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Chancellor, campus leaders brief the media on Berkeley budget issues

A transcript of comments by Chancellor Birgeneau, George Breslauer, and Nathan Brostrom in answer to questions from reporters

| 11 March 2009

Campus leaders spoke to the media on Tuesday (March 10) about the impacts of the state and global economic crisis on UC Berkeley and steps being taken to respond to the $60-70 million campus budget shortfall projected for 2009-10.

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Taking part in the conference-call briefing were Chancellor Robert Birgeneau, Executive Vice Chancellor and Provost George Breslauer, and Vice Chancellor for Administration Nathan Brostrom. Reporters from some 20 media outlets dialed in to ask questions on new measures and options announced early this week in letters to faculty and staff from the three leaders.

Earlier on Tuesday the three addressed a campus Leadership Forum at International House and answered questions on the campus financial situation from an audience of more than 400 campus administrators, deans, managers, and other faculty and staff leaders.

A complete transcript of the conversation with reporters follows:

Chancellor Robert Birgeneau: We've just completed a meeting with the administrative leadership team, both academic and purely administrative, across campus in order to apprise them of what we view as the challenges that we're going to face next year and, in all likelihood, in years beyond that.

Of course, every entity in the state and in the country doesn't know how long the current financial challenges will last, but we're certainly anticipating that all public institutions, as well as private, will be financially challenged probably through 2011. Because of a combination of retroactive cuts this year, a large number of unfunded mandates, and cuts by the state in our budget next year — before fee increases — our shortfall for the Berkeley campus alone next year is somewhere between $60 and $70 million dollars, which is an unprecedented number for us in terms of the challenge.

Of course, this will be partly mitigated by fee increases, but only a small part. We'll have more than one announcement as we work through the difficulty of devising a strategy that enables us to end up with a balanced budget.

I have announced already a staff hiring freeze and also a temporary (at least for this year and next year) drastic reduction in the rate at which we are hiring faculty, dropping [from what is now] approaching 100 faculty hires per year, down to 25 searches. We have expanded the START program, which enables all employees to reduce their working hours without a reduction in benefits. And there are some other initiatives, but those initiatives are awaiting approval by the Office of the President and the Regents.

Amid these difficult times our goal is, first of all, we absolutely must assure access and affordability for California students. They deserve a quality education. Because they're entering the university at a time when the state is facing financial challenges, it's not fair to penalize them. We intend to maintain a robust undergraduate curriculum, and of course our goal is to maintain our overall comprehensive excellence. But we're not going to be able to achieve that unless every single person and every single department and unit in the university pitches in.

We know that these are difficult and anxious times for our students, faculty and staff, but we ultimately believe that we will emerge a stronger university. Nevertheless, we don't want to minimize the challenges that we at Berkeley, and also, frankly, at every other UC campus, are facing in the next two to three years.

With that, I'd like to hand it over to Vice Chancellor for Administration Nathan Brostrom.

Nathan Brostrom: Thank you, Chancellor. I just want to give a little more context on the cut that we are anticipating, and also our strategies to address it.

The chancellor mentioned that we are looking at a shortfall of between $60 and $70 million in the coming budget year. To put that in context, our overall budget for the university is about $1.8 billion, but the state portion of it is about $500 million, about 27 percent. So it does represent a large portion of our funding.

The shortfall for next year consists of several items. One is a $15 million cut that the governor levied on us in the current budget year, 2008-09. Again, that's a one-time, temporary cut. Ten million of that will translate into a permanent cut in the next budget year, the 2009-10 budget. In addition, the state put in a cut of about $8 million — again these are Berkeley-specific numbers — that may be restored if the state gets a sufficient amount of the federal stimulus package. So far we are including that in our planning.

Finally, as the chancellor mentioned, we have about $34 to $35 million of unfunded expenditures that represent everything from our purchasing utilities to payments for our faculty merits and salaries for our represented employees, and health- and medical-benefit fee increases. The one wildcard out there is that we don't know yet about our pension contributions — the UC pension fund has taken a big hit in the current economic downturn — and we'll be looking to the Regents and the Office of the President on whether and how much we have to restart pension contributions.

