Q: How will these reductions affect UCLA?
A: The most immediate impact on UCLA will be felt by faculty and staff. The budget funds a 1.5% merit adjustment package, but no funds are available for cost-of-living adjustments. In addition, most faculty and staff will experience increases in their out-of-pocket costs for health care beginning Jan. 1, 2003. Beyond these impacts, the budget requires UCLA to reduce $13.3 million — or roughly 2% — from our academic and support programs. Of this amount, $6 million is permanent. Campus units will be required to realign their 2003-04 permanent budgets to the reduced funding levels, effective July 1, 2003. That $13.3 million included: $4.3 million from the core support area; $2.3 million from research; and $2.8 million from library support. In addition, there was a $3-million shortfall in the utilities budget, which we will have to cover for two fiscal years.

Q: In May, there were discussions about granting UC some flexibility in cutting the 10% from research programs. What happened?
A: UC requested maximum flexibility to allocate these cuts among various research programs, based on academic merit. The Legislature wanted to protect specific research initiatives supported by its members. Ultimately, the Legislature decided it wasn’t going to give the university any flexibility and applied the reduction on an across-the-board basis.

Q: Which units are the most affected?
A: These cuts affect all campus units receiving state funds for organized research. This includes organized research units, such as the Institute for Social Science Research, the various ethnic studies centers and the Institute of Industrial Relations. The reductions also affect multicampus research units, such as the Institute of Geophysics and Planetary Physics and specially funded legislative initiatives, such as the Brain Injury Research Center. Generally, social sciences and humanities disciplines are more dependent on state funding for research support than are the life, physical and health sciences.

Q: How might the picture change with the additional $750 million Gov. Davis is authorized to cut?
A: A $750-million reduction in the state operations budget is equivalent to an across-the-board reduction of 5%. Putting such a reduction into effect halfway through the year is equivalent to a 10% reduction on an annual basis. A 5% reduction in state support for UC as a whole would be $150 million. For UCLA, such a reduction would amount to about $30 million. But the governor has made no decisions, and the ultimate impact of this legislation on UC is a matter for speculation at this stage.

Q: What is UC doing to prepare for these possible cuts?
A: The Office of the President is discussing budget reduction options with the Department of Finance. UC will continue to argue against making across-the-board reductions that are aimed at our instruction and research missions. Instead, UC has asked the state to examine closely the value of special research and public-service initiatives that the state has funded above and beyond UC’s core funding under the Partnership. For example, in the past three fiscal years, the state added $90 million in new funding for special research initiatives.

Q: What does the state view as priorities?
A: Both the state and the university are making instruction a priority. Notwithstanding the state’s recent financial difficulties, the Legislature has provided new funds to support enrollment growth and summer session enrollment.

Q: Are student fee increases likely?
A: Student fees for California residents are currently 10% below the levels they were in 1994-95, and UC fees are significantly lower than tuition charged at comparable public institutions. The cost to taxpayers for a low-fee policy is significant. The state has added more than $250 million in permanent funding to UC’s budget since 1994-95 to keep fees at those levels. While the affordability of the UC system is a great asset, the university must consider whether this policy will diminish quality and access in an era of declining state support. I expect that the Office of the President will present a budget proposal to the regents in November that includes fee increases. The ultimate decision will be made by the regents, the Legislature and the governor.

Q: What about the 8% reduction plans that all departments put together last year at the chancellor’s behest?
A: We haven’t put those plans into effect because the 2% reduction called for in the budget was targeted primarily at specific areas. We asked for the 8% reduction plans to encourage our academic and administrative leaders to begin considering the available options to address potential budget cuts. If we are asked to make a 5% or 10% reduction later this year, we’ll take another look at those plans.

Q: In the meantime, is the “soft” hiring freeze still in effect?
A: Yes, with exemptions for faculty appointments and positions directly related to patient health care. In May, the chancellor delegated the responsibility for approving requests for waivers to the deans and vice chancellors; previously, I approved them. We have seen a slowdown in hiring activity. The number of job requisitions posted has fallen by about a third since November 2001, when the freeze was put into effect. The hiring freeze certainly hasn’t stopped hiring, but it has had the desired effect of raising awareness about the importance of keeping an eye on expenditures.

Q: Are layoffs or another VERIP (Voluntary Early Retirement Incentive Program) future possibilities?
A: Depending on how deep the cuts are, we cannot dismiss the possibility of layoffs. However, they will not be widespread this year on the basis of the reductions that have been made to date. And we always do whatever we can to avoid them. But if there are very deep reductions in state funding, they might be unavoidable.

As for VERIP, the state did, as part of the budget, offer an early retirement enhancement to members of CalPERS, but not to members of the UC retirement system. The UC environment is very different from the state environment. While the state is actively trying to reduce the size of its workforce, UC is doing the opposite — we are aggressively hiring more faculty to accommodate growing student enrollment — with the encouragement of the state. An early retirement program would undermine these efforts.

Q: What do these budget cuts mean for the future of the university?
A: In the short run, we have to anticipate there will be further reductions from the state, while we simultaneously respond to the pressure to accommodate an increasing number of students. We need to hire hundreds of faculty over the next several years, and also produce more teaching with our existing faculty. It’s a major challenge.

UC has faced these challenges in the past. We’re highly dependent on state funding for support of our core programs, and UC doesn’t have the same sort of constitutional and other legal protections that other state programs have. But UC and UCLA always bounce back from these situations. We’ve seen it repeatedly over the last several decades: State funding goes down, there’s a period of difficulty and retrenchment, but the state recovers and UC is successful in getting much of its funding restored.

While state funding will always remain important, UCLA also has had great success in increasing financial support from development activity and extramural research funding. Over the long run, we should strive to become less vulnerable to instability in the state funding environment.