OFFICE OF BUDGET OPERATIONS, PLANNING
AND ANALYSIS
June 1, 1993
ALL AT UCSD
The Regents of the University of California met in San Francisco on
May 20 and 21, 1993. For your information, the presentations by
President Peltason, Senior Vice President Massey, and Vice President
Baker regarding the status of fiscal 1993-94 Budget Development are
provided. Also included is the UC Press Release from the Office of the
President regarding that same meeting.
Corinne K. Foster
Director
Attachments
REGENTS MEETING PRESIDENT J. W. PELTASON
MAY 20-21, 1993 PROVOST MASSEY
SAN FRANCISCO VICE PRESIDENT BAKER
STATUS OF 1993-94 BUDGET DEVELOPMENT
(PELTASON)
We will be covering several related topics this morning. First, Vice President Baker will report on recent budget
developments in Sacramento; then Provost Massey will discuss the
implications of these developments and how we might proceed in
the short term; and finally, I will be talking about the longer-
term picture for the University.
(BAKER)
The budget that the Governor proposed in January has been
reviewed and revised by both the Assembly and the Senate. In
addition, yesterday, the Governor himself proposed revisions to
the January document. The Governor's revised budget assumes slightly higher total
revenues for 1992-93 and 1993-94. However, the revisions also
recognize about $2 billion of problems in the original budget. Federal funds and property tax revenues are now assumed to be
lower than anticipated in January; in addition, some cost-cutting
measures that required legislative approval in the current fiscal
year--such as elimination of the renters' tax credit--have not
been implemented. Fiscal year 1992-93 is now anticipated to close with a $2.7
billion deficit, which the Governor proposes to eliminate over
the next two fiscal years. No new taxes are proposed. The University's 1993-94 budget remains the same as proposed in
January. For 1994-95, the revised Governor's Budget estimates an
increase of about 3 percent for the University. While that is a
very early and tentative estimate, it is at least an encouraging
signal.
Both the Senate and the Assembly have proposed major changes to
the original Governor's Budget based on their own views of State
priorities. Our Senate subcommittee is still working on its
budget. The Assembly Ways and Means Committee prepared two
budgets--one assumes extension of the 1/2 cent sales tax, the
other does not. Neither budget was able to get a 2/3 vote on the
Assembly floor, so the Assembly is sending to conference a budget
bill that provides no appropriations. This has been done before;
it is simply a device to get the budget into conference where the
real debate will begin.
Looking at actions to date: The Senate budget gives a higher
priority to higher education than the January Governor's Budget;
as a tradeoff, the Senate has made deeper cuts in health and
welfare and prisons. The budgets for UC and CSU are augmented in
order to restore some of the funds cut by the Governor, while
financial aid is increased substantially through an augmentation
for the Student Aid Commission. The Senate budget restores about
half the Governor's $266 million cut to the community colleges
and covers the remaining half with a loan, which is to be repaid
from future Proposition 98 funding.
For UC, the Senate has provided a $50 million augmentation. Based on discussions in the budget hearings, there is a general
understanding that $10 million of the augmentation is intended to
reduce student fees by $100 and the remaining $40 million is
intended to reduce our salary cut from 5 percent to 2.5 percent. The Student Aid Commission's budget has been augmented by about
$60 million, which fully funds the Cal Grant Program. The
augmentation restores funds cut in the current year and also
covers student fee increases. The Senate Budget assumes that about half a billion of Federal
funds will be available to assist with costs of immigration; that
$1.3 billion will come from cuts to local government; and that
another $1.5 billion will come from a shift of programs to local
government, funded by a 1/2 cent sales tax. I would like to believe that the Senate version will prevail. It
reduces student fees, provides additional financial aid, and
allows us to reduce next year's salary cut. However, the Senate
budget includes deep cuts in health and welfare and prisons that
are in direct conflict with the Assembly's priorities. The
Senate, as well as the Assembly, will obviously have to agree to
compromises during conference committee negotiations--as usual.
The Assembly has taken an entirely different approach. The Ways
and Means Committee has made further cuts to both UC and CSU.