We plan to deal with [the campus's budget deficit] roughly half through revenue enhances, again principally student-fee increases, both in tuition and fees and some other fees, and then half through cost savings, both in permanent reductions and some of the temporary measures that the chancellor identified.

Birgeneau: And over to Executive Vice Chancellor and Provost George Breslauer.

George Breslauer: Good morning. I'd just like to add one or two points before giving you the opportunity to ask questions.

One is that each year I allocate from my budget a sum of money for curriculum support that supplements the monies that are spent by departments, by deans, on the hiring of teaching assistants and the like, in order to maintain a robust undergraduate curriculum. Very early in this process we made a collective decision to prioritize maintenance of the undergraduate curriculum. That translates itself, from the perspective of my budget, into a hefty increase in the amount of money that I will be giving for curriculum support to the deans and departments. While all other budgets are going to be cut, that budget, that is to say my contribution to curriculum support, will go up.

There will, of course, always be problems with students getting into this course or that course, because you can never field a curriculum large enough that everybody can get their first preference at any point in time. But to avoid this serious budgetary situation, creating great bottlenecks in access to courses, we are upping the provost's contribution to curriculum support.

(The teleconference opens to questions from reporters.)

Question: If you're a student on campus, which of these cuts are you most likely to notice?

Brostrom: The most likely thing they'll notice is the tuition and fee increases, but in terms of the cuts I'm not sure... We're trying to devise them in a way that will not impact either the experience or the curriculum for the students. Again, a lot of those decisions are going to be made locally by the departments, but in both the temporary measures and the permanent measures, maintaining a robust undergraduate curriculum is one of the top priorities.

Question: So no student services or anything like that?

Breslauer: There's bound to be a certain impact from a staff hiring freeze, an impact on all areas of campus, and student services would be impacted as well. We can't sugarcoat that.

Question: Because funding from the state is going to be cut, and the remaining funding comes from more private interests, do you think the university, because they're relying more on private funding, will they be more beholden to private interests?

Birgeneau: All of our philanthropic support comes without ties; that's a condition of the philanthropic support. Frankly we have a quite different view of philanthropic support, which is we are hoping that in these difficult times that Californians who have significant capability will step up and will support public institutions to achieve their goals of serving the people of California.

Interestingly, over the last eight months, which have really been difficult here in California, and excluding last year's $113 million gift from the Hewlett Foundation, our private giving is the largest it's been in Berkeley's history. We're really proud of that. We're proud of our development people, but we're also proud of Californians who are stepping up in order to help preserve this great public university.

Question: You mentioned that you are hoping that up to $8 million of the budget will come from the stimulus package. How exactly might that come in? How would it break down, and is Berkeley actually lobbying to get some of that stimulus money?

Brostrom: I should make it clear that this was a provision in the state budget which had a component — $50 million in cuts — [that applied] to the overall UC system. Of that, [Berkeley's] share is about $8 million. But one of the provisions, or conditions, of the cut is that if the state received a certain amount of direct outlays from the stimulus package it would be reduced. It's a conditional cut, and there are many other components of the federal stimulus package, especially in federal research and in some of the energy-efficiency and maintenance projects, where we are lobbying directly, and we hope that the campus will receive a certain percentage of those. But this one is outside of our purview; it's directly between the state and the federal government.

Question: Just to follow up, what is the amount that the state has to receive in order for them to restore some of that $8 million?

Brostrom: The number that I have in my mind is $10 billion, but I would want to check that against the final budget document.

Question: And that would all be from the education portion of the stimulus, or just $10 billion?

Brostrom: No, $10 billion in the direct outlay to the state in terms of state assistance.

Birgeneau: I will add to that that we're very excited about the enhancement of funding for energy research and for basic research in the Department of Energy, for the National Science Foundation, and the National Institutes of Health. The UC system generally, and Berkeley in particular, has historically been highly competitive [for receiving such research funding]. We're in the process of organizing a team of our top investigators to put together a strategy for enhanced energy research in order to take full advantage of the federal stimulus package. We think that the research aspects of the stimulus package will have a tremendously positive effect on our research and graduate education here at Berkeley and in the University of California generally.

