SUBJECT:

Special Edition "Our University"

A Newsletter from the University of California President for Faculty and Staff

This newsletter is available on the web at http://www.universityofcalifornia.edu/news/newsletter/issue11.html.

WELCOME

Dear UC Colleague:

As you may know, Gov. Schwarzenegger today issued his state budget proposal for the 2004-05 fiscal year. Because the budget includes cuts to the University of California system, I wanted you to be informed of the details as soon as possible. For that reason, we have produced this abbreviated version of "Our University." The newsletter's normal format, including systemwide news and responses to the Dynes' Desk emails I receive, will resume with the next publication.

Because the governor's budget is just out today, we have not had time to analyze every proposal or determine every impact. So, the information below is our best information as of today, and we will provide more as it becomes available.

As I told the press today, we know that the governor is making difficult choices, and asking many parts of state government to sacrifice, as the state confronts a massive deficit. But I think it also is important for the public to know that the cuts being proposed for UC, coming as they do on top of deep previous budget cuts, will have a very real impact on what this institution is able to accomplish for the people of California. I intend to work with the governor, the Legislature, and the Board of Regents to minimize these cuts and their impact, and to seek restoration of funding as the economy improves.

I know these are anxious times for many of you. People across the UC system are working harder with fewer resources to support them, all the while receiving no pay increases and facing higher health premiums. In addition, many of you are worried about the future of your programs, all of which contribute to the University's tremendous impact on California. I hear you, and I will continue doing everything I can to make the best possible case for the University. In his State of the State speech, Gov. Schwarzenegger said he is optimistic about the state's future and wants to "expand the dream of college" - which I think is very encouraging.

The governor's budget proposal is just the beginning of the budget process. The Legislature now begins to weigh in, and the final outcome won't be known for many months. I will keep you informed as we learn more. In the meantime, thank you for your continued superb work for the University and for the people of California.

Sincerely,     Bob Robert C. Dynes President

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BUDGET UPDATE

Governor's budget proposal cuts UC system

Note: The University's full press release, with additional details on the governor's budget proposal, can be found at http://www.ucop.edu/news/archives/2004/jan09a.htm.

Gov. Arnold Schwarzenegger issued a 2004-05 state budget proposal today (Friday, Jan. 9) with $372 million in cuts for the University of California system. The governor's proposals for UC are part of a series of statewide cuts intended to help close a $14 billion state budget shortfall.

Because the proposed program cuts are offset by some funding increases for UC, the University's net state-funded operating budget in 2004-05 would be $2.67 billion, or 8 percent below this year's level of $2.9 billion.

The governor's proposals, for the fiscal year starting July 1, would need the Legislature's approval to take effect. Final decisions will not be made until the summer.

Below is a quick summary of the governor's budget proposal for UC. The University's specific responses to individual items will be determined through consultations with many people in the UC community, including the Board of Regents.

· Enrollments: UC's freshman enrollment in fall 2004 would be cut 10 percent, or approximately 3,200 students, below this year's level, saving $24.8 million. This means that some freshman applicants who have met UC's academic eligibility requirements would not be granted admission to a UC campus this fall. The Schwarzenegger Administration is encouraging these students to attend community college through a Dual Admissions Program and proposes that their community college fees be waived. In addition, $1.6 million would be provided for UC counselors to work in the community colleges, helping students prepare to transfer to UC campuses and ultimately obtain a UC degree. The University will be reviewing the potential impact of the governor's budget on transfer enrollments.

· Faculty: A cut of 5 percent ($35.3 million) in spending on faculty. The Schwarzenegger Administration's intention is to increase UC's student-faculty ratio to 20.7 to 1; currently it is 19.7 to 1 following an unallocated reduction in the 2003-04 budget. The University expects to give campuses flexibility to make this cut in a manner that preserves academic programs to the greatest degree possible and fits with local circumstances.

· Administration and libraries: A 7.5 percent cut to academic and administrative support, including libraries. This is a $45 million reduction, on top of the $36.5 million reduction that occurred this year in these areas.

· Salaries: There would be no state funding, once again, for cost-of-living increases for faculty and staff. Because competitive compensation is key to the recruitment and retention of faculty and staff, UC is deeply concerned about this continuing trend and will continue to highlight it during budget discussions throughout the year.

· K-12 outreach: Elimination of all remaining state funding ($33.3 million) for UC's programs working with K-12 schools and students to improve academic performance and college preparation. These programs were cut 50 percent in the 2003-04 budget. (A previous statement from President Dynes supporting these programs is available here.)

· Research: A 5 percent ($11.6 million) reduction in state-funded research, on top of the 20 percent cut these programs have taken over the last two years. In addition, $4 million in funding for one specific research program, the Institute for Labor and Employment, would be eliminated entirely.

· UC Merced: The University's 10th campus would stay on track to open to students in fall 2005, though significant modifications in planning would be necessary. The proposed budget provides $10 million in one-time money to continue development of the campus (in addition to $10 million in permanent funding), whereas the campus estimated that $20 million in one-time funding was needed to maintain the original plan for opening. If the proposed level of funding stands, the University will need to examine the range and scope of academic programs and services available on opening day.

· Financial aid: The budget proposes a major curtailment of financial aid for UC students. Whereas increased financial aid has helped UC students weather prior fee increases, the governor's current proposal is to reduce the proportion of new fee revenue that UC directs to financial aid from 33 percent to 20 percent. In addition, the governor's budget does not increase Cal Grants to cover the proposed fee increase.

· Student fees: An increase of 10 percent ($498) for resident undergraduates and 40 percent ($2,088) for resident graduate academic students. Nonresident tuition would increase 20 percent. Fees for most professional schools would rise steeply, due to the governor's proposal that state support for most of these schools be reduced by an average of 25 percent and that student fees fill the gap. Finally, the governor is proposing that undergraduates taking more than 110 percent of the credit hours required for graduation be charged at a higher fee rate, such as the nonresident rate or the full cost of instruction; the budget assumes such a policy would be phased in, saving $9 million the first year.

· K-12 Internet: Elimination of remaining funding ($14.3 million) for the Digital California Project, which brings the Internet2 to California public schools.

· Capital budget: The governor's budget includes $339 million in general-obligation bond funding for UC construction, earthquake retrofit, and infrastructure renewal projects. These funds are contingent upon voter approval of Proposition 55, a statewide education bond measure on the March 2 ballot, the proceeds of which cannot be used to fund the University's general operations. There also is $55 million in lease-revenue bond funding for an agricultural genomics building at UC Riverside, funded through UC's sale of a parcel of land.

· Clinical enterprise: The specific effects of the governor's budget on the University of California's clinical enterprise have not yet been determined. The University will be analyzing this issue in the coming days and will provide more information as it becomes available.

Further details are in the press release at http://www.ucop.edu/news/archives/2004/jan09a.htm.

UC's public statements about prior budget announcements by Gov. Schwarzenegger are available at http://www.universityofcalifornia.edu/news/budget/.

RESOURCES

FEEDBACK TO PRESIDENT DYNES
www.universityofcalifornia.edu/president/desk.html

BUDGET NEWS
www.universityofcalifornia.edu/news/budget/

EMPLOYEE BENEFITS
http://atyourservice.ucop.edu/

UNION NEGOTIATIONS
http://atyourservice.ucop.edu/employees/policies/labor_relations/index.html

UC NEWS
www.universityofcalifornia.edu/news

UC SYSTEM
www.universityofcalifornia.edu