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The budget picture so far
The ‘ultimate impact’ on Berkeley remains to be seen, even as substantial information continues to emerge

09 April 2003

In a typical year, budget planning generates a buzz of activity all across campus in mid-spring. But California’s budget crisis makes this no typical year, and that buzz has reached a new pitch as campus units consider options, make contingency plans, look for ways to economize, and wait for clarity as the budget process in Sacramento plays out. What do we know, and not know, today? Executive Vice Chancellor and Provost Paul Gray talked with the Berkeleyan about the budget picture and next steps for the campus.

There is a lot of talk about the campus budget, but it’s hard to get a handle on exactly what we will be asked to cut. Why is that?
All we know with certainty right now is what the UC system is being asked to cut in the budget proposed by Governor Davis in January. When the state budget is finalized — not until the summer or even, some say, early fall — the UC Office of the President will let the campuses know specifically what reductions we need to make in our budgets.

The next major piece of information we will get will be next month’s “May Revise,” the legislature’s proposed revisions to the governor’s budget. This will give us a better picture of what to expect in a final budget, but there will still be a long way to go until we know the ultimate impact on Berkeley.

What is the UC system being asked to cut?
The governor proposed a $373.3 million cut, about 10 percent, in state funding for the 10-campus UC system. And he mandated where these cuts should be made — fortunately, the delivery of classroom instruction was spared, for the most part. But the cut applies to almost all of the other areas that make the campus work — libraries, student services, administration, academic support, maintenance, police, and so on. So, although we don’t yet know the final numbers for Berkeley, we know the cuts will be significant.

Will student fee increases ease the cuts?
Fee increases will generate about $180 million, roughly half of the proposed cut to UC, after financial aid has been set aside for students from lower-income families. This will trim the total UC cut from about 10 percent to about 5 percent.

Raising fees is one way the university is addressing the crisis. Increases began this semester — students at Berkeley paid an addi-tional $135 this spring. Fees will rise again in 2003-04 by at least $405 for the two-semester academic year, maybe more. It’s the first time UC fees have gone up in eight years, and financial aid will also rise to help students with financial need — but there’s no question this is a burden for students and their families.

And yet UC enrollment growth will continue?
It’s a paradox — while the governor’s proposed budget mandates cuts for UC, it also provides an increase in funding to cover the instructional costs of additional enrollment next year. The governor and legislature have concluded, at least so far, that it is imperative that UC’s capacity to take new students keep up with California’s population growth. Funding enrollment growth is essential, and the governor’s proposed budget continues to fund it at the same rate as in previous years, for about a 2-percent net increase in the UC budget.

Are there other unknowns in the budget picture?
There are many at this point. There could be more bad news — major changes to the budget, possibly larger cuts, could be mandated as the process evolves in Sac-ramento. There could also be relatively good news — for example, the legislature might mitigate cuts to some programs, such as outreach to K-12 students, which will be hard-hit under current proposals.

There are also some unknowns from UCOP. How will the system allocate reductions to the campuses? Will we have some flexibility to reallocate targeted cuts internally, at least temporarily? Will there be UC-wide cost-saving programs? (One example of these is the START program announced for review last week, which allows employees to reduce their work time voluntarily.) As these questions are answered, we’ll have a clearer sense of our options.

But even with all the unknowns, planning for 2003-04 is under way.
Of course, the campus can’t wait for the final state budget to plan for next year. Campus units have been asked to make plans for implementing permanent budget cuts. This planning process began in early February, and budget proposals are due on April 15. Preliminary decisions on these proposals will be made by May 15. These may be adjusted when we know the final state budget.

How much are units being asked to cut in this planning process? Who will feel the impact the most?
The governor’s budget proposal mandated which areas should be cut and by how much. The cuts will be permanent and aimed at non-instructional activities. In areas where specific cuts were mandated, units were asked for a plan to meet a specific percentage target. Other units were asked to plan for several possible scenarios for cuts.

Generally, student services supported by registration fees were asked to cut 20 percent [$4.4 million]; K-12 outreach, 50 percent [$1.5 million]; some public service activities, 20 percent [$0.9 million]; state-funded research programs, 10 percent [$3.7 million]; and academic and institutional support and administration, including libraries, about 5 to 10 percent [$5.3 million to $10.6 million].

There is also an “undesignated” cut to be made, mandated by the governor, of between $5.9 million and $10.5 million. This will be taken in such areas as campus administration, academic units and support, student services not supported by reg fees, and physical plant.

The governor’s budget does not cut classroom instruction, but haven’t academic deans been asked to plan for cuts, too?
Our goal, and the governor’s, is to safeguard instruction and our students’ academic experience. But if we spare academic units yet take hefty bites out of, say, the Regis-trar’s Office, libraries, the Disabled Students Program, and so on, have we met this goal? Doesn’t that diminish the student experience at UC? There’s a need for balance here.