The Ways and Means budget is based on what appear to be overly
optimistic assumptions. It assumes that $1.5 billion of Federal
funds will be available to assist with immigration costs, even
though it's generally understood that the actual amount will be
substantially less. Similarly, it assumes $2.5 billion of cuts
to local government, even though these cuts are subject to heated
debate. Additionally, as I said, the Ways and Means Committee
has prepared two different budgets based on different assumptions
about extension of the sales tax.
In the budget that optimistically assumes the Governor will
change his position and agree to extend the sales tax, the Ways
and Means Committee has cut the University's budget by an
additional $68 million. In the second budget, which assumes no
extension of the sales tax, UC is cut by the horrendous
additional sum of $225 million.
As you can see, two very different scenarios confront us as the
budget moves toward conference committee: Under the Senate
version, we'd gain some relief and could ameliorate some of the
damage that our present budget plan imposes. Under the Ways and
Means version, the damage would grow--possibly to such a level
that we'd actually have to shut down the University for a time,
perhaps a quarter. We could save money in the immediate term by
putting most faculty and staff on unpaid furlough.
Let me turn now to a brief report on subcommittee hearings on the
University's budget. In general, the hearings went well and the
University was in agreement with subcommittee decisions.
We were able to work out a mutually satisfactory arrangement with
the Legislature for repayment of a $50 million loan related to
the University's 1992-93 budgetary shortfall. As you know, we
had planned to repay the loan through a student fee increase of
$100 per year for five years. However, we have now agreed to
rescind the fee increase and adopt an alternate method of
repayment.
Essentially, our revised plan recognizes that in the 1980s, when
our hospitals were in financial trouble, the State provided over
$80 million of assistance by funding needed capital improvements. Revenue bonds for the capital projects are currently being paid
off with State funds. Now that the hospitals' financial
situation has improved, they've agreed to help out in our current
difficulties. They will provide funds equivalent to a partial
payback of the revenue bonds, which in turn will release State
funds that can be used to help with the University's budget
problem. We're still working out the technical details, and we
plan to return to The Regents in June with a proposal.
The students are the beneficiaries. We are extremely pleased
that we can reduce the 1993-94 fee increase by $100 as a result
of the new arrangement. If the Senate augmentation to our budget
holds, we could reduce student fees by an additional $100 next
year.
On the subject of hospitals, I would like to call your attention
to a separate issue concerning SB 855, which provides funds for
"disproportionate share providers" through the Medi-Cal budget. Three of the University's hospitals, Davis, Irvine, and San Diego
are eligible, meaning that they treat a disproportionate share of
publicly supported patients. Our hospitals have long been
underfunded for the care of such patients, and the SB 855 funds
provide welcome recognition of the financial burden we have
carried. Others, however, view the funds as an unjustified
windfall to UC hospitals and have attempted to eliminate $44
million from our budget on this basis. The Ways and Means
Committee's two budget plans include a compromise cut of either
$15 million or $38 million, depending on whether or not the sales
tax is extended; the Senate has approved a compromise cut of $20
million. The issue will be debated in the conference committee,
and we plan to take a very strong stand in the matter, arguing
that there should be no cut.
The Governor and both sides of the Legislature have approved a
revised capital budget of $230 million for UC. This amount
reflects deferral of several projects that we proposed in order
to recognize a slowdown from previous growth plans. The budget is expected to be in conference by early June. It is
encouraging that the budget process seems to be moving along on
schedule, but we have to remember what happened last year. Conference negotiations bogged down, leadership conferences were
convened, and it took until September to pass a budget. We could
witness the same stalemate this year. We plan to support the Senate budget in conference because it
recognizes the importance of higher education to California's
future economic health. We will do our best to help the
conference committee understand that UC has already received
damaging financial blows and should not be cut further. But it
will be an uphill battle all the way.
(MASSEY)
In March, The Regents approved a budget plan for next year that
cuts salaries, assumes work force reductions, and raises student
fees. These were hard decisions, forced by the $243 million
shortfall in the January Governor's Budget. The President
indicated at the time that he would like to provide at least
partial relief in some areas of the budget plan--but that won't
be possible if we get further budget cuts.