Question: Chancellor Birgeneau, you've stated that to maintain academic excellence for all, every single person and every single department is going to need to pitch in. Have you considered personally taking a substantial salary cut, and also asking your senior administrators to take similar cuts?

Birgeneau: Obviously this is one of the things that we have considered. At the present time, not just Berkeley [but throughout] the University of California, we have extraordinary difficulty in hiring senior administrators from outside because our senior administrators' salaries are so much lower than those at any institution that we compete with. Further reductions in salaries of the senior administration would make us even less competitive than we are at the present time.

Rather than put us in a situation of being even less able to attract the very best people, we've encouraged our senior administrators to make substantial personal donations to our undergraduate students from financially disadvantaged backgrounds. The [campus] leadership team has stepped up with an amount that is now approaching $1 million of their salaries that they have committed to donating to need-based financial aid to guarantee access. That includes one of our senior administrators who is actually donating his entire salary; he's fortunately in a life situation where that's possible for him. So people have stepped up in a way that's really quite extraordinary. I believe strongly that this is the most effective way to proceed without seriously damaging our ability to attract outstanding people to Berkeley.

Question: I was wondering about the possibility of a furlough that was mentioned in a couple of letters that the Chancellor and Vice Chancellor sent out. The letter said that it was being considered for the next fiscal year, and I was just wondering what that would look like if it were implemented, and what kinds of considerations go into whether that's a good idea or not?

Breslauer: The idea of furloughs is a very active one at the moment. It's complex when it has to be approved by the Office of the President and the Regents, because there are 10 campuses. Different campuses will have different desires and needs, but we personally would like to see a furlough for both staff and faculty, as a principle of community that staff furloughs should not be the only furloughs going on on campus. These would apply to senior administration all the way down the line.

The furloughs are complex also, however, because part of the workforce is represented [by unions] and part of the work force is not, so the Office of the President is currently studying the possibility of furloughs and deciding how one would navigate these different interests and concerns.

We think, here at Berkeley, that a modest furlough of about 6 days per year would substantially assist our ability, if applied to staff and faculty, to deal with the current budgetary challenges. That said, our conception of a furlough is also one in which we would hope to exempt the lowest-paid workers, say for example, those making less than $30,000 per year, from the furlough. And we would perhaps also take a category of the lowest-paid faculty and exempt them as well. But we think that furloughs, which are going on throughout the country even as we speak and will not take place in the UC system in the current academic year, are the way the system ought to be going in the next academic year — or at least campuses should have that option.

Question: What about the possibility of layoffs? There's a protest gathering even as we speak, I believe.

Birgeneau: All of the measures that we're considering — the START program, etc. — are all designed to maintain our workforce at as high a level as possible. We have an outstanding faculty and staff here, and we've made huge investments in training them, and they work extraordinarily well here. On the other hand, we have to deal with the reality of the state budget cuts. The state has reduced our budget quite considerably, and if we're not able to mitigate these effects of the state cuts, ultimately, unfortunately, we will have to lay off some number of employees. Our hope, obviously, is to minimize that, but layoffs will be part of our financial strategy. Because we don't yet know about furlough programs and some other programs we're considering, because they have to be approved at the Office of the President and Regental level, we're not able yet to determine to what extent layoffs will be necessary in individual units.

Brostrom: Just to add to that, we have asked all of the units, as part of their budget call, to [plan for] 8 percent permanent cuts, and some of those may include layoffs. Again, that would be budget proposals that they are developing at the local level. As the chancellor and provost noted, we're also looking at a number of temporary measures that will give us those savings in case we are not able to reach those through the permanent cuts.

Question: What burden do you expect the students to have to bear as far as those tuition and fee increases ... has that been determined yet how much are we looking at?

Birgeneau: At least in communications that we've had from Sacramento, they're expecting fee increases for undergraduates up to the level of 9.3 percent [Note: the chancellor later clarified the number to be 9.4 percent]. That's a significant fee increase for our students. My own view is that it will be particularly impactful on the middle class. We have in the whole UC system the so-called Blue and Gold Opportunity program, which guarantees that if your family's income is below the median in California, which is $60,000, you will actually not pay any fees at all. Any fee increases at the level of 9.3 [9.4] percent would be carried primarily by the middle class, although families whose income is up to $100,000, they will pay half the amount of the increase, that is 4.65 [4.7] percent, and families whose income is above $100,000 would pay the full 9.3 [9.4] percent. So there will be an increased cost of attending the University of California, but those costs will be borne primarily by people whose family income is more than $100,000 a year.

