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What Brown’s $500 million cut means for UC budget

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Just how big is a $500 million cut to the University of California system?

Gov. Jerry Brown this week unveiled a budget that included drastic reductions for the state's public colleges and universities. The plan calls for [PDF] a $500 million cut to the UC, a $500 million cut to the California State University and a $400 million cut to California Community Colleges – all part of an effort to close a state budget deficit in 2011-12.

Calling it a "sad day for California," UC President Mark Yudof said he would assign budget targets to the presidents of the 10 UC campuses and ask them to come up with proposed cuts. Campuses are to respond by March 1, a UC spokesman said.

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For UC, half a billion dollars represents 13 percent of its state funding and 2 percent of its total operating budget.

The 8 percent tuition and fee increase that UC Regents already approved in November will generate $115 million toward the cost-cutting goal.

For the remaining $385 million, the university will likely explore systemwide cutbacks including furloughs, layoffs, limiting enrollment, increasing out-of-state student enrollment and reducing financial aid, the spokesman said.

Campuses across the state will likely share the pain, with a focus on reducing or eliminating programs that do not directly affect student instruction, he said.

But improbability aside, what would it look like for the UC to save $500 million in one fell swoop? Here are a few hypothetical $500 million items:

State funding to UCLA: The state educational appropriation for UCLA totaled $522 million [PDF] in 2008-09. The Southern California campus draws the largest state educational appropriation in the system.

State funding to three medium campuses: Cutting total state support for UCSF [PDF] ($216 million), UC Santa Barbara [PDF] ($169 million) and UC Santa Cruz [PDF] ($108 million) would just about cover the bill.

UC Merced: Even if UC completely eliminated its fledgling central California campus, the university might still have to hunt for extra savings elsewhere. UC Merced [PDF] got about $45 million in total state support in 2009-10. On top of that, the campus has capital assets valued at $392 million after depreciation.

Import nonresident students: The university could admit 22,000 nonresident undergraduate students who pay $22,878 a pop. That would raise a little more than $500 million. But with an influx of new out-of-state students as big as the total undergraduate population of UC Irvine, officials might want to hang on to that UC Merced campus.

Pension cutbacks: Slashing everyone's pension by an average of 25 percent might do the trick. The UC Retirement System paid out $1.9 billion in benefit payments in 2010 according to UC's latest Annual Financial Report [PDF]. Then again, the UC just resumed contributing to the retirement system in April 2010 after a 20-year holiday.

UC Office of the President: Eliminating the entire UC Office of the President [PDF] would save $438 million. Much of the funding for the office comes from non-state resources, however. While nearly $200 million of the office's budget goes to administration, about $242 million of it goes to programs that the office oversees, including the Education Abroad Program, the UC Press and the California Digital Library.

 

Filed under: Higher Ed, Daily Report

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creese.1's picture
Thank you - great analysis. Hope Ca Watch does the same for the CSU and Community College systems.
Moravecglobal's picture
UC deficit has no impact on spending spree of UC Chancellor Birgeneau. Just how widespread is the budget crisis at University of California Berkeley? University of California Chancellor Robert J Birgeneau’s ($500,000 salary) eight-year fiscal track record is dismal indeed. He would like to blame the politicians, since they stopped giving him every dollar he has asked for, and the state legislators do share some responsibility for the financial crisis. But not in the sense he means. A competent chancellor would have been on top of identifying inefficiencies in the system and then crafting a plan to fix them. Competent oversight by the Board of Regents and the legislature would have required him to provide data on problems and on what steps he was taking to solve them. Instead, every year Birgeneau would request a budget increase, the regents would agree to it, and the legislature would provide. The hard questions were avoided by all concerned, and the problems just piled up to $150 million of inefficiencies….until there was no money left. It’s not that Birgeneau was unaware that there were, in fact, waste and inefficiencies in the system. Faculty and staff have raised issues with senior management, but when they failed to see relevant action taken, they stopped. Finally, Birgeneau ($500,000 salary) engaged some expensive ($3 million) consultants, Bain & Company, to tell him what he should have been able to find out from the bright, engaged people in his own organization. In short, there is plenty of blame to go around. Merely cutting out inefficiencies will not have the effect desired. But you never want a serious crisis to go to waste. An opportunity now exists for the UC President, Board of Regents, and California Legislators to jolt UC Berkeley back to life, applying some simple oversight check-and-balance management principles. Increasing the budget is not enough; transforming senior management is necessary. The faculty, Academic Senate, Cal. Alumni, financial donors, benefactors await the transformation of senior management. The author, who has 35 years’ consulting experience, has taught at University of California Berkeley, where he was able to observe the culture and the way senior management work. (Cal (UC Berkeley) ranking tumbles from 2nd best. The reality of University of California Berkeley’s (UC Berkeley) relative decline are clear. In 2004, for example, the London-based Times Higher Education ranked UC Berkeley the second leading research university in the world, just behind Harvard; in 2009 that ranking had tumbled to 39th place.) University of California, Berkeley in the news
Moravecglobal's picture
UC Berkeley Chancellor Birgeneau spends $300,000 for lectures by ex Michigan Governor. See Detroit Free Press
teeman72's picture
This budget proposal requires the University of California to absorb a 2% reduction in its total operating budget. I'm sure there are a lot of families and businesses in California who have faced the need to reduce their budgets by much, much more than 2% over the last several years. So its hard to generate a lot of sympathy for an organization as large and bureaucratic as UC, faced with the need to deal with a 2% hit.

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