As you heard, the Assembly is proposing to cut us by an
additional amount of either $68 million or $225 million,
depending on whether the temporary sales tax is extended. At the
$68 million level, our options, essentially, would be to continue
along the lines of the March plan with a further fee increase, a
larger salary cut, and more layoffs. To give you a sense of what
$68 million means: If we took the entire cut in fees, we'd need
about another $700 fee increase; taking it all in salaries would
require about another 4.5 percent salary cut on top of the 5
percent cut already imposed; alternatively, it could mean an
additional $68 million cut to campus budgets, forcing even larger
reductions in the workforce. The University has already pushed
each of these options about as far as it can in a single year. It's almost inconceivable that we would go further in any of
these directions next year, yet we see no clear alternatives at
the moment. At the $225 million level, we'd have a catastrophe on our hands. The University has been on the edge of a cliff; this would push
us over. We'd have to give up any thought of holding the place
together and trying to keep things going. Nothing short of
drastic action would work. It's an open question whether we
could recover.
In response to a direct question from the Assembly, we stated
frankly that we have no plan for taking a cut of $225 million. Given the staggering implications, it would be absolutely
critical to follow our usual internal consultation process in
developing a plan. Chancellors, faculty, students, and staff
would need an opportunity to be heard.
However, in order to give a sense of magnitude and not as a
serious proposal, we've indicated that it would require about a
$2,500 fee increase--allowing for the fact that this would force
more students into the financially needy category and thus more
financial aid would be required. Alternatively, at least
theoretically, we could consider closing down for the spring
quarter and furloughing our employees. Perhaps we could offer,
instead, a spring term that would be fully self-supporting
through tuition--similar to a summer session.
There is no way to predict the outcome of the State's budget
process but, given the Assembly's proposed cuts, the outlook is
very discouraging. We obviously need to develop a contingency
plan that recognizes the possibility that we may have to deal
with much deeper cuts next year. (DISTRIBUTE HANDOUTS)
I'd like to review what has already happened in order to
illustrate how hard it will be to try to cut, trim, and squeeze
further. The handouts that have been distributed show the
effects of four years of budget cuts. The Regents saw an earlier
version of these handouts in February; they have since been
updated to include the impact of the 1993-94 budget plan that was
approved in March. Handout #1 shows that campus and Office of the President budgets
have been cut by a total of $459 million. This includes a $79
million cut that will be required in 1994-95 in order to restore
salary levels, given that next year's salary cut is intended to
be temporary. There is virtually no possibility that the State
would fund both restoration and a salary increase. We need both
if we are to get back on a competitive track, so we will have to
fund some portion ourselves.
The total $459 million cut is over 20 percent of the University's
State-funded budget in 1989-90, the year before the budget cuts
began. The Office of the President has taken a proportionally
larger share of the total cut. For the most part, the budget
cuts are translating into workforce reductions. Campuses and the
Office of the President have few other options. Nonetheless,
despite losing funding for several thousand employees, both
faculty and staff, the University has continued to take all
eligible students at the undergraduate level.
