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Governor signs 2005-06 state budget with funding for key UC priorities
Long-deferred salary increase for faculty and staff is included

| 03 August 2005

The 2005-06 state budget signed by Gov. Arnold Schwarzenegger on July 11 fulfills his "compact" with the University of California, ending four years of budget cuts with increases for student enrollment growth, faculty and staff compensation, the opening of UC Merced, and an initiative to expand the training of K-12 science and math teachers, among other things.

The budget as signed by the governor also preserves funding on a one-time basis for the university's student academic-preparation programs, which work to improve academic achievement and college preparation for students in disadvantaged K-12 schools.

"We are grateful to both the governor and the Legislature for adopting a budget that halts the cuts of the last few years and invests in higher education's contributions to California," said UC President Robert Dynes. "This is a budget that allows us to meet our commitments to the incoming class of students, reward our faculty and staff, continue our work in the K-12 schools, and continue expanding our contributions to California's economy, health, and quality of life."

Over the last four years, UC has lost 15 percent of its state operating funds while seeing a 19-percent increase in student enrollments. The compact, an agreement reached last year by the governor and UC, offers the university new budget stability starting in 2005-06 by establishing funding and performance expectations over several years.

Consistent with the compact, the final state budget for 2005-06 provides a $134-million (5-percent) increase in state general funds for UC operations over the 2004-05 fiscal year. UC's state-funded operating budget for the fiscal year that began July 1 will total $2.843 billion.

The budget includes the following for the UC system:

• Enrollments: Funding for enrollment growth of 5,000 full-time-equivalent students in 2005-06, a 2.5-percent increase, consistent with the compact.

• UC Merced: Continuation of $10 million in ongoing operating funds plus $14 million in one-time money for the new campus opening in fall 2005, along with enrollment funding (part of the above 5,000-student allocation) to enroll its entering class in 2005-06.

• Science and math initiative: A $750,000 allocation for UC to begin the "California Teach: One Thousand Teachers, One Million Minds" program. In this program, UC will work with corporate partners and the California State University system to expand dramatically the training of high-quality science and mathematics teachers for California's schools, to bolster the state's long-term economic and technological competitiveness.

• Academic preparation: Continuation of $17.3 million in state funding for UC's academic-preparation programs, which work to help improve academic achievement and college preparation among students in disadvantaged public schools in California. The governor's budget message indicated that this funding will be sustained "on a one-time basis, with the understanding that the university will work with the [Schwarzenegger] administration to fully evaluate the cost-effectiveness of each program and eliminate those that cannot demonstrate an adequate return on investment."

• Faculty and staff compensation: A 3-percent funding increase for salary increases, including merit-based increases, and additional funds to help contribute to employee health-benefit costs and to address market-based and equity issues. (Specific compensation levels are subject to local programs and collective bargaining agreements where applicable.)

• Labor institute: The governor vetoed $3.8 million from the budget passed by the Legislature for a set of labor-research programs formerly known as the Institute for Labor and Employment. One-third of this funding now supplements the budget for the Institute of Industrial Relations at Berkeley, one-third of it does the same for the Institute of Industrial Relations at UCLA, and one-third of it goes to a systemwide labor-research grants program.

[Editor's note: Schwarzenegger's line-item veto surprised some who believed that funding for these programs had been agreed to during last-minute negotiations between the Legislature and the governor. At a meeting of the regents' finance committee on Thursday, July 21, UC President Robert Dynes said of the governor's veto: "This is not new; this is not novel. [This funding] was not created by the academic process: It was created politically, and it was eliminated politically."]

UC systemwide officials are currently assessing what options may be available for continuing to fund research efforts in this area. Larry Hershman, UC's vice president for budget, told the regents on Thursday that "we have assurance from the governor's office and the [state] Department of Finance that they'll reconsider this in next year's budget."

• Student fees and financial aid: The regents last November approved undergraduate and graduate-student fees for 2005-06, consistent with the levels outlined in the compact and consistent with the final state-budget outcome. The action included increases of 8 percent ($457) for resident undergraduates and 10 percent ($628) for resident graduate academic students. (Details about 2005-06 student fees are available at www.universityofcalifornia.edu/news/budget/fee_fact_sheet05.pdf.) UC financial aid, in conjunction with Cal Grants, will be sufficient to cover the fee increase and some other increases in costs of attendance for undergraduates eligible for UC grant aid.

[Editor's note: At their Thursday, July 21, meeting the regents approved an increase in fees for certain professional-school students by a vote of 12-6. A previously approved fee increase will, in combination with last week's hike, raise fees for those students by 10 percent by the 2006-07 school year. Another increase, approved 10-8, will impose a temporary increase in the educational fee these students pay, to cover the costs incurred by UC because of an injunction against collecting increased fees that were approved by the regents in 2003, which are the focus of a lawsuit currently in litigation. The educational fee will increase by $700 in 2005-06 and by another $1,050 in 2006-07. For details on the professional-school fee hikes, which will affect Berkeley students in the Haas School of Business, Boalt Hall School of Law, and the School of Optometry, see www.universityofcalifornia.edu/news/2005/jul21.html.]

• Capital improvements: Funding of $352.5 million from a voter-approved general-obligation bond measure to expand and upgrade academic facilities to support enrollment growth and to maintain progress on seismic and other life-safety improvements while also addressing essential infrastructure and building-renewal needs.