June 19, 2009

Amid Uncertainty, Budget Briefing Offers Some Insight into UCSF's Fiscal Future

By Robin Hindery

On June 15, as California’s constitutional deadline for a state budget passed unmet, more than 100 UCSF employees gathered for a briefing on what the future may hold for them if the budget crisis continues.

The presentation, led by Randy Lopez, UCSF’s interim vice chancellor of Finance and Administration, and Mike Tyburski, director of campus Human Resources, was an effort to keep staff informed of the multiple scenarios that could play out over the coming months from layoffs to lower salaries. Already, employees across the University are being laid off.

California is currently facing a $24 billion deficit, and Gov. Arnold Schwarzenegger’s revised budget proposal includes a $322 million cut to UC. When combined with inflation and the state’s underfunding of student enrollments, UC’s total budget gap would amount to $531 billion for the 2009 fiscal year, according to UC President Mark Yudof.

“Salary reductions, employee furloughs, decreases in enrollment, increases in class sizes, cuts to programs and student services, and, unfortunately, even higher fees at this point, all options must be placed on the table for consideration at some point in the future,” Yudof said in a statement released May 21.

In a campuswide email sent June 17, UCSF Chancellor Mike Bishop, MD, announced that the University has been assigned two sequential cuts for fiscal year 2010, totaling approximately 25 percent of UCSF’s state funds.

And though salary actions at UCSF have been limited thus far, they will almost certainly become more widespread in the coming months, Bishop said.

Many questions will remain unanswered until state lawmakers agree on a budget and the UC Board of Regents finalizes a systemwide cost-cutting plan.

But on June 17, Yudof offered a preview of three salary reduction options being considered for recommendation to the Regents at their next meeting on July 14. These options, which would take effect on Aug. 1 and apply to all UC faculty and staff except student employees, are:

Reducing all annual salaries above $46,000 by 8 percent, and salaries below $46,000 by 4 percent for fiscal year 2009.
Reducing salaries by 8 percent through a combination of certain unpaid holidays and furlough days totaling 21 days for most staff, 14 days for academic year faculty and 19 days for fiscal year faculty.
Reducing salaries by 8 percent through a 3.4 percent direct cut and 12 unpaid holidays and furlough days. Individuals earning less than $46,000 per year would have their salaries reduced by a total of 4 percent through six unpaid holidays and furlough days and a 1.7 percent direct pay cut.

“Whether it’s a pay cut, an unpaid holiday or a furlough, it doesn’t feel good,” Lopez acknowledged at the June 15 briefing, which was organized by the Staff Council at UCSF. “I think the July Regents meeting will be one to watch.”

Multiple Financial Woes

State budget cuts may get most of the attention, but they are just one of the “major fiscal issues” threatening UCSF’s financial stability, Lopez and Tyburski said. Others include the significantly underfunded University of California Retirement Plan, rising health care costs and a drop in philanthropic donations due to the ailing global economy.

The UC Office of the President (UCOP) has recently announced the formation of a special task force to grapple with retirement and retiree health care cost challenges.

All told, UCSF is facing estimated cumulative cuts and shortfalls of more than $500 million from fiscal year 2008 through fiscal year 2012, Lopez said.

In preparation for such drastic funding shortages, both UCSF and the UC system as a whole are exploring other cost-saving or income-generating measures beyond changes to employees’ schedules and salaries.

For example, UCSF is looking at ways to enhance its partnerships with industry, use space including rented space more effectively, and reconfigure or consolidate administrative and support services to be more efficient, Lopez said.

In addition, Tyburski said, the University is seeking approval from the UCOP to adopt a program similar to UC Berkeley’s new Voluntary Separation Option (VSO), which provides up to six months of severance pay to eligible employees who agree to vacate their positions. Positions that open up under the VSO program cannot be filled for 18 months, so that the resulting savings in salary payments can help UC Berkeley meet its budget reduction goals.

Tyburski said UCSF’s own voluntary separation program could take effect as early as July 1, if approved by the UCOP.

But Lopez cautioned that in most cases, the program will exclude employees who have skills in high-need areas and whose departure would leave their departments with no alternative for getting that work accomplished.

“While we remain open to such options, most units have already been eliminating positions they can live without,” Lopez said. “Given that, there are not likely a gigantic number of opportunities for the VSO at UCSF.”

Another potential cost-saving measure being reviewed is the possibility of merging the UC Berkeley and UCSF police departments under common leadership. UC Berkeley is temporarily suspending the search for its new chief of the UC Berkeley Police Department while officials at both campuses assess whether UC can achieve significant savings by consolidating some activities, such as training and recruiting, while maintaining the high standards of public safety and security for which both departments are known.

“Representatives from our two campuses will begin their review immediately, and we will update the campuses as their assessment moves forward,” said UCSF Police Chief Pam Roskowski.

Amid so much uncertainty, Lopez and Tyburski urged staff members to take advantage of the resources available to them, including the Faculty and Staff Assistance Program (FSAP), which provides voluntary, confidential, individual counseling services to all UCSF employees.

“It’s very important to continue managing your life in such a way that you don’t let things fall by the wayside that help sustain you whether that’s proper nutrition, exercise or religious practice,” said FSAP manager Yvette Guerrero, PhD, who spoke briefly at the budget presentation. “Don’t let yourself be overwhelmed by stress.”

Multiple Financial Woes

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