Handout #2 shows that University employees have received no cost-
of-living adjustment to salaries since 1990-91, and their pay
will be cut by 5 percent next year. In order to keep faculty
salaries competitive, we needed 8 percent for a salary increase
in addition to 2 percent for merits next year. Instead, we're
cutting salaries by 5 percent. At the March Regents' meeting,
the President stressed the need for a real salary increase of at
least 5 percent in 1994-95, in addition to restoration of base
salaries. It is essential that UC return to a competitive
position in the marketplace. Except for 1991-92, and except for executives at the higher
levels, we have continued to give merit increases for faculty and
staff in order to recognize and reward excellence. This is
necessary even in hard times--in fact, especially in hard times. Handout #3 shows that student fees will have more than doubled
since 1989-90, increasing from about $1600 to nearly $4,000. The
total of $3,939, by the way, recognizes that we no longer plan to
charge students $100 a year to repay a loan related to this
year's budgetary shortfall. At levels currently approved for next year, UC student fees for a
resident undergraduate will be about $400 less than projected
average fees at our four public salary comparison institutions. UC fees for nonresident students will continue to be somewhat
higher than the average. About a third of the revenue generated by fee
increases has been set aside to cover the fee increases for needy students. The University has continued to meet its commitment in this regard. By next year, we will have increased financial aid grants from
University sources by over $110 million in four years. Unfortunately, the State's Cal Grant program was cut this year
and needy students dependent upon that fund source have not had
their fee increases covered. Also, financial aid for non-fee
expenses has not been keeping up with student need. We had hoped we might be able to increase financial aid for UC
students next year. This remains a high priority, but the
prospects are not encouraging. Although the State Senate has
recognized the need by fully funding the Cal Grant Program, we
are concerned that the Senate budget may not hold up in
conference. And given further cuts, there is no way we can hope
to provide funds from our own resources. We will proceed to develop a contingency plan for next year, one
that addresses the possibility of further cuts. Our task is made
especially difficult because of the extraordinary actions that
have already been taken: no salary COLAs followed by a salary
cut, major reductions in workforce, and large fee increases. Absent a catastrophic cut, however, these remain our basic short-
term options for the fiscal year about to begin. We can have
fewer employees, we can pay them less, and/or we can charge
students more. The University's Executive Budget Committee, which I chair and
which is charged with general oversight of the budget process,
has already begun to consider alternative plans for next year. We will take the lead in developing options which can then be
reviewed by the Chancellors and the Academic Senate as well as
other faculty, students, and staff. The President will bring a
recommendation to the Board following the usual consultation
process. You will be interested to learn that, in addition to efforts
directed toward the immediate budget crisis, the Executive Budget
Committee also has begun the process of developing a revised set
of resource assumptions for the future. The need for revision is
illustrated in Handout #4, which you may wish to turn to. Handout #4 shows the University's resource assumptions back in
1988 compared with what has really happened since then. Our 1988
plan--the top line--assumed that UC's State-funded budget would
increase by about 9 percent a year, including 5 percent for
inflation and the remainder for enrollment and other workload
growth as well as modest improvements averaging about 1 percent a
year. The short darker line labeled "Actual Budget" shows what
the State has actually provided up to and including the 1993-94
Governor's Budget. You can see the clear divergence beginning in
1990. Looking beyond 1993-94, the middle line shows the University's
resource requirements through the end of this decade in order to
fund a workload budget. That's a highly optimistic scenario. It
assumes that State revenues will grow at a rate of 7 to 7.5
percent a year, and that UC will maintain its share of the State
budget. This outcome seems unlikely given the University's
discretionary status compared to constitutional and statutory
mandates. Also, the Department of Finance's own projections
indicate that expenditure needs will continue to outstrip State
revenues for the rest of the decade. The bottom line shows a "worst case" scenario. This is based on
Department of Finance projections and assumes modest revenue
growth for the State as a whole coupled with rapid growth in
spending for protected programs such as K-14 education and health
and welfare programs, leaving virtually nothing for discretionary
programs such as UC. I do not believe our funding will decline
to zero, but we need to recognize that UC's share of the State
budget will probably grow smaller over time. The most likely
scenario for our State-funded budget between now and 2002 lies
somewhere between the workload budget line and the worst case
line. In either case, it will fall very far short of what we
anticipated back in 1988. We can't know precisely what the future holds, but it is time for
the University to begin planning ahead on a time scale longer
than the next budget year. The Executive Budget Committee
therefore plans to focus its efforts on strategic resource
planning for the longer term. We may develop several long-range
budget scenarios--optimistic, pessimistic, and mid-range, for
example. In addition, we may want to look at various options
with respect to the University's overall salary structure and
merit increases; student fees and tuition, including
differential fees for students in the professional schools; and
enrollment levels as they relate to available resources. Our
goal is to provide a common framework and context that will guide
the campuses as they undertake long-range planning.
Handout #1
University of California
Permanent Cuts
to Campus and Office of the President Budgets
1990-91 through 1993-94 Governor's Budget
Cuts ($ mil.)
