Berkeleyan

The 2004-05 budget: A work in process
Higher student fees a certainty, other impacts not yet clear

31 March 2004

Paul Gray

Since Gov. Arnold Schwarzenegger issued his state budget proposals on Jan. 9, the UC community has been grappling with how to respond and, should the budget be approved as proposed, how to cope. The activity around the UC budget is intense — the UC Regents wrestling with their charge to make fiscal decisions and set student fees, UC and campus administrators struggling to preserve quality on an ever-shortening shoestring, staff and faculty stretching dollars at work and at home, and students and their families scrambling to cover the cost of looming fee increases.

One of the campus leaders at the center of this storm of activity on the Berkeley campus is Paul Gray, Executive Vice Chancellor and Provost. He spoke with the Berkeleyan at this midpoint in the state's spring budget process.

Where are we in the state budget process, and what do we know about its impact?
After two years of lean budgets, I think people on campus have become experts on how the state budget develops. It starts with release of the governor's proposed budget, which happened in January. We're now in the phase where legislators and the Department of Finance in Sacramento study and recommend adjustment to the proposal, the public adds its input, and it all leads to the May revision of the proposal. From that point until mid-summer, the legislature works to develop a budget that can win a two-thirds vote in each house and then be signed by the governor.

So there is still a lot of uncertainty about what the final budget will be and the effect it will have on UC in general and Berkeley in particular. We know next year will be another difficult year, but we don't know just how difficult.

Overall, what is your impression of Gov. Schwarzenegger's January budget proposal for UC?
When we had our first indications of the governor's budget proposal in January, a lot of UC people initially breathed a sigh of relief. On the face of it, it was similar to last year. With approximately a 13-percent reduction in the overall UC operating budget and more than half of that cut "offset" by fee increases, program cuts were expected to amount to no more than about 6 percent. It sounded like a cut we could manage. But when we got a look at the details — the magnitude of the proposed fee increases, the specific areas mandated for cuts — it was apparent that this budget plan was a lot more problematic.

What concerns you most about the plan?
First, there is the cumulative impact of this second year of significant reductions — and third year of budget stress. Coming on top of that, we're actually going to feel the impact of the cuts this year much more than before.

Second, while we're heartened by the governor's commitment to the principle of maintaining undergraduate fees at a low level, we hope he can be persuaded that a different mix of undergraduate and graduate fee increases would serve the university better in the coming year. There is a 10-percent increase proposed for undergrads, a whopping 40 percent for graduate students, plus substantial hikes for non-residents and students in professional schools. These increases come on top of last year's 30-percent hikes in fees for undergrads and graduate students. These costs are hard on students personally — both on our current students and on those who are choosing to come to Cal because of its traditionally low fees. And, as an institution, it's disturbing to contemplate the serious effects the grad-student fee hikes could have on the fundamental nature of UC and its teaching and research programs.

Ultimately, the Regents set student fees — is there room to negotiate in the governor's proposal?
That remains to be seen. The Regents began that discussion at their meeting two weeks ago. There is a strong possibility that they will try to come up with a proposal to lessen the burden on graduate students. And this is not just an issue of fairness to our students but a practical matter, since many, many grad students have their fees paid by the university (for graduate-student instructors) or by contracts and grants (for graduate-student researchers). So in a real way, UC takes a double hit when grad-student fees soar.

One option that the Regents discussed would be to increase undergraduate fees by, say, 13 to 15 percent instead of 10 percent, to be able to lower the graduate-fee increase from the proposed 40 percent to 20 to 25 percent. Professional-school fee increases could also be structured in different ways to achieve the level of savings assumed in the governor's budget.

Any way you look at the budget for 2004-05, it will involve higher fees. Under the current budget proposal, we fear that UC's traditional role of providing maximum access through relatively low fees will be eroded still further. There is a lot of work being done to develop options for a future fee structure — a plan that will make the cost of higher education more predictable for students and families.

