UCSD
CAMPUS NOTICE
University of California, San Diego
 

OFFICE OF THE ASSISTANT VICE CHANCELLOR -
RESOURCE MANAGEMENT

January 9, 2004


ALL ACADEMICS AND STAFF AT UCSD (Including UCSD Healthcare)

SUBJECT:    2004/05 Proposed Governor's Budget

President Dynes' office today issued the attached news release, in response to Governor Schwarzenegger's proposed 2004-2005 budget, which includes major cuts to the University of California budget. For the next several months, the California legislature will consider this proposal and negotiate with the Governor, until the budget is finalized this summer or fall. It is clear, however, that there will be budgetary shortfalls to each campus and fee increases for our students. UC representatives will continue their ongoing discussions with the State legislature and the Governor's staff to minimize the impact on the UC budget. As this fiscal picture becomes clearer, we will keep the campus community apprised. If you have any questions concerning this notice, please contact Budget Director Sylvia Lepe-Askari at extension 4-5357.

Updates also will be posted at the UCSD Campus Budget Office website:
http://www-avcrm.ucsd.edu/cbo/home.htm


Margaret F. Pryatel
Assistant Vice Chancellor
Resource Management

***********************************************************************

FOR IMMEDIATE RELEASE
Friday, January 9, 2004
Brad Hayward (510) 987-9200
brad.hayward@ucop.edu


GOVERNOR'S BUDGET PROPOSAL CUTS UC SYSTEM


Fall 2004 freshman enrollment would be reduced 10%

Spending on faculty would be cut 5%, aimed at increasing
  student-faculty ratio

Fees would increase 10% for undergraduates, more for
  graduate/professional

Financial aid would be cut from 33% of new student fee revenue to 20%

Deeper cuts proposed for outreach, research, administration, other
  programs

UC Merced would open in fall 2005 at modified level

Gov. Arnold Schwarzenegger issued a 2004-05 state budget proposal today (Jan. 9) with $372 million in cuts for the University of California system. The proposed cuts would reduce student enrollments, raise student fees, scale back student financial aid, reduce spending on faculty, eliminate K-12 outreach, and make deeper cuts to research, administration, and other programs.

The governor's proposals are part of a series of statewide cuts intended to help close a $14 billion state budget shortfall. The proposals, for the fiscal year starting July 1, will need the Legislature's approval to take effect. Final decisions will not be made until this summer.

"The governor is making difficult choices, and asking many parts of state government to sacrifice, as the state confronts a massive budget deficit," said UC President Robert C. Dynes. "That is understandable. But it also should be understood that these cuts, coming on top of deep previous budget cuts, would have a very serious impact on the University of California and its tradition of providing a top-quality, accessible, affordable education for Californians.

"UC is recognized worldwide and in our own communities for the extraordinary opportunities it offers our state's young people and for the profound impact it has on California's economic growth and global competitiveness. It is an institution that helps our people achieve their hopes and dreams. The continuing trend of reduced state funding for UC makes me deeply concerned about our ability to deliver on the promise that the University of California has always represented 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, to seek restoration of funding as the economy improves, and to preserve what the University of California has always meant for California."

The budget, and the University's response to it, will be discussed in more detail at next week's Board of Regents meeting.

The $372 million in program cuts represent the fourth consecutive year of such cuts to the UC system. The proposed budget for UC also includes $145 million in augmentations, largely consisting of restoration of $80.5 million in one-time cuts in the 2003-04 budget, funding for annuitant health benefits, and other items. As a result, UC's net state-funded operating budget in 2004-05 would be $2.67 billion, or 8 percent less than the current $2.9 billion.

Measured another way, the governor's budget, when combined with prior cuts, would leave the University with $530 million less in net state funding than it had in the 2000-01 fiscal year - a decline in state support of more than 16 percent during a period when enrollments have grown by more than 15 percent. Already, every area of University spending has been cut, student fees have increased significantly, employee positions have been eliminated, and faculty and staff have been denied cost-of-living salary increases.