1990-91 5% cuts in research, public service,
and administration. $25
--------------------------------------------------------------------
1991-92 Workforce reductions in both instructional
and non-instructional programs;
cuts in non-salary budget; undesignated cut. 120
--------------------------------------------------------------------
1992-93 Permanent cut of $200 million is being
phased in over 2 years. 200
--------------------------------------------------------------------
1993-94 Reduce campus and Office of the President
January budgets, which will result in further workforce
Governor's reductions. Part of the cut is based on hospitals
Budget and health sciences clinical programs;
remainder of the cut is to be accommodated
through improved management efficiencies. 34
--------------------------------------------------------------------
1994-95 Reduce campus and Office of the President budgets
in order to fund restoration of salary funds cut
temporarily in 1993-94. 79
====================================================================
Total: $459
HANDOUT #2 UNIVERSITY OF CALIFORNIA
COLA (Range) and Merit Increases
1990-91 through 1993-94 Governor's Budget
Faculty Staff
-------------------------------------------------------------------- % %
1990-91
COLA 4.8 5.0
Merit 2.0 2.0
--------------------------------------------------------------------
1991-92
COLA 0 0
Merit 0 0
--------------------------------------------------------------------
1992-93
COLA 0 0
Merit related to 1991-92 2.0 0
Merit for 1992-93 2.0 2.0
-------------------------------------------------------------------- 1993-94
COLA 0 0
Merit 2.0 2.0
(full year) (half year)
Pay reduction -5.0 -5.0
--------------------------------------------------------------------
-------------------
Note: For 1993-94, UC requested a 5% COLA for both faculty and staff, effective mid-year, consistent with the agreements worked out between the State and its employee groups. UC also requested
2% full-year merits for both faculty and staff. Data from UC's
comparison institutions indicated that an 8% COLA plus 2% merits
would be required to maintain competitive salaries for faculty.
Because of the State's fiscal problems, however, UC limited its
request for a faculty COLA to 5% effective January 1, 1994. The
1993-94 Governor's Budget provides a 5% COLA for State employees
effective January 1, 1994.
HANDOUT #3
University of California
Undergraduate Resident Student Fees
Registration, Educational, and Miscellaneous Campus Fees
1990-91 through 1993-94 Governor's Budget
1989-90 Total Fees $1,634
--------------------------------------------------------------
1990-91 increase +186
--------------------------------------------------------------
1991-92 increase +666
--------------------------------------------------------------
1992-93 increase +558
--------------------------------------------------------------
1993-94 increase related to 1992-93 budget cut
(implementation deferred to 1993-94) +455
1993-94 increase related to 1993-94 budget cut +440
==============================================================
1993-94 total fees already approved prior to any additional increase that may be required $3,939
Amount of new financial aid provided from UC sources:
Amount($ mil.)
1990-91 $ 5.9
-----------------------------------------------------
1991-92 26.0
-----------------------------------------------------
1992-93 26.6
-----------------------------------------------------
1993-94 52.1
=====================================================
Total $110.6
University of California
RESOURCE NEEDS vs. STATE-FUNDED BUDGET Handout #4
$7---------------------------------------------------------------------
$6------------------------------------------------------------------ P +
+
P
+
+
$5------------------------------------------------------- P -----------
+
P
+
P
+
B $4---------------------------------------- P --------------------------
i 1988 Plan (P) +
l P
l +
i P
o +
n $3-------------------------- P ------------------------------------+ B s + Workload Budget (B) + B +
+ P + B +
+ P + + B +
+ P + + B +
+ P + + B +
$2- S ++ A ++ A ++ A + ------------- + B + ----------------------------
+ A + + B +
Actual Budget (A) + A +
+
++
+ W +
$1---------------------------------- + W ++ W + ------"Worst Case" (W)
+ W + + W +
+ W +
+ W +
+ W
$0--+----+----+----+----+----+----+----+----+----+----+----+----+----+-
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Fiscal Year ending:
I will now turn the meeting back to President Peltason.
PLANNING FOR THE FUTURE: NEXT STEPS
Text of a speech to the Board of Regents by
President J. W. Peltason San Francisco
University of California May 21, 1993
___________________________________________________________________
Madame Chairman and members of the Board:
Bill and Walter have filled you in on the short-term perspective. Now I'd like to turn to the future.
