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Budget update: Questions from the Staff Town Hall

12 May 2009

At the Town Hall meeting for staff held on March 23, Chancellor Robert Birgeneau and Vice Chancellor for Administration Nathan Brostrom answered randomly selected questions submitted by the audience for nearly 40 minutes. As the Wheeler Auditorium meeting ended, they pledged to publish answers to the questions that remained. With similar questions consolidated, below are answers to those questions.

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Q. Will the budget cuts being made by the chancellor's and vice chancellors' offices be published?

A. Campus decisions about budget cuts for all units including those within California Hall will be made in the next two months, and units will have until Sept. 1 to determine how those cuts will be made. When the budget is finalized, an overview of campus actions, including breakdowns by control units and offices, will be published on the Budget Central website, newscenter.berkeley.edu/budget.

Q. What are the specifics of the campus restructuring initiatives that were presented at the March Regents' meeting?

A. The Regents asked the campuses to present ideas that are being pursued to streamline operations, with the goals of improving services, saving money, and reducing workload. The initiatives Berkeley presented, now on the Regents' website, represent a "menu" of initiatives — some are well under way, and others are still being considered or planned. The campus has already seen the benefit of some of these initiatives: changing the way funds are paid out of endowed chairs to benefit directly academic and research programs, graduate students, and faculty payroll; rethinking our debt strategies and management of financial assets to achieve significant savings; and consolidating contract and grant administration for six major units through the new Research Enterprise Services.

Ideas in much earlier stages of discussion include rethinking how the campus handles information technology, human resources, and administration in general. These and other ideas presented at the Regents' meeting are larger initiatives that could have long-term positive effects — the time scale for implementation would range from one to six years. The chancellor and senior campus leaders will discuss some of these initiatives at a daylong retreat in late May.

Q. During times of financial hardship, why are staff always the first to take the hit?

A. The pain of the economic crisis is being felt by staff, faculty, and students alike — it is a shared burden. Student fees are increasing, staff salaries — including those of senior administrators — are frozen as are faculty cost-of-living increases, and fewer faculty are being hired. The campus's top priority, as always, is carrying out its academic mission, so non-academic activities have taken cuts ahead of academic programs.  Because of the economic situation we now face, no segment of the campus is immune.
The campus's largest expenditure, and the bulk of the state's funding for the campus, is for faculty and staff payroll. Because tenured faculty cannot be laid off, the disproportionate burden of reductions in permanent state funding invariably falls on staff. Berkeley continues to try to minimize staff layoffs through voluntary measures (the START program, Voluntary Separation Option) and attrition (the staff hiring freeze). For faculty, the continuing slowdown in faculty hiring is increasing faculty workload as the student-faculty ratio continues to grow. The campus is working on ways to manage workload impacts on staff and faculty as it deals with the effects of fewer employees to carry out Berkeley's mission.

Q. The last time staff and faculty made sacrifices during difficult financial times, staff salaries never recovered when good times returned. How would you address this when the recovery begins?

A. In terms of pay increases, for three years the campus has used equity funds provided by UCOP to increase the salaries of those who lagged furthest behind the market, and substantial progress was made in that time in bringing many salaries closer to the minimum of market ranges. The hope is that funding for such equity increases will be restored in the near future. With the implementation of Career Compass, Berkeley is putting a market-based, standardized job structure in place and, when the state economy improves, will be in a better position to launch an effort to bring employee pay closer to market in a systematic way by addressing the most acute cases first.

Q. Will there be internal hiring in the next year? That is, will staff be able to transfer between campus units during the hiring freeze?

A. The hiring freeze announced in March applies to all staff positions on campus. There are some exceptions to the freeze, so an employee interested in transferring to another campus position should continue to monitor campus job listings. Also, the campus will continue to fill jobs that are fully funded by grants and contracts, as well as short-term, limited appointments of less than six months. Details on the freeze and possible exceptions are at hrweb.berkeley.edu/scro/hiringfreeze.htm.  

Q. What is the advantage for an employee to take the Voluntary Separation Option (VSO)?

A. VSO is an option for employees who are thinking about retiring or leaving the university in the future and are willing to accelerate their plans to do so; those who take this option may not return to work at any UC campus for at least three years. The program offers a modest severance payment. VSO also might be attractive to employees who think they might be laid off but are not sure; an employee who is laid off has the option of taking severance pay or preferential rehire. See hrweb.berkeley.edu/scro/vso.htm for complete VSO information.

