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Chancellor delivers grim budget news at BSA gathering

The news, mostly bad: deeper budget cuts, more layoffs, and likely 8 percent wage reductions

| 16 June 2009

"I hate to be the messenger of such a terrible message," Chancellor Robert Birgeneau told the general meeting of the Berkeley Staff Assembly membership Monday. But with the campus now facing a budget shortfall of around $145 million "a shocking number," he said, more than twice the size of the deficit expected just six weeks ago grim news was the order of the day.

"I've not seen anything like this in my entire career," said Birgeneau, referring to the deepening cuts being made to UC and other state higher-education systems in the wake of the voters' defeat of a package of budget measures in last month's special election. "We had a strategy for bridging" the earlier, $67 million shortfall, he said, with some $45 million in student-fee increases and savings from the staff hiring freeze, voluntary staff separations, the Staff and Academic Reduction in Time (START) program, and other such cost-cutting measures.

Now, though, administrators will need to find another $100 million in cuts "money that literally is not going to be there" when Sacramento finally approves a state budget and that, Birgeneau said, is going to require significant sacrifices.

In a preview of an e-mail sent to the campus community later in the day, Birgeneau said all campus units will be asked to cut their budgets by an average of 20 percent over two years, instead of the 8 percent cuts expected as recently as mid-May. Staff who survive these contractions and, the chancellor emphasized, "there will be eliminations of staff positions" will see their paychecks shrink.

"We can all collectively expect wage reductions in the neighborhood of 8 percent," reported Birgeneau, adding that the formula could include some combination of furloughs and actual pay cuts. That, he said, will depend on decisions at UCOP, which is expected to make an announcement as early as this Wednesday.

Prospects for furloughs "are changing day by day," Birgeneau said, noting that earlier this year Berkeley officials had explored the possibility of requiring five or six furlough days a year, but that UCOP decided any such requirement must be implemented systemwide. "It's now a centrally controlled process," he said, for which a formal proposal is likely to go to the Board of Regents in July.

The chancellor also noted that sometime in 2009-10, UC employees would be hit with the resumption of employee contributions to the UC pension fund expected to be 2 percent of their salaries and almost certainly with higher premiums for health insurance come Jan. 1, 2010.

Meanwhile, the chancellor recounted some of the other steps the campus is taking to dig out of its budget hole, including a "near-total freeze in faculty hiring," and made the case for unity in the face of adversity.

"Every single person, students, faculty, and staff, we're all going to have to make sacrifices," he said, suggesting that it's "not helpful" to blame the unions, senior executives, staff, or even the regents for the university's financial woes.

"We have to make sure that when we circle the wagons we shoot out, not in," Birgeneau said. "I think it's critically important that we understand that we're all absolutely in this together."

As for the grisly details of the cuts ahead, the chancellor said those are mostly "to be negotiated" over the summer, once the Legislature finally enacts the state budget that was due to be passed on Monday. For now, "I encourage everyone to let legislators in Sacramento know what kind of damage this is going to cause," he said.

Particularly worrying is the governor's proposal to eliminate Cal Grants, whose loss, the chancellor warned, would "fundamentally subvert the meaning of UC Berkeley" and its commitment to a financially diverse student body. The possible loss of that undergraduate-aid program, he added, would leave the campus in an even deeper hole than currently projected for 2009-10.

Birgeneau, who addresses the BSA membership every year, did his best to end this year's meeting on an upbeat note upbeat, at least, given the somber mood of the Haas School's Wells Fargo Room by the time he'd finished outlining the harsh budget realities confronting the campus in the months and years ahead.

"This is not the first time Berkeley has faced difficult financial challenges," he reminded his listeners. "But we've been a great university for 141 years, and we'll be a great university 141 years from now. I think history will judge all of us, including the leadership team, on how well we manage to navigate" the current crisis.

"All of us [on the leadership team] are doing our best, and I know we can count on all of you to do your best, to get us through this."

Due to the pressing budget news the chancellor shared at the BSA session, questions for him submitted to BSA in advance will be answered online in the coming weeks at bsa.berkeley.edu. Staff are invited to continue sending budget-related questions via the site.