For 125 years the University of California has been built and
shaped by three far-sighted concepts:
First, a social contract with the State, much of which is now
embodied in the Master Plan. Under this contract, the University
has provided access to all students who meet our entrance
requirements and seek to come. We have not locked our doors and
concentrated on providing education to the elite few, but over
the years as the state has grown we have expanded the University to
insure that there would be a space here for the sons and daughters
of the people of California. The state in turn has provided us with the resources to make this
possible. And so we have grown from one to nine campuses.
Second, the University has been built on a policy of service to the
state and nation. In particular, the University of California has had a long and
proud tradition of being responsive to the state's needs. In the
land-grant tradition, we have discovered, expanded, and shared
knowledge with California through our research activities and given
the state one of its greatest economic advantages. From our
laboratories and classrooms have come much of the knowledge and
many of the men and women that have built California's economy.
Third, we have grown through a public-private partnership in which
private funds have played, and in recent years increasingly so, a
complementary role that has provided us with the margin of
excellence. The state taxpayers have made us a good university;
private donors and federal dollars have made us a great one.
These three concepts have created a system of nine campuses that
is, in Robert Gordon Sproul's memorable phrase, one great
university, a university that has produced almost a million
graduates. Today UC provides an outstanding education,
undergraduate and graduate, for 160,000 students, and supports the
work of a brilliant faculty of 7,500. It has brought billions of
dollars of federal research funds into California. It sponsors
five medical schools and teaching hospitals that take
care of thousands of patients and are unequalled in the fight
against disease. The University of California has taken its place along with CSU,
the community colleges, and the independent colleges to give
California its greatest comparative advantage and its best hope for
the revival of the California economy.
The University has a strong tradition of strategic planning. The
planning efforts of the 1980s, when California higher education was
told to get ready for 800,000 additional students by the year 2005,
were only the most recent of those efforts. We did a careful survey of the capacity of our existing campuses,
campus by campus. We asked how many more students could be
accommodated at our eight general campuses--Berkeley, Davis, Santa
Cruz, Santa Barbara, UCLA, Irvine, Riverside, and San Diego. We
concluded that by the year 2005 we could accommodate about
two-thirds of the conservatively estimated 63,000 additional
students coming to this university on our existing campuses, but
the rest would have to be taken care of on new campuses. We did an
equally careful and thorough review of the faculty numbers we would
need to educate these students and planned accordingly. Our
strategic plan corresponded with a supporting review
of the Master Plan by the legislature and a recommitment by the
state of California to find the resources to keep the college doors
open for these students.
At the October 1988 Regents' meeting the Board adopted that
strategic plan. Each of the campuses was given a framework within
which to develop a long-range development plan to guide it to the
year 2005, and we set about finding a site for a tenth campus.
That was just four short years ago. Not once in those four years
have we been given the budget to implement that plan. We are now
operating the University of California with one billion fewer
dollars than we needed to fund inflation, fixed costs, and
enrollment growth over the last four years. The budget reductions
ofthe last few years have raised doubts about the viability of that
plan. The budget year coming up confirms them.
These reductions came on quickly and unexpectedly. We have
responded to them with a series of ad hoc measures. You know about
these measures. We have offered early retirements, raised fees,
cut our payroll. It is now apparent, however, that the time for ad hoc measures is
past. The State funds we have lost are not likely to be restored. It is painfully clear that, as an unknown wit has phrased it,
today is not a prelude to yesterday. This means that the 1988 plan, though it remains our ultimate goal,
is no longer a realistic guide to the twenty-first century. We
need to rethink, in fundamental ways, what our future is going to
be like and how we are going to get there.
Specifically, we need to plan for three separate realities: how to
deal with the overwhelming crisis of living with dramatic cuts in
State funding in the immediate future--1993-94; how to address the
intermediate problem of restructuring the University of California
as we move towards the next century--1994-1997; and how
to accommodate to the longer-range problem of preparing for the
large and diverse upsurge of students who will be arriving at our
door, beginning around 1996 and continuing through 2005-2010.
