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Regents review 2004-05 budget options
An increase in nonresident admissions and fees is among proposed measures

| 24 September 2003

With the state of California still facing an $8-billion budget deficit, the UC Board of Regents has begun preliminary discussions regarding the possibility of further budget cutting in the 2004-05 fiscal year.

At the board’s Sept. 17 meeting, UC Vice President for Budget Larry Hershman said that simply to keep up with enrollment and workload increases, the university in normal times would need to request a budget increase of 10 percent next year. However, due to the state’s continuing budget crisis, the state Department of Finance has asked all state agencies, including UC, to consider how they might absorb a budget cut of up to 20 percent next year. In addition, the legislature included intent language in this year’s state budget indicating that UC will not receive funding for enrollment growth or other cost increases in 2004-05.

A 20-percent cut to UC’s state-funded budget would be nearly $600 million, Hershman said — the equivalent of the state-funded budgets of three of UC’s small to medium-size campuses, or a $4,000 increase in student fees, or a reduction of 60,000 students and 13,000 faculty and staff.

UC cannot pursue anything that drastic, Hershman said, and the actual budget levels for 2004-05 will not be known for some time — but the university needs to begin considering some combination of approaches to address the likelihood of some level of further budget cuts next year. To that end, the Regents began reviewing a series of budget options that the board will continue to discuss at its November and January meetings.

“I’m not going to tell you we support any of these,” Hershman told the board. “We’re going to do our best to convince the state not to do any of this.”

The options include:
Enrollment restrictions: For example, reductions in the number of new freshmen UC accepts; reductions in the number of community-college transfer students UC accepts; or redirection of some UC-eligible students to the community colleges for their lower-division instruction, followed by transfer to UC. Such constraints on enrollment are a source of great concern to the university, Hershman said, given its history under the state’s Master Plan for Higher Education of offering a place on one of its campuses to every applicant who meets UC eligibility requirements.

Student fee increases: For example, further increases in mandatory systemwide fees, further increases in professional-school fees, further increases in nonresident tuition, income-indexed fee surcharges, or additional fees for students taking large numbers of classes beyond those needed for graduation. Fees have already increased substantially this year after seven years without a systemwide increase. Expanded financial aid protects lower-income and many middle-income students from the full impact of the fee increases, and this commitment to financial aid would continue.

Program cuts: For example, further cuts to UC programs that were already cut significantly this year — such as research, libraries, students services, administration, K-12 outreach, Cooperative Extension, and many others. All of these options would seriously affect the quality of the university and its ability to serve the people of California, Hershman said, noting that many programs were also cut deeply in the budget crisis of the early 1990s. Salary reductions are another option, but Hershman said they would be very difficult for the institution because UC faculty salaries already lag those of comparable institutions by 9 percent, and the university has a similar challenge with respect to staff salaries.

No decisions were made at the meeting, and Hershman stressed that the university at this point is simply beginning the budget discussion by putting “all options on the table.”

Over the last three years, UC’s state-funded budget has fallen 14 percent while its student enrollments have grown 18 percent. The falling state funding has meant that most university programs are being cut substantially, employees are not receiving cost-of-living increases, student fees are rising, and the opening of the UC Merced campus has been delayed for one year. The UC system is now operating on roughly $3 billion in state funds at a time when it had expected $4 billion.

“We already have taken deep cuts affecting nearly every part of the university,” said UC President Richard Atkinson. “Further budget cuts from the state will have a drastic impact on [UC’s] ability to meet its commitments to the people of California. What we are today — an institution that achieves the highest levels of academic excellence, that provides access to high-achieving students from all walks of life, and that has a deep impact on the economy and quality of life in communities throughout the state — is seriously threatened by this next state budget.”

Atkinson, who retires as president Oct. 1, suggested that the Regents consider an additional option in which the university would move closer to public universities in Michigan and Virginia in terms of the treatment of out-of-state students. He said UC could increase nonresident tuition by several thousand dollars, admit larger numbers of out-of-state students, and use the resulting revenue increase to prevent enrollment cuts for California resident students. UC will be analyzing the proposal further.

The Regents at their November meeting are expected to vote on a series of “principles” guiding the development of the 2004-05 budget, and the board may begin taking budget actions in January, following the release of the governor’s budget proposal for 2004-05.
Updates on the budget are available at www.ucop.edu/news/budget and newscenter.berkeley.edu/budget.