FA Representatives Meet with UCOP reps re. UC budget

Dec. 2004

On Monday of last week we enjoyed another productive meeting in the UCOP with VP Larry Hershman and Assistant VP Ellen Switkes. The focus of the meeting was he UC budget. Although he did not know for sure what the Governor will present in his budget proposal which is due in January, Hershman was optimistic that UC's part of the document will be based on the Compact and reflect many, if not all, of the requests in the Regents' proposal. Of perhaps most interest to faculty, the Regents' proposal includes $40.6M for an average 1.5% COLA adjustment for all faculty and staff, and $46.8M in merit increase money--equivalent to 1.78% of the faculty and 1.5% of the staff salary budgets, respectively.

We asked for clarification of a $23.7M item labeled "Funds to support health benefit costs plus parity and equity compensation for faculty and staff." We came away with the distinct impression that this item is a place-holder. Although open enrollment is over and the amounts that employees will have to spend out of pocket have been established, the actual overall cost of health care to the University had not been determined as of the date of the November Regents meeting. Historically, UC and PERS have provided omparable funding for health benefits. Accordingly, the item in question is large enough to match PERS funding for health care costs with some left over.

When we asked who might get the "leftover" parity and equity compensation, Hershman noted that a bigger percentage of the merit money had been allotted for faculty than for staff (1.78% vs. 1.5%) so the staff might have first call, but some of these funds would probably go to faculty as well. We asked whether "staff” could include Chancellors and/or senior UCOP Administrators. Hershman replied that some of the money might go to one or two Chancellors, but the Administration certainly would not use up the entire pot.

At this point in the conversation Hershman said that because faculty salaries are well below those of our comparison institutions, making it increasingly difficult to recruit new faculty and retain the ones we have, the Regents have given a very high priority to bringing faculty salaries back to parity. He also reminded us that there is an "elephant sitting in the corner." At some time not too far downstream, employees will once again have to pay into the UC Retirement System. With that realization, it would be desirable, if we can, to get a little ahead of both the faculty and staff salary curves in an effort to minimize the effects later on of a global reduction in everyone's purchasing power.

The other major area of the UC budget of interest to faculty is enrollment growth. The Regents' proposal includes funding enrollment growth for 5,000 FTE students. The proposed amounts needed to do nothing but that are $38M in state funds and $29M in student fee funds. The Regents approved mandatory systemwide fee increases in the amount of 8% ($457) for resident undergraduates and 10% ($628) for resident graduate academic students, beginning in the summer 2005 academic term. These fee levels are about $1,000 (for undergraduates) and $2,300 (for graduates) below the estimated average of UC's four public comparison institutions.

After the Governor presents his budget, the Legislature will meet to discuss it and the final negotiated budget will not be determined until July or later. Hershman said that he had been been unable to glean any clues whatever about any aspects of the Governor's budget. He noted that the state is facing very difficult budget restrictions. He surmised that because of the very difficult budgetary climate Gov. Schwarzenegger will propose deep cuts in many areas, including health and social services and perhaps K-12 education. To counter these, some legislators will more than likely propose tax increases, and the battle will be joined.