Most of our strategic planning is taking place on the campuses, as
it must; faculty, staff, students, and administration on each
campus are in the best position to evaluate programs and decide on
priorities. The Office of President now needs to bring a
systemwide perspective more directly to bear on these efforts,
especially the academic program planning initiative. I intend to accelerate planning, coordination, and direction at the
systemwide level to take advantage of our strengths as a system and
to avoid the kinds of across-the-board cutting that dilutes the
quality of all programs. I am asking Provost Massey to give this
effort his highest priority. I will also be asking the Chair of
the Board to appoint Regents to act as consultants with me in this
effort. We will, of course, consult with the Academic Council, and
in fact are responding to the request of the Council at its April
13th meeting that the Office of the President, in coordination with
the Academic Senate and the campus administrations, initiate a
process for review of all instructional and research programs. And
of course all recommendations will be reviewed at the campus level,
by the Council of Chancellors, and will be sent, through me, back
to the Board. I intend to consult with the Board along the way for
its guidance and approval.
I have been and will continue to be guided in these efforts by the
following principles:
First, the principle of one university. Each campus can and should
develop its own centers of excellence and we must move to avoid
costly duplication, but each campus must retain the teaching,
research, and public service missions of this university. A
campus of the University of California must have all the
aspirations of the University of California. Second, we will be guided by the principle of priority-setting and
selectivity to retain and extend our strengths. Specifically:
We must review all educational programs, campus by campus and between and among campuses, and consolidate resources behind those of the highest priority. We need to review our professional schools and our graduate programs, decide whether there can be consolidations or eliminations, and then we must look to new sources of funds for them. We must look to ways to share resources among the campus and with CSU and the independent colleges.
We need to review our fee system and begin to consider a tuition program. We need to review the fee policies for professional schools and consider ways in which they can become more self-sufficient.
We need to shorten the time to degree, make better use of summer sessions, and do more to capitalize on educational technologies.
We must review our enrollment targets and set them at more realistic rates in light of the constrained resources of the last four years. To be absolutely clear about it, we will need to consider the likelihood that we will not be able to enroll all qualified California students who wish to come. If we are forced to restrict enrollment, however, we must do so in a fashion that will enhance diversity so that our student body will reflect the diversity of the people of California.
We have to face the fact, however, that no matter how well we
manage the University of California, reinvent it, or restructure
it, we cannot deliver the same high-quality undergraduate programs
at the same charge to all the students who want to come to the
University of California. Not only are we unable to build a
tenth campus, at least in the near term, we are having great
difficulty in sustaining the present enrollments on the existing
campuses. To admit the students without adequate faculty, staff,
or resources to provide them with a quality education would cheapen
the degrees of all students. We are accountable to the people of California, primarily through
the Board of Regents, but we are also accountable to the people's
elected representatives. We must reaffirm the appropriate division
of responsibility between state government and postsecondary
education with regard to educational issues. For example, we
understand that the state is asking us to review and enhance the
attention given to undergraduate education. We will do so;
although undergraduate instruction has never been stronger, it can
be improved. All of us--faculty, staff, and administration--will
have to become more productive; we are becoming so. We ask
of the state that it give us our educational goals, provide us with
resources to obtain these goals, hold us accountable for the wise
use of them, but not to try to micromanage us in such a fashion
that it will drive out of California our very best teachers and
scholars. The legislature needs to tell us what it wants us to do,
but leave to the University the decision about how to do it. And
if there are not sufficient funds to educate all the people, the
legislature needs to help us accommodate to these realities.
The state must realize, however, that California will be a lesser
place if the University of California and its companion
institutions--CSU, our community colleges, and our independent
colleges and universities--are so starved of resources
that the next generation of Californians will be less well educated
than the present one. Demographic projections and the demands of
the California economy both suggest that our institutions of higher
education should be preparing to accommodate 800,000 additional
students by 2005. We want to give those young people the same
educational opportunities that previous generations have enjoyed;
California's best interests argue that we should. But we cannot
fulfill our role unless the State gives us the resources to do so. There could be no greater tragedy for California than the
dismantling of its system of higher education. We are not the only American university facing financial crisis. Thirty-six states have cut their higher education budgets in recent
years. But what is done here, in the most distinguished public
university in the country, will have reverberations
far beyond this system or even this state. The University has
probably never faced a greater challenge in all of its 125 years. There is a new California emerging; there needs to be a new
University of California that emerges with it. We need
the best minds in our community to help us find a path through the
crisis of the present into the realities of the future.