Proposed program cuts

Major elements of the governor's 2004-05 proposal include:

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. As a result, 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. UC will
  be reviewing the 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 the
  student-faculty ratio to 20.7 to 1; currently it is 19.7 to 1. If this
  cut stands, the University likely would give campuses discretion to make
  the cut in a manner that preserves instructional programs as best they
  can.

Administration and libraries: A 7.5 percent cut to academic and
  administrative support, including libraries, on top of the cuts these
  areas already have taken. This is a $45.4 million reduction, in
  addition to a $36.5 million reduction that occurred this 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, particularly in
  educationally disadvantaged areas. These programs were cut 50 percent
  in the 2003-04 budget, and the Schwarzenegger Administration already
  has implemented a mid-year cut of $12.2 million to these programs.

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 open to students in fall
  2005. 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;
  thus, significant modifications would be necessary.

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. The University will continue to hold the goals of serving Central Valley students and delivering the highest-quality academic programs within a modified campus plan. "UC Merced remains critical to expanding educational opportunity in the San Joaquin Valley and to UC's long-term ability to accommodate growing college demand statewide," President Dynes said.

K-12 Internet: Elimination of remaining funding ($14.3 million) for
  the Digital California Project, which brings the Internet2 to
  California public schools. The budget notes that K-12 schools could
  contribute voluntarily to continue the program.

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 very concerned about this continuing trend.

Clinical enterprise: The effects of the governor's budget on UC's
  clinical enterprise have not yet been determined; UC will be analyzing
  this issue in the coming days.

Student fees and financial aid

The governor's budget proposes the following in the areas of student fees and financial aid:

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 at UC.

These policy proposals are of significant concern to UC because they would have a significant effect on access of lower-income students to public higher education. If these proposals stand, UC would need to consider alternatives for preserving access for lower-income students, such as rescinding a program started just this year in which UC provides grant aid to many financially needy students with family incomes of between $60,000 and $90,000 per year.

Resident undergraduate fees: A 10 percent increase. Mandatory
  systemwide fees would increase by $498 from the current $4,984 per
  year to $5,482 per year. With the inclusion of campus-based
  miscellaneous fees, the systemwide average for resident undergraduates
  would be $6,028 per year.

The governor's budget also states the Schwarzenegger Administration's support for a long-term fee policy in which student fees would increase regularly in line with per-capita personal income, but not by more than 10 percent in a given year. The University believes such a policy should take account of overall state funding available for University programs, however.

Fee surcharge for extra units: The governor's budget proposes 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 at the full cost of instruction. The budget
  suggests that such a policy be phased in and assumes $9 million in
  savings the first year.

Resident academic graduate fees: A 40 percent increase. Mandatory
  systemwide fees would increase by $2,088 from the current $5,219 per
  year to $7,307 per year. With the inclusion of campus-based
  miscellaneous fees, the systemwide fee average for resident academic
  graduate students would be $8,931 per year.

The governor's proposal also contains a long-term policy goal that academic graduate students ultimately pay 50 percent more in fees than undergraduates.

Professional school fees: The governor's budget proposes that state
  support for the operation of most professional schools be reduced by an
  average of 25 percent, and that student fees fill the gap. Specific
  figures would vary, but for medicine, law, and business administration,
  for instance, the fee increase would be roughly $5,000 - without any
  provision for financial aid, which UC considers a high priority. The
  Schwarzenegger Administration exempted nursing from its proposal.

Nonresident tuition: A 20 percent increase, or $2,746 for undergraduates
  and $2,449 for academic graduate students. Out-of-state students also
  pay mandatory systemwide fees and campus-based miscellaneous fees in
  addition to nonresident tuition; the average annual total under the
  governor's budget would increase to $24,672 for undergraduates and
  $23,968 for academic graduate students.

The UC Regents are not expected to set fall 2004 fee levels until later this winter or spring.

The governor's budget also contains a capital budget of $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. 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.

The governor's budget is available at http://www.dof.ca.gov/HTML/BUD_DOCS/Bud_link.htm.