Regents approve final budget for 2008-09
Budget reductions and unfunded cost increases for the current year add up to tough times for UC campuses and UCOP
| 22 October 2008
BERKELEY — The University of California Board of Regents formally approved a final 2008-09 operating budget for the UC system on Tuesday, Oct. 21, totaling $3 billion in state funding for core operations. The budget reflects a $48 million year-over-year reduction in state funding and requires another $100 million in internal savings to cover cost increases not funded by the state. Cost savings of $28 million in the Office of the President in Oakland are also included in the budget.
UC President Mark Yudof warned that additional reductions are possible in either the 2008-09 or 2009-10 year — though the university will continue making the case for strong state investment in the education and research activities that are key to economic recovery.
“It is evident that the turmoil in the international and national equity, housing, and credit markets will cause continuing erosion in the state’s economy,” Yudof said. “As such, we must view this budget as just the beginning of potential further state-budget reductions this year or next year.”
The state budget as signed by the governor Sept. 23 reduced UC’s state funding by $15 million, including a $5 million reduction of funding for labor research.
However, the state Department of Finance recently informed UC of an additional $33 million cut. During budget negotiations, the governor and legislative leaders agreed to achieve $340 million in additional reductions from state agencies after the budget was completed. UC has been assigned the additional $33 million reduction as its share of the new cut.
In total, UC received $48 million less in state revenue than in the prior year. Furthermore, the adopted state budget did not provide funding for increased student enrollments or inflationary increases in fixed costs such as utilities and health benefits. The university must achieve $100 million in savings to cover those cost increases.
As a result, the entire budget gap that the university must close through internal savings is $148 million, which would be equivalent to a 5 percent reduction in state General Fund support. Campuses are developing plans to achieve those cuts. The $28 million reduction in the budget for the Office of the President in Oakland avoids even further reductions to the campuses.
The central UC office also is operating under new approval processes in order to further reduce spending on travel and purchasing. Campuses will need to achieve savings to bridge the rest of the gap. Yudof has urged campuses to protect the student instructional program and student academic-preparation programs to the greatest extent possible.
Campuses have been encouraged to consider such actions as curtailing hiring, travel, and consulting services; reducing use of leased facilities; further reducing energy costs; encouraging employees to take advantage of voluntary reduction-in-time programs; and evaluating business practices to achieve efficiencies and eliminate non-essential activities.
UC’s spending plan for 2008-09 still makes progress on some priorities for the university, including continued expansion of student mental-health services, continued improvement of graduate-student financial support, and return-to-aid provisions that reduce or eliminate the impact of student-fee increases for many students meeting federal need standards.
Not included in the spending plan for 2008-09 are several items identified by the regents as high priorities that are being deferred in order to avoid making significantly higher cuts to existing programs. These include general salary increases for faculty and staff, additional funding for the second year of a four-year faculty-salary-improvement plan, and funding to continue improving student-faculty ratios.
The final state General Fund operating budget for UC is $3.032 billion. Background on the budget action taken by the regents is available at newscenter.berkeley.edu/budget.