Budget Gap Threatens State's Master Plan for Higher Education

Donna Hemmila | Jan. 24, 2011

UC President Mark Yudof, left, and Russell Gould, chair of the Board of Regents, during the board's meeting at UCSD last week.

The $1 billion budget gap the University of California faces could constrain the system's ability to meet the growing demand for a UC education, President Mark Yudof told the Board of Regents Wednesday during a meeting held here on campus.

"We can maintain excellence and keep our tuition levels relatively low, but we can't do this and continue to expand access to meet the state's needs," Yudof said.

At a time when demand for UC admission is the highest in the university's history, UC faces a proposed new $500 million cut in state general fund support in 2011-12. Additional demands on revenue will push UC's budget gap closer to $1 billion.

"The moment is fast approaching when the university no longer will be able to guarantee admission to a UC campus to all California applicants who meet the eligibility criteria," Yudof said. "This commitment is a fundamental element of the Master Plan for Higher Education."

That commitment is at risk, Yudof emphasized, because the state is not adequately funding the plan.

The university currently enrolls more than 11,000 students that the state does not provide funding for. Since 1990, the state's support for UC students has declined 57 percent.

Regents heard a sobering budget presentation from Patrick Lenz, vice president of budget and capital resources.

For the first time, Lenz said, student tuition will contribute more to UC's core operating budget than the state if the state spending plan Gov. Jerry Brown proposed on Jan. 10 is approved. And state cuts could go even deeper if voters fail to approve a five-year extension of taxes Brown is seeking.

In addition to the $500 million cut in funding, the proposed state budget included no state contribution to the UC Retirement Plan, although the state contributes to the pension plans of California State University and community college employees. UC had requested the state contribute $171.8 million to help fund the pension plan.

UC also will have $300 million in new mandatory operating costs for contract-negotiated salary increases, rising utility costs and other operating expenses.

Chancellor Marye Anne Fox during the Regents meeting.

UC has a systemwide Working Smarter initiative under way to reduce costs through administrative efficiencies with a goal of reaching $500 million in savings in five years. But, Yudof said, that won't be enough to bridge the budget gap UC faces.

Yudof has asked the 10 campuses and the Office of the President to identify specific solutions to address the budget gap. In March, Yudof will present the plans to the Board of Regents.

Those solutions are to be based on the principles of preserving UC's core mission; balancing access, affordability and quality; and maintaining UC's status as a public institution.

"I hope your analysis will include the option of maintaining the enrollment at current levels and no student fee increase for the next several years," said Regent Eddie Island.

Lenz gave examples of several approaches to save money, emphasizing that these approaches were examples, not recommendations: laying off 1,000 employees, deferring 775 faculty hires, reducing enrollment by 10,000 California residents or increasing student fees by 6.5 percent. Each of those actions could save $100 million.

"I want the campuses to come back (in March) with permanent changes in how they operate and the service level they provide and what the impact will be on affordability, access and quality," said UC Regent Chairman Russell Gould. "We need to lay out the implications of what the cuts mean to California."

Audience members listen to a presentation.