Obviously, what's been on the top of my mind this month has been the university budget. We've known for some time that the state was facing a severe fiscal crisis, and we've been waiting to hear what the new governor's recommendations would be with regard to the budget. One of the keystone aspects of his budget is to borrow, through the bonding of a debt, about $15 billion to help balance the state's deficit. And that bond issue will come before the voters [on March 2].

It is important, it seems to me, for us to understand that without the passage of that, the problem for balancing the state's budget and particularly the budget of the university, will become much more difficult and serious. The reductions for higher education are already extremely painful and those for the university, about which we all care, are very, very difficult. For example, according to the partnership that we had established with both Governor Wilson and Governor Davis, the university's General Fund — that is, the state portion of our budget, not just for Berkeley but for the university system as a whole — would be roughly $4 billion. If the governor's recommendations are enacted, the university General Fund budget will be $2.6 billion instead. That's a decline of over $1.3 billion in general revenue for the state. That means, obviously, that the cost to students of attending the university will be increasing.

If one looks over the long term, as many of our alumni do, at the cost of attending Berkeley, it's really quite a remarkable story. From 1960 to the present, for example, the cost of attending Berkeley has gone from being 12 percent of the median family income of a California family, to being 27 percent per year. It costs over a fourth of a median family income annually to send a student to Berkeley now. Clearly, the cost of attending the university is becoming one of the difficult tasks for families of modest means.

And next year, that increase will be even greater. The impact of a 10 percent increase on undergraduates will be somewhat substantial, but the impact of a 40 percent increase recommended by the governor for graduate students will be extremely difficult for them to bear. Most graduate students are on their own, with little support from their families, and they depend heavily on the support the university can provide for their education. They will face an 85 percent increase, nearly a doubling of their tuition or fee costs, in the course of two years.

For students in the professional schools of law and business and optometry, the increase is even greater. So the burden for graduate students, who are essential to the future of this state and its economy, will be extraordinarily difficult. But it's also worrisome because it means that we probably won't be able to attract as many of the outstanding grad students in the future as we've been able to in the past, and that will be a discouraging factor for our faculty.

These are very difficult times, but we must not lose sight of the fact that graduate education is essential to the quality of a research university, and it's essential to the retention of faculty in a research university like ours at Berkeley. Graduate students contribute to the teaching of undergraduates. They serve as role models, they contribute to the research, they are a vital part of what we as an institution contribute to the state of California. The fee hike proposed by the governor needs to be reassessed, UC must pay its share of the cuts, but it must also be able to compete against the nation's elite universities, to attract the very best students. We can't be a great university without the very best graduate students.

Presidents of other universities from other nations with whom I meet talk about the investment that's going on in higher education, particularly in Asia, where we know that China for example, is investing large sums of money. We cannot fall behind in this competitive environment in the world in which we live, or more jobs will be lost to the future of our state and our nation. That's what's on the top of my mind.

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