Will increases in financial aid kick in to ease the burden of the increases on eligible students?
We have always tried to make sure that financial aid kept pace with student fee increases by channeling about one-third of the funds from increases into aid for students in need. Under the budget numbers proposed, we'd have to break that precedent for 2004-05. Half of all UC students are still expected to qualify for scholarship and grant aid, but overall increases in financial aid won't be as generous as in the past. We don't yet have final decisions on funding levels for state-supported grants for students, but it's clear they won’t keep up with proposed fee increases.

And the budget proposal holds no good news for faculty and staff, correct?
Last year we were able to protect the core academic program, keeping the effects of the cuts largely in the business areas of the campus, not in instruction. That won't be the case this year under the governor's proposal. There will be impacts that have a permanent effect on our campus. We're being asked to reduce our enrollment of new freshmen students by 400. We're being asked to reduce spending on faculty and raise the student/faculty ratio — currently 19.7:1 — to 20.7:1. Maintaining this ratio has always been a top priority for Berkeley; under the current proposal, we'd have to hire faculty at a slower rate to reach a significantly lower final target number of professors on campus. That will have a sure impact on the undergraduate experience here — fewer classes offered, limits on freshman seminars we can offer, and many other results.

The pain of these cuts will fall on the staff side, too, with the continued problem of added workload and static salaries. To date, most of the budget cuts have come from the non-academic side of the campus; in many cases further reductions in those areas would erode our ability to provide the basic services the campus needs. It's critically important to balance the impacts of these cuts, so that we can preserve the overall effectiveness of the campus in carrying out its mission.

We're also worried about the new budget's prescribed cuts to state-funded research — a 5-percent reduction, on top of the 20-percent cut these programs have taken over the last two years — and the proposed elimination of all remaining state funds for K-12 outreach, our excellent programs for getting California children to come to college and helping ensure that the student bodies in California higher education reflect the population of our state. We simply must continue to leverage the richness of the UC community to enhance the effectiveness of our K-12 system in preparing students for study at UC and other four-year institutions.

Has the campus been asked to prepare for various scenarios of budget cuts, as units did last year?
We've again given units planning targets for budget reductions. Academic units have told us how they would implement a 5-percent temporary reduction, plus how they would handle it if it were a permanent cut. Non-academic units have been asked to determine how they would take both 4.5- and 7.5-percent cuts to their programs — these plans are being submitted right now. UC will be trying throughout the spring to avoid the 7.5-percent reduction, which would be especially hard on our programs and would surely lead to additional layoffs.

And how will decisions be made on campus as the budget picture becomes more certain?
We set a committee structure in place last year, and we'll retain that, headed by an Executive Budget Steering Committee that will consider options for making cuts. The chancellor chairs that committee. They will be aided by a Budget Advisory Committee (including student, staff, and Academic Senate representatives), by the Council of Deans, and by the chancellor's cabinet. The structure worked well last year to make many of the hard decisions that needed to be made. [For details on the decision-making structure, see www.berkeley.edu/news/media/releases/2003/01/31_committee.html.]

As a campus, what are we doing to make the case for UC as the budget process unfolds this spring?
UC is reaching out much more vigorously this year than it has in the past to make sure that Sacramento understands the real value of the UC system — its role in educating California's workforce and innovators, its economic impact on the state, the way UC programs and research affect the daily lives of Californians. The Berkeley campus is working with legislators, alumni, and friends to make the case that the governor's January proposals need to be modified, that their negative impact on UC Berkeley will not be minor, will affect our quality, and could diminish all the positives we bring to California. This message needs to be heard loud and clear in Sacramento.

What is the next hurdle in the budget process?
The Regents are likely to adopt a fee structure for 2004-05 in April or May, and President Dynes and his staff, in consultation with the campuses, are developing proposals for that right now. We’ll keep the campus posted on new developments through the Budget Central website (newscenter.berkeley.edu/budget) and direct e-mails.