Regents endorse state budget amid fiscal uncertainty
Following a somber discussion of the University of California's fiscal outlook, the UC Board of Regents Wednesday (July 18) took action to help the university stave off a possible $375 million in budget cuts.
In a single vote, regents endorsed the state's appropriation for UC for 2012-13, supported a revenue measure on the November ballot and agreed to freeze mandatory systemwide student charges at 2011-12 levels, contingent on passage of the initiative.
President Mark Yudof
The ballot initiative, sponsored by Gov. Jerry Brown, would raise roughly $8.5 billion through temporary increases in the state sales tax and the personal income tax rate paid by those earning $250,000 or more.
Shortly after the vote
, Brown dropped by to thank regents for their support of his measure — on the ballot as Proposition 30 — and told them that if it passes, the additional revenue could help return stability to both California and the university.
"If we keep an even keel, I think (the state) can renew the kind of support the university has long enjoyed," Brown said.
Should the initiative fail, both UC and the California State University would see their state appropriation automatically cut by $250 million in January. The university would also lose an additional $125.4 million in state funds that lawmakers pledged to include in UC's 2013-14 budget in exchange for holding mandatory systemwide student charges at current levels.
"Gov. Brown's 2012-13 budget package, in tandem with his revenue intiative, contains an implicit deal for UC," said President Mark Yudof. "It is an imperfect deal, and it is not without risks. Still, it is a better deal than we anticipated. And it is our best shot at taking an important step toward the financial stability that this university so desperately needs."
The possible loss of $375 million in state funds would come on top of nearly $1 billion that California has cut from UC's budget since 2007-08, explained Nathan Brostrom, executive vice president for business operations. Over that same period, UC's costs have risen by $1.22 billion.
The university has taken aggressive actions to address the deficit. It has relied on tuition and fee increases to cover a third of the budget gap. The other two-thirds have come from administrative efficiencies and cuts to academic programs. Campuses have eliminated or consolidated 180 programs; and more than 4,200 staff have been laid off and an estimated 9,500 faculty and staff positions have been left unfilled or eliminated entirely.
Toll of diminished support
Provost Aimee Dorr told the board that eroding state support was beginning to impact educational quality: Faculty-student ratios have crept up, and UC lags its comparator institutions in faculty salaries by nearly 11 percent.
"It is not impossible to recruit and retain really outstanding faculty, but it is getting harder," Dorr said.
As costs continue to rise, UC's budget shortfall in five years could grow to as much as $2.9 billion if revenues remain at current levels, Brostrom said.
Should the ballot measure pass, UC still will face a challenging budget picture over the next few years, but the university will be in a much better position to address it, he said.
UC's five-year budget projections already include aggressive assumptions that the university will cut $1.5 billion of its deficit through administrative efficiencies, alternative revenue sources and cost reductions, he said.
"We've identified $1.5 billion of our own potential solutions," Brostrom said. "What we would say to the state is ... this has to be a partnership. We would still have a $1.4 billion gap."
UC leaders have been in negotiations with state lawmakers over establishing a multi-year funding plan that would provide modest but predictable increases in state support, which would go a long way toward helping the university cope with its structural deficit, Brostrom and others said.
But that plan, too, is contingent on what happens in November.
Should the November ballot measure fail, "UC will descend into an alarmingly dire state of affairs," Yudof said.
Just to replace the $375 million state cut, UC would need to raise mandatory systemwide student charges by as much as $2,400 per year or resort to deep cuts to UC's academic program, as well as layoffs, hiring freezes and more, he said.
"I'm hopeful that if (the ballot measure) passes, we will get a multi-year deal and the university will be on the road to recovery," Yudof said.