UC President Cites Serious Consequences of Revised State Budget Scenarios

Contact: Ricardo Vázquez
Phone: (510) 287-3301
Email: [email protected]

UC President Mark G. Yudof said today (May 14) that the revised state budget scenarios released by Gov. Arnold Schwarzenegger would have serious consequences for the level and quality of service provided by the University of California system to students and taxpayers.

The scenario that assumes failure of the May 19 state ballot propositions would leave the UC system with a net budget reduction of $322 million, or 10 percent, in the 2009-10 year. Taken together with the state’s underfunding of student enrollments and inflationary cost increases, the scenario would leave the university with a total budget gap of $531 million in 2009-10. The university’s current state-funded budget is $3.2 billion.

“Additional budget cuts of this magnitude would have a devastating effect on the students, the faculty and the staff of the University of California, and ultimately on the service we provide to the state,” Yudof said. “The severe reductions envisioned in these scenarios, especially if the ballot measures fail, threaten a dramatic change in the quality and accessibility of the university.

“If these cuts are implemented, we will have to look at a wide variety of unpleasant options to close our budget gap in the coming years – from enrollment and student fee levels to class sizes, academic program offerings, and availability of campus services for students, in addition to pay reductions or furloughs for our employees.”

Details of the proposals

Both scenarios issued by the governor would change the proposed allocation of both state funds and federal stimulus money to the University of California this fiscal year and next. The scenarios are intended to reflect both reduced state revenues and the impact of passage or failure of the budget-related propositions on the May 19 ballot in California.

Under both proposals, UC’s state funding would be cut by $510 million in the current 2008-09 fiscal year and replaced by $640 million of federal stimulus money – with $510 million of it for use in 2008-09 and $130 million for use in 2009-10.

Then, if the May 19 ballot propositions are approved by the voters, the governor’s proposal for the 2009-10 fiscal year calls for UC to receive a reduction of $255 million in state funding, with $130 million of it replaced by the federal stimulus money – for a net reduction $125 million.

Coming on top of the existing $115 million in state funding cuts already approved for UC,  the new cut would amount to a total reduction of $240 million for UC’s 2009-10 operating budget.

If the May 19 ballot propositions fail, the governor’s proposal calls for even deeper reductions on top of the above cuts. The additional cuts would include a further $50 million state funding reduction and a $31 million cut targeted to UC’s academic preparation programs. Taken in total, the university would see a $322 million reduction in 2009-10, or 10 percent of its state General Fund support, under the governor’s plan if the ballot propositions fail.

The actual challenge facing the university would be even worse, however, because the cuts do not include the state’s underfunding of student enrollments and inflationary cost increases. Including those shortfalls – and accounting for new revenue coming to the university by virtue of a student fee increase approved by the Board of Regents last week – the total immediate budget gap facing UC if the ballot propositions fail would be $531 million.

“I am concerned that this new round of cuts for the state’s entire public education system comes at a time when the Public Policy Institute of California has warned us that the state’s workforce will face a shortage of nearly 1 million college graduates by 2025, unless state leaders implement policy changes to enroll and graduate more students,” Yudof said. “The consequences of these budget proposals for academic preparation and student accessibility are daunting.”

Steps already taken and possible new consequences

UC already has taken a series of actions to deal with the shortfall in state funding. These include:

•  freezing senior managers’ salaries;
•  cutting bonuses and incentive pay;
•  curtailing travel;
•  downsizing and restructuring of the Office of the President in Oakland, where more than $60 million in savings has been achieved;
•  undertaking a legal analysis to create a viable framework for implementation of salary reductions or furloughs for employees;
•  reducing 2009-10 freshman enrollment targets by 2,300 students;
•  raising student fees by 9.3 percent for the 2009-10 academic year; and
•  achieving a range of budget cuts, reductions in hiring and faculty recruitment, and administrative efficiencies on campuses.

Already in recent years, the state’s contribution to the per-student cost of education at UC has fallen significantly in inflation-adjusted terms, and student fees have made up part of the gap.

Additional budget cuts such as the ones contained in the governor’s budget scenarios would exacerbate UC’s already difficult budget situation and force the university to consider a series of actions – either in 2009-10, the following year, or both – that could negatively impact quality and accessibility. While no decisions have been made, these actions could include:

•  further enrollment reductions that would make it harder for students to be admitted to UC campuses;
•  cuts in academic programs, reductions in course offerings, and increases in class size;
•  cuts in student services ranging from academic and career counseling to student mental health services;
•  pay reductions or furloughs for UC employees; and
•  higher student fees, which may become unavoidable as one part of a series of cuts and cost-saving measures to confront new potential cuts.

The governor’s May Revision is available at www.dof.ca.gov/budget/historical/2009-10/may_revision/documents/May_Revision_2009-10_General_Fund_Proposals.pdf.