Questions and answers on the state budget
Campus sets plans in motion for one-time cuts in most programs, permanent cuts in state-funded research

19 September 2002 |

With just a two-week perspective since Governor Gray Davis signed the 2002-03 California state budget, Paul Gray, executive vice chancellor and provost, answered questions for the Berkeleyan on what the UC budget reductions will mean for the Berkeley campus and how the cuts will be accommodated.

With the state budget now approved, what does this mean for the Berkeley campus?
The state has continued to fully fund core instructional activities and our needs for enrollment growth, but declining state revenues will mean some budget cuts for the University of California. There will be reductions in funding for both state-funded research and campus operations.

What level of budget cuts is expected for operations?
All campus units will take a 5-percent cut, except for the state-funded research units. This is a one-time, temporary reduction, starting July 1 for the 2002-03 fiscal year. Campuswide this will total $20 million.

And what is the impact on state-funded research programs?
The legislature, in its budget approval, mandated a 10-percent reduction in the budgets of state-funded research units at all UC campuses. This is a permanent reduction in funding, meaning it will be reflected in base budgets for these units this year and in years to come. At Berkeley this reduction will total $4.3 million.

What about state funding for outreach — campus programs to help make K-12 students college-ready?
Earlier versions of the budget proposed large cuts in UC spending on outreach, but the final approved budget scaled the cuts back significantly, and even added money to a few outreach programs. School/University Partnerships — programs that work with partner schools in communities throughout California — took the brunt of the reductions; programs that work with individual students fared better.

Berkeley has nearly 70 outreach programs, and for those most affected by these cuts, the plan is to explore other potential funding streams — the new federal No Child Left Behind Act, federal grants, gifts from foundations or individual donors — in order to continue this important work.

Where else were cuts made in state funding for UC?
Three other areas will be affected significantly, but the details of how these cuts will be made are still being decided. UC-run professional development programs for K-12 teachers will take a $56.9-million cut, though UC is working with schools on plans to continue this work using other funds. There will also be a $10-million cut in UC’s initiative to expand Internet2 connections to California public schools, and a one-time reduction of $29 million across all ten UC campuses for deferred maintenance, libraries, equipment, and instructional technology.

Are there still more cuts to come?
In approving the budget, the legislature directed the governor to trim an additional $750 million in state spending. Although we don’t know for sure how the governor will make these cuts, our plan is to be prudent now to try to avoid another round of cuts later in the year.

Is there any good news in this year’s budget?
Yes, there is some. In a very difficult revenue picture for the state, the governor and the legislature showed real support for the University of California. The budget provides funding for enrollment growth and continues to provide state support for summer sessions at Berkeley and three other UC campuses.

Does the budget provide any funding for pay increases?
Among the allocations for this fiscal year is funding to provide a merit increase of 1.5 percent for eligible faculty and staff, subject to applicable collective bargaining agreements.

This the first time in a decade that state funding for the UC budget has declined. How will the cuts at Berkeley be made?
Budget-planning principles have been developed by the campus’s Executive Budget Committee, and we will implement budget reductions based on these. Maintaining the quality of academic programs is the top priority in these guiding principles. It is crucial that we maintain the current faculty-student ratio, as well as the staff-faculty ratio in academic units.

Members of the Executive Budget Committee are the Chancellor, Executive Vice Chancellor and Provost, the Vice Chancellor for Budget and Finance, the chair and co-chair of the Academic Senate, and the Assistant Vice Chancellor for Human Resources.

Is there a possibility of layoffs?
Some layoffs may be inevitable as a result of program cutbacks and services that are discontinued, but we do not anticipate large or widespread layoffs due to reductions in state funding this year — and we will make every effort to avoid them.

Who will make decisions on how to absorb the reduction in funding?
An important budget-planning principle is that decisions on how to take cuts will be delegated to the lowest practical level. In other words, we don’t want to impose decisions from above. Those who will have to run their operations on less money, we feel, should determine how to implement their cuts.

What about students — how will they feel the impact?
The state has explicitly protected the instructional program. Undergraduate students should not experience significant changes under this current budget plan. Some graduate students may be affected by the reduction in state-supported research. However, it is our hope that that the trend of increased external funding for research will continue, filling the gaps for those students.

What about the possibility of a student fee increase?
Following the lead of the governor and the legislature, UC Regents have steadfastly maintained fees for California residents at a level lower than any comparable university in the country. Depending on how severe the shortfall in state revenues is in the coming months, fee increases might be considered.

This fall, fees increased 10 percent for out-of-state undergraduates and 4 percent for nonresident graduate students, with an additional 6- percent rise scheduled for nonresident undergraduates in the spring.

What more can you tell us about implementing the budget cuts on campus?
It is important to remember that the 5-percent cut for most of the campus will be a one-time cut. If we are flexible and look for creative options, we should be able to get through without major changes.

Approximately two-thirds of the state funding goes to the academic program. The 5-percent reduction for academic units will be shared this way: 1 percent will come centrally from reserves we keep in that area; the remaining 4 percent will come from individual academic departments. Deans have developed plans for managing these cuts in a variety of ways. Strategies include deferring faculty start dates for a year, saving salaries and deferring start-up costs; not filling open staff positions is another option, as is delaying equipment purchases. I know of one department where individual faculty members are returning the interest on their gift funds to the department.

For the administrative one-third of the campus, units will be asked to take a 5-percent cut. Most of the units already have plans in place to do so. Again, employing salary savings from open positions and using carry-over reserves are common strategies. In some cases, planned projects or enhancements to existing programs will be put on hold.

What about the 10-percent cut to state-funded research?
This is a much more difficult situation, because the cut is permanent. The Berkeley campus receives about $40 million a year to do state-funded research, so we are looking at a $4-million permanent reduction. Since the state mandated that the cuts be made across-the-board, we must follow that mandate.

In general, units that get their research support from multiple sources will be in the best position, because they will have greatest flexibility. Those that rely entirely on state support will face the toughest times.

Our main goal is to do everything possible to maximize external funding. For example, in addition to seeking new grant funding, we will take measures to protect the administration of sponsored research activities. It makes no sense to cut back in the areas that seek and administer external funding, a move that would jeopardize a far greater amount of money than would be saved by trimming administrative costs.

Who receives state funding for research on the campus?
Approximately half the funding comes to research programs in the academic program, which comes under my office. So, we will be looking at $2 million in cuts there. The College of Natural Resources receives the most state research funding and faces the largest cut. However, there is a fair amount of funding flexibility there, and it is our hope that most of the funding can be replaced with other grants.

Another $1 million in cuts will come from the more than 40 organized research units under the Vice Chancellor for Research, and the other $1 million in reductions will come from funding that goes to the central campus to cover operations related to state research.

What’s the outlook for the future?
No one can predict how California’s revenues will fare in the coming years, but I think we all expect there may be more tough times ahead. But the university is a great institution, with creative, resourceful people who work hard to keep it great. We’ve weathered lean times, and there is no doubt we’ll do it again.