Q. How can staff members appeal if they feel they've been laid off unfairly?

A. All career employees have specified rights with regard to layoff; these vary depending on the personnel policy or union contract that governs your position. To learn your rights, read the sections on layoffs in your union contract or Personnel Policies for Staff Members that cover your position.
If you believe you have been laid off in violation of the contract or policy covering your position, you may file a grievance (represented employees) or a complaint (non-represented employees). You can find contracts, personnel policies, and these procedures on the Web at hrweb.berkeley.edu/hrpolicy.htm.

Q. Why has Berkeley announced a hiring freeze while the Office of the President (UCOP) has just announced the hiring of new administrators?

A. The hiring freeze announced in March applies only to the Berkeley campus. Each UC location sets its own hiring policies in this regard. UCOP has already downsized significantly, and has eliminated approximately 600 positions in the past few years. Amid the downsizing, some key UCOP positions have become vacant and have been filled to ensure that critical work gets done in their streamlined operation. (Berkeley's hiring freeze also permits hiring for key vacant positions in exceptional situations.) Details on UCOP restructuring are at www.universityofcalifornia.edu/future.

Q. I've worked in clerical positions at Berkeley for nearly 25 years. In March the Regents approved the appointment of a chief financial officer for UC, at a base salary of eight times what I make. Please explain how this is appropriate.

A. Salaries are set to be commensurate with job duties and levels of responsibility. UC's chief financial officer is responsible for making decisions that affect the entire $20 billion university enterprise, 132,000 faculty and staff, and all 220,000 of our enrolled students. It's a high level of responsibility, with significant impact on UC.

Q. Salaries for many UC employees are lower than the market rate. Given that, why does the chancellor earn such a high salary?

A. Market inequities cross the spectrum of campus jobs, including the chancellor's. The chancellor's salary, which is set by the UC Regents, falls in the bottom half of those of chancellors and presidents at other peer public universities. Among the private and public campus leaders surveyed at peer universities in the Association of American Universities, the Berkeley chancellor's salary ranks 44th out of 60, with a market gap of more than 30 percent. The market gap for other UC Berkeley senior administrators is nearly as large.

Approximately 200 people out of 5,000 total non-represented staff fall below the market midpoints determined in the new Career Compass job categories; on average, Human Resources found, Berkeley's career staff are at about 93 percent of market midpoints. For those who fall below the minimum, the campus is working to find a way to remedy that situation, if at all possible.  

Q. Despite the announcement in January of a freeze in executive pay, some deans received pay increases in February. Why?

A. Each of the recent salary actions for Berkeley executives involved new temporary or permanent appointments with increased responsibilities. No salary increases have been approved for deans continuing in an unchanged position. The UC president and Regents must approve such actions, and all such decisions are posted publicly on the Regents' website.

As a budget-reduction measure, the Regents did freeze salaries of Senior Management Group (SMG) members (deans and above) through 2009-10. This means that the chancellor and vice chancellors are not eligible for merit or equity increases. This means that no SMG member is eligible for merit, equity, or retention increases. However, like any employee, SMG members (who are in staff positions) can receive a pay increase or stipend if they take on a more demanding position or expanded temporary responsibilities. 

Q. The chancellor has said that he and other top administrators are not going to take pay cuts because it would seriously damage the university's ability to attract outstanding leaders. Has he considered what his statements imply about the worth of the rest of the campus staff?

A. This is not, in fact, what the chancellor said, which was reported inaccurately in the media. What he did say is that, for competitive reasons, he does not believe in cutting base salaries but rather has encouraged members of his cabinet to donate back a significant portion of their salaries to the university. Chancellor Birgeneau himself has donated back about 8 percent of his salary for the past three years, and will do so as long as he is chancellor. He is opposed to cutting base salaries for all employees because of the impact it could have on pensions, and because he does not want Berkeley employees to lag any further below market-rate pay. 

Q. Why did associate university librarians, who each earn over $100,000 a year, receive merit increases this year, while salaries are frozen for other library staff, many of whom earn less than a third of that salary?

A. Academic personnel — including faculty and non-Senate academic employees, such as the associate university librarians — received merit and promotional increases in 2009-10 on the established schedule for their personnel program. Because academic appointees are eligible for merit-based increases only every two to five years, for now the university is continuing the merit programs. However, academic personnel are not receiving any annual range or market adjustments, except those required in collective bargaining agreements.

Q. What is the status of the Durant Hall renovation? It looks like a foreclosed building in the middle of campus.

A. The renovation of Durant Hall is one of many state-funded capital projects in the UC system. Last December, because of California's budget crisis, the state was unable to issue bonds and was forced to "freeze" disbursements to most state-funded capital projects across the state of California, including the UC system. Work on the Durant Hall renovation project was suspended, with the expectation that the project would restart once the state budget crisis was resolved and the flow of state funds resumed. With the recent success of California bond sales, it is expected that funding will begin to flow again to state-funded projects soon. The campus is optimistic that Durant Hall funds will become available soon so that work can resume and the project can be completed.