I will keep you informed of our progress.
>>UC NEWSWIRE<<
Friday, May 21, 1993
PELTASON CALLS FOR REASSESSING UC'S FUTURE
University of California President Jack W. Peltason today ( Friday,
May 21) called for a fundamental rethinking of the UC's operations
and future in light of crippling state budget cuts.
As part of that effort, Peltason said, "We need to consider the
likelihood that we will not be able to
enroll all qualified California students who wish to come."
Four years ago, the University adopted a long range plan to
accommodate an expected 63,000 additional students by the year 2005
through expansion of existing campuses and the building of a tenth
campus. But not once in the four years since, Peltason said, "have
we been given the (state) budget to implement that plan. We are now
operating the University of California with one billion fewer
dollars than projected."
Because the cuts came so quickly and unexpectedly, Peltason said UC
responded with a series of stop-gap measures, including offering
early retirements to senior faculty and staff, pay freezes and
cuts, and hikes in student fees.
"It is now apparent," he said, "that the time for ad hoc measures
is past. The state funds we have lost are not likely to be
restored. This means that the 1988 plan, though it remains our
ultimate goal, is no longer a realistic guide through this decade.
We need to rethink, in fundamental ways, what our future is going
to be like and how we are going to get there."
Peltason told the Board of Regents at its meeting in San Francisco
that he has asked Walter E. Massey, UC's provost and vice president
for academic affairs, to give his highest priority to the
reassessment of UC's future. Peltason said he will also ask a
subcommittee of Regents to act as consultants through process.
Wide consultation will take place with faculty, staff, students and
administration on each campus, he said. "We have to face the fact that no matter how well we manage the
University of California, reinvent it, or restructure it, we cannot
deliver the same high-quality undergraduate programs at the same
charge to all the students who want to come. Not only are we unable
to build (for now) a tenth campus, we are having difficulty
sustaining the present enrollments on existing campuses. To admit
the students without adequate faculty, staff, or resources to
provide them with a quality education would cheapen the degrees of
all students."
Peltason said the review will be guided by the principle of "one
university" and priorities will be set to retain and extend
academic strengths.
"Each campus can and should develop its own centers of excellence
and we must move to avoid costly duplication, but each campus must
retain the teaching, research and public service missions of this
university," he said.
Peltason offered five specific areas that will be part of the
comprehensive re-evaluation.
þ "We must review all educational programs, campus by   
             campus and between and among campuses, and consolidate 
             resources behind those with the highest priority."
þ "We need to review our professional schools and our   
             graduate programs, decide whether there can be       
             consolidations or eliminations, and then we must look 
             to new sources of funds for them."
þ "We need to review our fee system and begin to consider 
             a tuition program. We need to review the fee policies 
             for professional schools and consider ways in which  
             they can become more self-sufficient."
þ "We need to shorten time to degree, make better use of 
             summer sessions, and do more to capitalize on        
             educational technologies."
þ "We must review our enrollment targets and set them at 
             more realistic rates in light of the constrained     
             resources of the last four years. If we are forced to 
             restrict enrollment, however, we must do so in a
             fashion that will enhance diversity so that our      
             student body will reflect the diversity of the people 
             of California."
At the same time, Peltason said the University is working to be
responsive to California needs.
"If there are not sufficient funds to educate all the people, the
Legislature needs to help us accommodate those realities," he said.
"The state must realize, however, that California will be a lesser
place if the University of California and its companion
institutions -- the California State University, our community
colleges, and our independent colleges and universities -- are so
starved of resources that the next generation of Californians will
be less well educated than the present one. There could be no
greater tragedy for the state than the dismantling
of its system of higher education."
>>UC NewsWire<<