January 15, 2009


SUBJECT:    UC Press Release on Regents' Approved Plans to Trim
Enrollment, Freeze Senior Management Pay

On Wednesday, January 14, 2009, The University of California Board of Regents approved plans curtailing the University's 2009/10 undergraduate enrollment growth, and freezing the salaries of top administrators as part of response to state budget challenge.

For your information, below is a press release from the Office of the President. Details of the plans on enrollment and senior management pay are available on the Web at

If you have any questions concerning this notice, please contact Sylvia Lepe at extension 4-5357 or Blair Stephenson at 4-6590.

Gary C. Matthews
Vice Chancellor -
Resource Management and Planning



Acting on the recommendation of University of California President Mark G. Yudof, the UC Board of Regents today (Jan. 14) approved plans curtailing undergraduate enrollment growth, and freezing the salaries of top administrators and significantly restricting compensation for a large group of senior leadership. The plans, approved via a special teleconference meeting of the Regents, are part of UC's efforts to cope with insufficient state funding for enrollment growth and continuing budget cuts.

The plan to curtail undergraduate enrollment will reduce enrollment of new California resident freshmen by 2,300 students systemwide for the 2009-10 academic year (from a total of around 37,600 new freshmen in 2008-09 to around 35,300 for 2009-10). In view of large increases in applications from California community college students, however, transfer enrollments will be allowed to increase by 500 students (bringing new transfer enrollments to around 16,300 for 2009-10). Graduate enrollment will remain at 2008-09 levels.

"It is an excruciating decision to reduce opportunity for students in any way, but the lack of sufficient state funding leaves us no choice," Yudof said. "This actually is a modest reduction in that it aims to bring our enrollments into line with our resources over several years rather than in a single year. It also enhances access through the community college transfer route, which is a path to the university that needs to be widened. In future years, of course, we hope the state will be able to focus on investing in California's human capital and provide the resources necessary for expanded opportunity in public higher education."

Details of enrollment plan.

UC has seen large increases in freshman applicants in recent years, at the same time that state funding for enrollment growth has stagnated. Currently, UC enrolls approximately 11,000 students for whom it receives no state funding -- a shortfall estimated at $121.8 million. Furthermore, the recently released 2009-10 governor's budget proposal provides no funding for enrollment growth.

To protect academic excellence and maintain the level of service students expect when they enroll at UC, the plan calls on UC's president to bring enrollments closer to the university's budgeted levels by reducing new freshman enrollment at six UC campuses -- Davis, Irvine, Riverside, San Diego, Santa Barbara and Santa Cruz. Freshman enrollments will remain constant at the Berkeley and UCLA campuses and could grow at the Merced campus.

At the same time, the plan maintains UC's historic commitment to offer a place somewhere in the system for every UC-eligible California resident applicant.

It is expected that modest growth in freshman applications this year, estimated at approximately 3 percent, combined with lower admission targets at most campuses will result in students receiving fewer admission offers to UC campuses. For example, a student who in the past was admitted to three campuses might be admitted to only one or two this year. Because UC applicants are very well qualified and have many opportunities, some who do not receive offers from their campus of first choice might choose to attend other institutions. UC-eligible California residents who are not admitted to any of the campuses to which they apply will receive offers from campuses that do have capacity. Details of proposed pay freeze plan.

The second item approved by the board, also related to the ongoing state budget crisis, is a plan by President Yudof that freezes the salaries of 285 top administrators and implements significant restrictions to compensation for an expanded group of senior leadership. The plan, effective immediately, will be in effect for the remainder of the 2008-09 and through the 2009-10 fiscal years.

Incumbents in the following senior-level executive positions, totaling approximately 85, will have their current compensation frozen, disallowing any consideration for merit, equity and retention increases:

* president

* chancellors

* vice chancellors, vice presidents and above

* medical center chief executive officers

* chief investment officer/vice president for investments

* senior vice president/chief compliance and audit officer

* general counsel/vice president for legal affairs

Any existing stipends will be continued for the period approved by the Regents. If an individual is offered a new position (in any of those listed above) resulting in a higher grade with different or expanded responsibilities, a promotional increase may be considered on a case-by-case basis. If an individual temporarily assumes one of the positions listed above, a stipend, in addition to the base salary, may be considered on a case-by-case basis. Promotional increases and stipends will be subject to the president's review and regental approval. No further salary actions will be considered for this group of roughly 85 senior level executives.

For the roughly 200 remaining positions in the senior management group not specifically identified above, salaries will be frozen, disallowing any consideration for merit or equity increases. Consistent with the standards and guidance provided above, stipends or promotional increases may be considered on a case-by-case basis. If an individual in this group receives a bona fide offer of employment, a retention increase may be considered on a case-by-case basis, upon review of supporting documentation. Any recommendations for stipends, or promotion or retention increases for this group will be subject to review by the president and approval by the Regents.

This action follows the recent suspension of merit and equity increases for senior managers and senior professional staff, and is the latest in a series of actions taken by the university to deal with a significant funding shortfall. Estimated savings due to the elimination of the merit/equity program for senior managers is approximately $1.3 million per year.

In addition to freezing salaries for senior managers, Yudof's plan also includes restrictions on the university's systemwide employee recognition and development program, and similar campus-based bonus programs. Pending payments for senior management group members and others with annual salaries in excess of $205,000 will be canceled. The plan also significantly restricts any cash awards under this program for fiscal years 2008-09 and 2009-10, by, limiting participation to only non-senior management staff whose annual salaries are less than $100,000, and limiting those awards to no more than $1,000 total in any year.

Only certain incentive plans, such as the regentally approved Clinical Enterprise Management Recognition Plan pertaining to key hospital and clinical leadership positions, will be continued. The Clinical Enterprise Management Recognition Plan is supported by hospital revenues and does not involve state funding. Yudof's plan implements limitations on payouts but recognizes the value of these programs that reward staff for improvements in patient safety and satisfaction, quality of care, and other hospital priorities. These incentive programs are also important competitive components of the participants' total compensation.

"These are extremely difficult times, and we must make difficult decisions," said Yudof. "Although I regret very much the impact of these actions on our very dedicated and valuable employees, I believe they are consistent with our obligation as a public institution, and are warranted given the historic economic crisis confronting us."

UC has already taken, or is considering, a range of actions to respond to the state's fiscal crisis, and the president and the chancellors are working diligently to reduce all unnecessary expenditures to conserve resources. At the Office of the President in Oakland, reductions have been taken to save approximately $30 million this year, and additional reductions will be taken in the coming months. All locations are limiting travel expenditures, equipment and other purchases. Severe restrictions are also in place limiting the ability to fill vacant employee positions. All of these actions coupled with ongoing strategic reductions in budgets systemwide are critical to the university's ability to withstand these financial difficulties.

Yudof's plan aligns with Gov. Arnold Schwarzenegger's recent orders to reduce and limit personnel-related costs for state employees, which request that UC and other entities enact similar measures.