Q. The chancellor has mentioned there would be an increase in charges for some student services. Which ones?

A. The May Regents meeting addressed student registration and educational fees, approving an increase of 9.3 percent for both in-state and out-of-state undergraduate fees. Berkeley is also working with UCOP, other campuses, and Berkeley faculty and student leaders to investigate options for a student technology fee to generate resources to meet the growing demand for technology services. Similar fees at peer public institutions range from $100 to $300 per semester. If such a fee is implemented, students would participate in setting priorities for high-demand technology improvements (such as AirBears expansion). The standard campus percentage of the fee would be set aside to provide assistance to students who receive financial aid.

Q. We've been told that the rising cost of utilities plays a major role in the nearly $70 million campus budget gap. What is the campus's program to reduce waste in energy and water use, to save money and jobs?

A. Almost 200 new energy-efficiency projects are under way as part of the UC Berkeley Strategic Energy Plan, with a goal of cutting campus greenhouse-gas emissions by 40 percent to 50 percent. Most of these projects have just begun: The campus will be improving lighting and heating-and-ventilation systems, has developed the Green Department Certification Program to recognize sustainable practices on campus, and has launched an effort to reduce the power usage of 1,500 computer workstations. Campus efforts already reduced electricity usage by 5 percent last year. Water-saving, video-conferencing, and transportation-management efforts are under way, too — all are better for the environment and will eventually save money.

These efforts will cost the campus approximately $25 million, which will be funded through external borrowing and some $9 million in rebates from PG&E. But the improvements will pay for themselves in short order, saving the campus $3 million a year once they are in place.

Q. Why aren't lights turned off overnight in many campus buildings? It would surely save money.

A. You are right. As a campus, we are committed to increased energy efficiency — and we need to be vigilant collectively and as individuals. Anytime you see unnecessary lights or heat on or water running, please turn them off. If you see "unsustainable" or wasteful practices on campus, report them at sustainability.berkeley.edu so that they can be addressed.
Of course, there may be good reasons for nighttime lights in campus buildings — people may be working or lights might be on for safety or security reasons. The Strategic Energy Plan calls for installing more automatic controls in campus light fixtures, the most efficient way to reduce unnecessary lighting. This will be an up-front cost with a long-term payoff in energy savings.

Q. What are the potential negative effects of the downturn in the economy and state funding on future pension benefits? How secure are our pensions, and how likely is it that payouts will be lowered? Are our pensions guaranteed?

A. Downturns, as well as upturns, in the economy affect return on investments, but the payout an employee gets from the UC Retirement Plan (UCRP) is not affected by gains or losses in plan investments. Because it is a defined-benefit plan, UCRP is required to pay out vested benefits according to established formulas. This type of pension plan is becoming less common, especially in the private sector, where many companies have terminated retirement benefits or opted to contribute to an employee account, with no guaranteed retirement benefit.

That said, UC employee contributions to UCRP will almost certainly restart in April 2010 to keep the fund healthy. The state of California has not yet committed to matching UC employee contributions, as it does for California State University and community-college employees. UC President Mark Yudof has urged employees to contact their elected representatives in Sacramento to ask them to support state contributions to our retirement plan.  

Q. Did any UC financial managers of retirement funds receive bonuses in 2008?

A. The retirement fund is managed by the UC Office of the President. Some investment staff in the UC treasurer's office received incentive compensation based on performance during the 2007-08 fiscal year and before. Now, with the exception of payments to some individuals in UC's clinical medical enterprise, all bonuses and incentives for UC employees have been frozen by the Regents. A fact sheet on UC compensation is available at www.universityofcalifornia.edu/news/execcomp2008.pdf.

Q. Will there be a mechanism to allow staff to ask questions about the budget as new information becomes available?

A. Whenever you have a question about the budget and how it affects your unit, you should first direct it to your supervisor, who can answer specific questions in the context of your unit's budget and priorities.

For more general questions, ideas, and comments, a mechanism for input is already in place. Berkeley's Budget Central website, newscenter.berkeley.edu/budget, has extensive links to the latest information about the UC and UC Berkeley budget situation, and there is an option for submitting comments to campus leaders. Decision-makers are very interested in feedback and suggestions on how Berkeley can be more efficient and make the most of scarce resources during these lean budget times.