UC President Offers Proposals to Preserve Excellence, Expand Financial Aid

| Nov. 8, 2010

President Mark G. Yudof

University of California President Mark G. Yudof today
(Nov. 8) announced a series of proposed actions intended to shore up university finances, preserve the public university system’s tradition of excellence in education and research and throw open its doors to an even broader range of deserving Californians.

Yudof, at a press briefing and in an open letter to California, said he would bring to the governing Board of Regents next week separate plans to reform the university’s seriously overextended pension and retiree health programs and to stabilize the university budget for fiscal year 2011-12, in part by enacting an 8 percent fee increase.

In addition, Yudof said he would push for an expansion of the university’s Blue and Gold Opportunity Plan, which now ensures that qualified California students who come from families with incomes under $70,000 have their tuition fully covered by financial aid. Under his latest proposal, the Blue and Gold ceiling would rise to cover eligible California students with family incomes under $80,000.

“We’ve seen polling data that indicates two-thirds of California families fall into this category,” Yudof told reporters. “So this is a significant expansion of our financial aid package. A public university should be measured not just by the level of tuition it charges but also by the students it teaches. And the University of California is unmatched as a public research university system in the percentage of low-income students it serves.”

At the same time, Yudof is also proposing that the university provide grants to cover the 8 percent fee increase for one year for financially needy California undergraduates with household incomes of less than $120,000.

UC’s fee proposal calls for raising fees by 8 percent, or $822 dollars, for all students for the 2011-12 academic year. Under the plan, undergraduate fees for California residents would rise to $11,124 a year (or an average of $12,150 when campus-based fees are included), a level that compares favorably to fee charges at public comparison institutions. (Some professional school fees also would rise by varying amounts, depending on the campus and program).

These fee increases would generate approximately $180 million in annual revenue, of which nearly $64 million would be set aside for financial aid, leaving approximately $116 million to support UC’s operating budget.
UC expects that the expansion of financial aid, combined with expected increases in Cal Grant awards will provide enough funding to cover the proposed fee increases for approximately 99,000 students – 55 percent of the university’s 181,000 undergraduates.

Yudof said fee increases regrettably were needed because state funding continues to be inadequate. The $370 million increase in state funding for the 2010-11 fiscal year, he said, amounts to a little more than half of the budget cut the university received last year.  In fact, permanent state support for the university remains 10 percent below the level provided in 2007-08, and since then, UC’s enrollment of California residents has increased by 16,000 students.

Per-Student average expenditures for education

In addition, Yudof said UC faces more than $200 million in mandatory cost increases in 2011-12 not funded by the state.  These include the university’s contribution to the retirement plan, health benefit cost increases for employees and retirees, and purchased utility cost increases, among other mandatory expenses.

These fee increases, together with revenue associated with the overall state budget request of an additional $596 million, would enable the university to add courses and sections, improve library hours, purchase necessary instructional equipment and technology, restore student support services and resume restoration of student-faculty ratios.

Without the proposed increases, Yudof said, it is likely that there would be layoffs, elimination of some educational programs and further reductions in California freshman enrollments.

To address inadequate state funding, UC also has taken a series of actions, such as a salary reduction/furlough plan that has affected tens of thousands of faculty and staff, the restructuring and downsizing of the central office that has achieved $55 million in savings and a campaign to wring $500 million in savings out of administrative expenses by initiating efficiency measures. In addition to cutting course offerings and reducing the number of incoming freshmen, campuses have laid off more than 2,600 staff and eliminated 1,400 positions.

At the briefing, Yudof said another urgent issue the university needs to address is the $21 billion unfunded liability for its retiree pension and health programs.
 
Yudof said that after extensive consultation with faculty and staff, he will bring to the regents a plan that takes a two-pronged approach. Current employees and the university together will begin to contribute more into the retirement plan, but by doing so will receive no reduction in benefits. Employees hired after July 1, 2013, will be offered a plan with slightly reduced benefits, but one that will cost 20 percent less than the current pension plan.

Despite the proposed changes, Yudof said he is confident UC’s retiree pension and health programs will continue to be more generous than those offered by other universities and attractive enough to recruit and retain the quality faculty and staff that are the beating heart of a great university system. He said, however, that the decision with all these proposals ultimately rests with the Board of Regents.