Question: And would those fee increases go into effect in the fall? Do we know when?

Birgeneau: Yes, [if approved] they would go into effect on July 1.

Question: Could you please tell me what effect the slowdown in faculty hiring, or even GSI [graduate-student instructor hiring] is going to have, and how is UC Berkeley going to stay competitive?

Breslauer: The slowdown in faculty hiring takes place in the wake of a very high rate of faculty hiring over the previous five years, so that even this slowdown is not going to markedly reduce the total size of the faculty in the next few years. And we anticipate that once we start coming out of this recession we will be able then to re-enlarge the size of the faculty.

In the meantime, though, we have to put more money into hiring of highly-qualified Ph.D. lecturers to field some curricular offerings that otherwise would not be fielded by the regular faculty, which would diminish slightly in size.

The issue of competitiveness is entirely separate. If you look across the country, all of our competitors are imposing hiring slowdowns or hiring freezes. They're imposing faculty salary freezes, and therefore we do not anticipate that this downturn is going to disadvantage us any more than it disadvantages our main competitors, where they are dependent entirely for their funding of the instructional program on a combination of student tuition and endowment yield when they're already charging $35,000 to $40,000 a year. They don't have terribly much headroom to sharply increase their student tuition, and their endowments are way down. I do not view the measures that we have to take as necessarily reducing our competitiveness, because everybody's hurting.

Question: Provost Breslauer, you talked about having a focus on undergraduate studies. What about the graduate departments?

Breslauer: The graduate program is, of course, of great importance to us. A lot of decisions are made about graduate admissions at the departmental level, so some departments have decided, for example, that they are going to take fewer graduate students but get the top quality by concentrating all the funds available to them for  graduate fellowships on the top candidates. That has been a winning strategy for a good number of departments. Other departments want to increase the number of their graduate students, and so they may engage in private fundraising to increase graduate-student support. The Hewlett grant is also increasing our graduate-student support, because 25 percent of the yield from a Hewlett endowed chair goes to graduate-student support.

The graduate students are integral to the entire research enterprise on this campus, as well as integral to the teaching enterprise through their GSIs [graduate-student instructor appointments], or what used to be called teaching assistants. They will remain key to our entire teaching and research enterprise. I do not see them being disproportionately disadvantaged by these budget cuts, where everyone is taking a certain amount of pain.

Birgeneau: I might just add to that that one of the consequences of the overall cuts in the economy is that we're seeing in many of our departments record numbers of applicants for graduate school, especially for Ph.D. programs, outstandingly qualified people. For example, besides being chancellor, I am also a professor both in the physics department and in the materials science and engineering department, and these departments are seeing record numbers of applicants and are anticipating that the incoming graduate classes will be the strongest we've had in modern history. So one of the ironies of the financial difficulties that the country as a whole has been facing is that the quality of graduate students in graduate programs in major research and teaching universities is going to be significantly enhanced.

Question: If I could just follow up, you mentioned the graduate-student instructor positions. Do you anticipate that those positions are not going to be affected by the budget shortfall?

Breslauer: The number of graduate-student instructors is an aggregate of a series of about 100 localized decisions, so it's impossible for us to know in advance how many graduate-student instructors there will be next year relative to this year. I can add to my supplement for curriculum enhancement, but the way that supplement is used in order to maximize the curriculum is a local [departmental] decision. Some departments might say, for example, that they want to make sure that every undergraduate who wants to take courses in that department has the opportunity to do so, and they can only do that by opening more classes, but not more classes that carry discussion sections. They might be able to afford to hire additional lecturers to teach those classes, but without discussion sessions, so that would be a strategy that would not focus so much on hiring large numbers of additional GSIs. Other departments might make a different mix in their approach to curriculum building.

Question: In addition to the tuition, can you give me some specific examples of other areas where students can anticipate fee increases?

Birgeneau: We don't know yet. We just simply don't know.