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Berkeleyan

Governor's UC budget supports enrollment growth, includes funding for salary increases
Last year's tuition 'buyout' will not recur; students face a sizable increase in fees

| 17 January 2007

The 2007-08 state budget proposal for the University of California, issued Jan. 10 by Gov. Arnold Schwarzenegger, funds growth in student enrollments, proposes a major research and innovation initiative, supports faculty and staff salary increases, and proposes an infrastructure plan for facilities, among other things.

The governor's research-and innovation-initiative, one of the highlights of his overall budget plan, invests state funding in a number of UC research projects supporting the state's economic and environmental objectives. The initiative would support two "green technology" initiatives, support UC's bid to build a new supercomputer with uses in a wide range of fields, and provide operating funds for the California Institutes for Science and Innovation.

The governor's budget proposal fulfills his 2004 "compact," an agreement that spells out anticipated state funding levels and UC accountability measures over a multi-year period. However, it also again proposes to remove state funding for UC academic-preparation and labor-research programs. [Editor's note: For background on the ongoing effort by the governor to defund the Institute for Labor and Employment, see "For UC labor studies, marketplace of ideas lacks a safety net" in the Berkeleyan's March 22, 2006, issue, at newscenter.berkeley.edu/goto/ILE.]

Also, with the state still facing a $4 billion structural budget deficit and the governor's budget proposing tight or reduced spending in many areas of state government to eliminate that deficit, the budget does not propose a student-fee "buyout" in the 2007-08 year, as occurred in 2006-07.

As a result, increases of roughly 7 percent in mandatory systemwide student fees and 10 percent in select professional-school fees would be necessary to balance the 2007-08 budget proposal adopted by the Board of Regents in November. The regents will not be asked to set actual fee levels until their March meeting, to allow time for consideration and input. Any fee-increase proposal will be accompanied by a proposed increase in financial aid for needy low- and needy low- and middle-income students to preserve the affordability of the university.

The governor's budget also does not include $60 million the university had requested for reinstated employer contributions to the UC Retirement Plan, which have not been required since the early 1990s. [Editor's note: A recent two-part Berkeleyan examination of this controversial proposal is online at newscenter.berkeley.edu/goto/UCRP.] The university's next steps regarding the resumption of contributions, and the timing of those next steps, will be considered by the regents at future meetings. UC President Robert Dynes will recommend that employee contributions not be restarted until employer contributions are resumed as well.

"This budget does not include everything we might wish for," said Dynes. "But overall, in a tight fiscal environment, I believe this budget represents a strong vote of confidence in the work that the University of California is doing for California."

Under the governor's budget, UC's state-funded operating budget would increase $192 million, or 6.2 percent, to $3.27 billion in the fiscal year beginning July 1, 2007. The Legislature will consider the governor's budget and make proposals of its own during the spring. The governor and Legislature typically adopt a final state budget in the summer.

Key features of the budget for UC

Student enrollment: The budget includes funding for an increase of 5,000 students (2.4 percent) in 2007-08, consistent with the compact. This increase will allow UC to meet its commitments to undergraduate access under the Master Plan for Higher Education and continue to increase graduate enrollments as well.

Student fees: To fund UC's priorities in 2007-08, the budget proposal adopted by the regents included an option for either a student-fee increase or equivalent state funding. The governor's budget does not include the equivalent funding, recognizing the state's fiscal situation. As a result, balancing the UC budget proposal would require increases of roughly 7 percent in mandatory systemwide student fees and 10 percent in fees at selected law and business schools.

Currently, mandatory systemwide fees are $6,141 for resident undergraduates and $6,897 for resident graduate academic students. Professional-school fees vary by campus and discipline. The governor's budget proposes an increase in the Cal Grant budget to help offset fee increases for eligible students.

In addition, any proposed increase in mandatory systemwide student fees will be accompanied by a proposed increase in UC grant assistance for needy low- and middle-income students. Dynes intends to recommend that the university return 33 percent of the income from any undergraduate-fee increase to financial aid. Generally, this means that the university would be able to provide an additional UC grant, covering 100 percent of the fee increase, to on-time financial-aid applicants considered needy under federal eligibility standards and whose family incomes are lower than approximately $60,000 per year. In addition, UC would provide a grant covering 50 percent of the fee increase to other needy on-time financial-aid applicants whose family incomes are below $100,000 per year.

There also would be provisions for UC financial aid at the graduate and professional levels.

The governor's budget assumes the nonresident-tuition proposals contained in the regents' budget: a 5 percent increase in nonresident tuition for undergraduates, and a freeze on nonresident tuition for graduate academic students for the third year in a row, as part of the university's effort to remain attractive to the most talented such students nationally and internationally. Out-of-state students must also pay systemwide student fees, and any increases in those fees, in addition to nonresident tuition.

Research-and-innovation initiative: The governor's budget proposes a research-and-innovation initiative to help keep California on the leading edge of global competitiveness. It includes $30 million in lease revenue bonds for the Helios Project, an initiative by the Lawrence Berkeley National Laboratory to create sustainable, carbon-neutral sources of energy; $40 million in lease revenue bonds for Berkeley or UC San Diego in the event that either wins a global competition for the British Petroleum Energy Biosciences Institute, which will focus on the development of alternative fuels; $20 million in general funds for operations of the California Institutes for Science and Innovation, four cross-disciplinary, public-private research institutes located at UC campuses and focused on scientific fields with great potential for economic development; and $5 million in state matching funds in the event that Lawrence Livermore National Laboratory, Lawrence Berkeley National Laboratory, and UC San Diego win a National Science Foundation competition to build a "petascale" computer. That would be the most powerful computer in the world and, if sited in California, would give an enormous competitive advantage to California universities and businesses.

Faculty and staff compensation: The governor's budget (combined with other revenues) would provide a 5 percent pool for employee- compensation increases, including merit- and equity-based salary increases, health-and-welfare-benefit cost increases, and related cost increases. (Distribution of salary funding is subject to collective-bargaining requirements where applicable.) This increase is intended to begin closing the market-pay gap affecting many UC faculty and staff.

UC Merced: The budget continues $14 million in one-time funding for start-up costs.

Academic preparation: The governor's budget proposes cutting $19.3 million in state funding for UC's academic-preparation programs, which help improve the academic performance of educationally disadvantaged K-12 students statewide, leaving the $12 million in internal resources that UC currently provides. "These programs are critical to providing the pathways to college that a state like California depends upon for its economic and social vitality, and we will aggressively seek continuation of state funding for them," Dynes said.