The deans were asked last fall to plan how they would take a 5-percent temporary cut — and to do it in a way that would not diminish undergraduate education or limit courses students need to make progress toward graduation. Based on recommendations from the chancellor’s working groups, it’s likely that we will ask the deans to take this temporary cut in 2003-04. The money generated would be used to aid the hardest-hit units next year, giving them more time than a single year to reach their targeted reductions. It’s a temporary tactic to help ease the burden and balance the impact.

Have some units come up with good ways to economize?
Budget cuts make us all look for ways to streamline operations so that we can preserve our critical functions. The Tang Center, for instance, assessed its 24-hour advice nurse hotline and determined that they typically average 10 to12 calls a day between 6 p.m. and 8 a.m. on weekdays. For a substantial savings, they are considering eliminating the late-night coverage and directing after-hours callers to the campus police, local health systems, or another fully staffed help line with whom they’ll coordinate. Some of these measures will be tough decisions, but wise ones.

If student fees are going up, why are the programs they support being cut?
There are two kinds of fees that students pay: an education fee, which pays for instructional programs and financial aid, and a registration fee, which pays for student services not funded by the state. The Regents are expected to increase the education fee, but not the registration fee. As a result, instruction and financial aid will be spared, but student services will take a hit. The goal of the budget planning being done now is to keep important services operational and adequate for students.

It’s complicated. Fees haven’t gone up for eight years, but, of course, the cost of student services has. Each year we’ve asked the state to increase fees to cover inflation, but the state insisted on keeping fees down. So each year the state allotted money to cover, or “buy out,” this rise in costs. With these “buy out” funds removed from next year’s budget, we’re back to a base of funding for student services that has stayed constant for nine years.

Will there be funds for pay increases for faculty and staff?
It’s still too early to tell. The governor’s proposed budget does not include merit or cost-of-living funding for eligible employees — and that’s a great concern. All that’s clear is that if salary adjustments do occur next year, they will be very small.

Might there be a pay cut for campus employees?
Again, it’s too early in the budget process to tell. There are no current plans for an across-the-board pay cut.

Is there a chance that UC will offer a voluntary early retirement incentive program (VERIP), as it did in the early 1990s?
There is very little chance of a VERIP for faculty or staff.

Will layoffs be required?
The campus will always do all it can to avoid layoffs. But there have been some already responding to this year’s cuts, and some units are considering possible layoffs in their strategic planning to meet the cuts next year. Human Resources has developed a comprehensive program to help both managers and employees through this difficult process, coordinating its activities with CORE and CARE Services. We encourage employees and managers to contact HR and use the resources on the HR website when they are faced with these circumstances. [See hrweb.berkeley.edu/layoff/contents.html]

The campus will continue to hire faculty to support enrollment growth, but reduce the budget for services. Doesn’t that mean another increase in staff workload?
Staff workload is already very heavy. Enrollment growth, hiring freezes, and other factors can make it heavier, and we don’t want to let that happen. To keep workload in check, we’ll have to find meaningful ways to be more efficient, end duplication of effort, and eliminate unnecessary work that people are asked to do.

How are such plans and strategies being set?
The Chancellor has named a campus committee to advise him on budget reduction strategies, plus a series of working groups to develop specific strategies for maintaining campus operations as we absorb cuts. The groups include staff and students, where that’s appropriate. These groups are reporting to the Chancellor this week.

We’ve also adopted a set of principles to guide the budget cuts — these have been published in the Berkeleyan and on the web. [See newscenter.berkeley.edu/budget] One of the principles states that budget decisions will be made at the “lowest practical operational level” — not handed down but made by the people involved in each program. The overarching goal is to protect Berkeley’s excellence and core instructional needs.

Why not reduce or eliminate academic programs to save money, rather than cutting units across-the-board?
One of the Chancellor’s working groups is examining that option. Also, the campus is putting in place a strengthened process for reviewing academic programs. These reviews can form the basis for reducing or eliminating academic programs. But, for a number of reasons, including impact on students, this action would be taken over several years and wouldn’t bring a near-term boost to the budget.

How can the campus absorb another reduction in research funding — a 10-percent cut next year after a 10-percent cut this year?
Some research that is now state-supported will have to move to other funding, such as externally funded grants and contracts. Some graduate students now supported on campus research funds will likely need to be supported on other funds, as well.

The prospects for the coming year sound dire — do you find any cause for optimism?
I actually do. Sure, it’s going to be a difficult time — it’s tough all around California and nationally, as well. But Berkeley and many of our staff and faculty have been through budget cuts before, and we’ve weathered them. The university is a stable institution, whose mission of teaching, research innovation, and public service becomes, if anything, even more critical in hard financial times.

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