SUBJECT:

1994-95 Governor's Proposed Budget

For your information, following is the official news release from the Office of
the President - University Relations regarding the Governor's 1994-95 State
budget.

If you have any questions regarding this notice, please call Robert Brents at
534-6519.

Margie Pryatel Assistant Vice Chancellore

>>UC NEWSWIRE<<
Friday, January 7, 1994
UC News Office (510) 987-9200

GOVERNOR PROPOSES FIRST FUNDING INCREASE FOR UC IN FOUR YEARS

   Gov. Pete Wilson today (Friday, Jan. 7) proposed a
1994-95 state budget increase of 3.2 percent for the
University of California, the first increase in state
funding for the University in four years.
   Under the governor's proposal, UC would receive $1.8
billion in state funds next year, an increase of $58 million
over the current year. The University had sought an 8.8
percent or $159 million increase in state support.
   "We are very grateful to the Governor for his proposal," said
UC President Jack W. Peltason. "The 3.2 percent increase represents
the best outcome possible given the state's fiscal situation and
the increasing demands on state funds."
   The governor's budget recognizes that the proposed increase in
state general funds alone will not be enough to prevent further
erosion in UC quality or access, Peltason said, and acknowledges
that fee increases will be necessary.
   Equal portions of increased state support, additional student
fees, and further cost-cutting by the campuses and the Office of
the President will be needed to balance UC's 1994-95 budget,
Peltason said.
   "If state taxpayers are willing to provide some of the funding
to maintain the quality of the University in these tough economic
times, we reluctantly need to ask parents and students who can
afford to do so to contribute more as well," Peltason said.
   As a result, the UC Board of Regents at its meeting Jan. 20-21
in Los Angeles will consider a proposed $620 or 17 percent general
student fee increase for next year, which would raise the total
average fee paid by resident undergraduate students from the
current $3,727 a year to $4,347. It is anticipated that the new fee
will be about $300 less than the average to be charged
students at the four public universities (Michigan, Virginia,
Illinois, and SUNY Buffalo) UC uses for salary comparisons.
   About a third of the funds raised by the general fee increase
will be set aside for financial aid for low- and middle-income
students and the remainder used to help offset general budgetary
needs. Even with the $620 fee increase, resident undergraduate
students will be paying about a third of the cost of their
education with the state paying for over 60 percent of the cost.
   Thanks to the increasing amount of financial aid being set
aside from student fee increases, UC has been able to increase the
percentage of entering freshmen students from low-income families
and continue to enroll the same percentage of students from middle-
income families as before. It is estimated that this year that
financial aid will cover fee increases for about half of all UC
students.
   From the start of the Regents budget discussions in October,
it was acknowledged that a general fee increase in the range of
$600 to $650 would be needed if the state was unable to fund UC's
full budget request.
   At their January meeting, Regents also will be asked to
institute an additional $2,000 fee for new students entering the
graduate professional schools of medicine, law, veterinary
medicine, business and dentistry. UC is the only major institution
of its kind in the country without a differential fee for such
professional programs. The consideration of a special professional
school fee has been under study for more than a year.
   At least a third of the special professional program fee
would go to financial aid for students in those programs and
consideration also will be given to the development of loan
forgiveness programs for students who enter public service.
   The remaining money from the special professional fee will be
returned to those professional school programs to restore previous
budget cuts and to improve quality. The special fee revenues would
be used for expanded student services, library augmentations,
instructional equipment and additional faculty.
   The proposed increase in state funds and the fee increases
would cover about two-thirds of UC's original request for increased
funds. Peltason said the campuses and his office will review
the governor's budget proposal to determine where cuts can be made
to balance the budget. A recommendation will be presented at the
January Regents meeting.
   The governor's proposal provides funding for a half-year, 5
percent cost-of-living increase for faculty and staff. The Regents
budget had requested funding for a full-year pay increase.
   UC faculty and staff have not received a cost-of-living
increase for the last three years. This year, salaries were cut on
a one-time basis by 3.5 percent. To restore salaries to pre-pay cut
levels, campuses and the office of the President budgets will be
cut by a total of $53 million next year, in addition to any other
savings needed to balance the 1994-95 budget.
   Even with the salary restoration, the 5 percent cost-of-living
adjustment and regular merit increases, UC faculty salaries next
year would still lag an anticipated 7.5 percent behind the average
faculty salaries at the comparable eight public and private
institutions traditionally used for salary comparisons.
   In a separate action, the governor is proposing a $166.8
million capital budget for UC in 1994-95. All but $26 million of
the building budget would be dependent on voter approval of a
proposed general obligation bond issue for public higher education.
>>UC NewsWire<<