousands of new faculty over this decade."


Budget Challenges Facing UC in 2003-04 ($ in millions)

· Deep targeted cuts to the base budget covering nearly every
area of the Universitys budget (on top of $160 million in
cuts contained in the 2002-03 Budget Act) $159

· Student fee increases to avoid cuts in Instruction $179

· Unallocated reduction not covered by student fee increases  $35

· No funding provided for faculty merit increasesUC has no
choice but to fund faculty merits  $24

· Employee health benefit increases  $25

· Energy cost increases  $20

· Maintenance of new space  $6

· Price increases on non-salary budgets  $20"


The data above is based on the Legislature accepting the Governor's budget--not a done deal by any means. Recently, the Republicans presented their budget based on their desire to avoid taxes.  If adopted, their proposals would cut UC as much as 10% more. Hershman told the Regents and the legislators that UC will fight any reductions beyond those in the Gov's budget because those cuts are already deeper than they expected.  Hershman said that despite the Gov's attempts to protect instruction, the additional $35M in undesignated cuts could affect instruction. He added that quality would be affected.  Further reductions could affect enrollment. UC is currently experiencing unprecedented growth: By 2003-04, total enrollment will be more than 12,000 FTE over the level envisioned in the 1999 plan. In the current year alone, the University has 5,000 students more than budgeted levels.  To accommodate an additional 10% funding reduction, UC would need to "reduce its student population by 32,000 people or raise tuition by 90%--$3,200--in a year's time, said Lawrence Hershman. . ." (Sac. Bee March 26, 2003). At the Regents' meeting, Hershman said that UC cannot reduce enrollment for 2003-04 because the students have already been admitted.  The Regents discussed ideas for reducing enrollment over the long haul, including sending more students to community colleges. They also discussed possible fee increases, noting that UC fees are still lower than those of our comparison institutions. One regent suggested a fee structure based on the student's ability to pay--charging more to students who can pay more. Doing so would help the middle-income students who do not benefit from student aid. Hershman said that UC would be wise to negotiate matters of enrollment and fees with the Legislature to avoid possible negative consequences. He asked to have student fee increases placed on the May meeting agenda. The Legislature will continue budget hearings throughout the spring and summer until a budget is signed. Hershman pointed to two possibly positive signs for meeting budget deadlines: the Big Five has begun to meet and the court ruling that the state could not pay state employees any more than the federal minimum wage may put pressure on the Legislature to act. Nonetheless, there is great division among the politicians. It may be a long summer.

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