:: UCLA TODAY Home

©2004
The Regents of the University of California
 

preparing for possible cuts

Chancellor details budgetary challenges

UCLA Chancellor Albert Carnesale sent a letter last month to faculty and staff discussing the state’s difficult financial climate and the budgetary challenges the UCLA community faces. (See it at www.ucla.edu/budget/acc_oct03.html.)

Recently, UCLA Today sat down with Chancellor Carnesale to discuss these issues in greater detail.

Q: There are several important things to ask you about, one of which is obviously the recent announcement of the campus closure over the holidays. But first, let’s talk about the budget. We’ve already been through budget cuts. Are there going to be more in 2004-05?
A: Unfortunately, this is likely to happen, although we don’t know yet by how much.

The Legislative Analyst’s Office just issued a report stating that the state is facing a year-end shortfall of $10.2 billion in 2004-05 assuming the vehicle license fee rate increase remains in effect, and substantially more if the rate is rolled back and the state resumes backfill payments to localities. The Legislature and the Department of Finance have also informed the University of California that the state will provide no funding in 2004-05 for UC salary increases, non-salary price increases or enrollment growth.

Over the next few months, our campus will consider a range of options to prepare for likely reductions in state funding. But it’s still far too early to know the specific impact of the state’s fiscal problems on UC. More detailed information will not be available at least until after the new governor submits a budget to the Legislature in January 2004.

Q: In such an uncertain environment, how do you prepare for possible cuts in our state funding for 2004-05?
A: As I talk to faculty, staff and students, I am aware that there is a lot of concern about what might happen. The good news is that we’ve been preparing for the likelihood of cuts for quite a while, and future budget cuts will not catch us unawares. For example, our decision to implement a staff hiring freeze helped us prevent layoffs and save jobs. Also, last year, we set aside $4 million to help us prepare for the possibility of midyear cuts this January.

As part of our planning process for the 2004-05 fiscal year, I have asked the deans and vice chancellors to prepare for implementing reductions of 5%. This figure is an estimate of what our campus might be asked to contribute to a UC-wide cut. We simply do not know at this time the extent to which California’s budget crisis will affect our campus. The deans’ and vice chancellors’ plans are due in December and we will need to review them in light of the governor’s budget next January.

Q: So you haven’t yet made any decision regarding specific cuts?
A: No, not yet. As I’ve mentioned, we’ve put in place a process that our campus is using to plan for future anticipated reductions. The uncertainty of state funding means that we also must explore options that previously have been difficult to consider. For example, we may want to reduce state funding for some research units that have the potential to raise external funds. We also must continue to explore ways to keep reducing costs and improving our overall level of efficiency.

Q: How are deans and vice chancellors going to make budgetary decisions?
A: At the beginning of this academic year, the campus leadership came together to discuss the challenges and opportunities that we face — from both a short- and long-term perspective. In addition to discussing the budget process, we also established guiding principles upon which decisions will be based.

Q: What are these principles?
A: We will continue to maintain and enhance UCLA’s place among the world’s great universities. As we tackle the budget crisis, we do so using excellence as our guide — both on a university level and at the unit level. We will maintain excellence where we currently enjoy it and develop it where we must have it. We will invest in the future so that we emerge from these difficult financial times in a strengthened position. While cost savings are, of course, important, we need to make sure to invest in those areas that reflect our important priorities.

There are certain areas in which a great university like UCLA simply must have a seat at the table. We have established ourselves as a leader in interdisciplinary areas like nanotechnology and the biomedical sciences, and we must continue to be an innovator. We simply cannot wait until the budget difficulties pass to make forward-looking, critical investments.

Q: You mentioned the hiring freeze and its impact on layoffs. Do you expect future layoffs on the campus?
A: Because of the hiring freeze, layoffs at UCLA have been limited and have not been as severe as they have been on some other UC campuses. And where positions have been eliminated, the changes have occurred primarily through attrition or elimination of vacant positions, rather than through layoffs.

However, we must acknowledge that there will likely be some additional layoffs in the future. For example, as a result of the 50% cut in state funding to outreach programs, we will be unable to avoid some layoffs in that area. We do offer job replacement assistance and other services to employees who are subject to layoff.

Q: What do you say to people on campus who feel like they’re working harder for less?
A: It’s true that in these difficult times many staff and faculty are working harder for less — and we are all grateful for these outstanding efforts. Funding that might have been used for replacement staff positions and salary increases is, to a large extent, simply no longer available to us, because the state has provided no funds to support increased costs at this time.

Q: So there will not be any salary increases this year?
A: We all know that there is a critical need to maintain competitive salaries in order to maintain institutional quality. The university continues to press this important topic with state officials. But the final 2003-04 state budget contained no funding for UC salary increases. However, built into the system, we do have funding — non-state funding — for faculty merits this year.

Q: For the first time, UCLA will be closed over the holidays. What process was involved in making that decision?
A: The implementation of the campus closure at the end of December is an excellent example of how UCLA is putting in place measures that will generate real savings for our campus. Last May, I informed the campus that we were going to consider a variety of proactive cost-reduction initiatives, including energy conservation, to respond to the difficult budgetary situation.

This campus closure was first suggested by the Energy Conservation Task Group, which was established last summer to develop recommendations for energy savings. In many respects it makes formal what were informal closure arrangements that were already happening on some areas of the campus. By extending and formalizing these measures, we will significantly reduce our energy costs. It is a pilot program, but I believe that it will prove successful in reducing costs.

Q: On another topic, employees are concerned about the rising cost of health care.
A: Yes, this is a national problem. Unfortunately, health-care costs are rising everywhere. Some employers have been forced to reduce benefits, and employees have had to bear more of the cost. The good news is that health care remains a top priority for the university; that UC is committed to ensuring that all employees have access to affordable, quality medical plans; and that UC continues to pay the majority of each employee’s monthly health-care plan premiums. The fact is that, despite the increased costs, these plans are still one of our most valuable benefits.

People may not know that UC will be using a salary-based employee contribution structure for 2004 health plan costs. In other words, UC is helping to keep cost increases down for lower-paid employees. This tiered approach recognizes that increased premiums are especially challenging for many of our valued employees.

Q: In your letter, you encouraged people to get involved. How can they do that?
A: Deans and directors are providing opportunities for people to participate and give input as the budget review process unfolds. Different units are approaching this differently, so I encourage people to talk to the academic and administrative leadership in their area about the ways in which they can become involved.

Many people have already conveyed their thoughts directly to me via my Web site. I read these comments and suggestions, and find that such recommendations and contributions are a valuable part of this process. I encourage everyone to stay informed about this topic by consulting our budget Web site at www.ucla.edu/budget/index.html. The site also has a special area where members of the UCLA family can e-mail me their ideas and suggestions about the budget.