SUBJECT:

Board Of Regents Adopts Budget Proposal For 1997/98

For your information, following is the official news release from the
Office of the President - University Relations, regarding the Board of
UC Regents adoption of the 1997/98 budget proposal.

If you have any questions regarding this notice, you may contact me at
534-6590.

Margaret F. Pryatel Assistant Vice Chancellor

Attachment
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FOR IMMEDIATE RELEASE
Friday, November 15, 1996
Mike Lassiter (510) 987-9200
michael.lassiter@ucop.edu

BOARD OF REGENTS ADOPTS BUDGET PROPOSAL FOR 1997-98

A 1997-98 budget proposal which would provide the University of
California with slightly less state support than it received in 1989-90
was adopted today (Friday, Nov. 15) by the UC Board of Regents at a
meeting in San Francisco.

"The budget request is the minimum needed to maintain quality and
ensure access," said Larry Hershman, UC associate vice president and
director of the budget.

The budget calls for general purpose expenditures of $3 billion,
exclusive of debt service on bonds, an increase of 4.8 percent or $136
million over this year. The Regents took no action regarding student
fees, deferring those considerations until January when Gov. Wilson
announces his proposed state budget.

Based on the governor's four-year compact with higher education, the
university can expect at least a 4 percent or an $80.5 increase in
state funding for next year for a total of $2.04 billion. That is
slightly less state funding than UC received in 1989-90.

In the last two years, the governor and the legislature have provided
extra state funds above the compact that eliminated the need for a
student fee increase. The compact calls for annual state funding
increases averaging 4 percent for UC and annual student fee increases
averaging 10 percent.

The UC budget for 1997-98 anticipates a general student fee increase
of slightly less than 10 percent unless extra state funding is
available again next year to "buy out" the fee hike.

The Regents said buying out the fee increase for a third consecutive
year will be among the university's top priorities if extra state
funds are provided. Other priorities in the event of additional state
support would be to:

  * Restore faculty salaries to the average of comparison
   Institutions next year. The budget now calls for closing the gap over
   the next two years.
  * Expand academic outreach programs.
  * Expand the Industry-University Cooperative Research Program to
   speed the movement of research from the laboratory to the market
   place.
  * Match a proposed $40 student fee to expand instructional
   technology efforts.
  * Fund ongoing building maintenance.

"We are encouraged by the state's growing economy and are hopeful that
additional funds will be available to fund needs beyond what can be
funded through the compact," Hershman said.

The proposed budget reflects the university's minimum needs if it is
to maintain quality and provide continued access to all qualified
California high school graduates who wish to attend UC and provide the
classes they need to graduate in a timely fashion. Applications for
enrollment are at an all-time high and graduation rates have never
been higher in the history of the university.

The budget implements the second year of a three-year plan to restore
competitive faculty salaries. This would bring faculty salaries within
3 percent of the average of comparison institutions. Since 1990-91,
faculty teaching loads have increased by almost 7 percent.

The budget request also recognizes the increasing importance of
instructional technology by building upon the approximately $55
million the university already spends annually on instructional
technology.

Recommended is a $40 general student fee for instructional technology
that would directly benefit students. After setting aside a third of
the revenue for financial aid, $4 million would be generated from the
fee to provide students with better access to state of the art
technology, improvements to the university's electronic network and
expanding the use of technology in classrooms.

A matching $4 million from the state above and beyond the compact
would be sought, as would in-kind contributions from industry.
Universities across the nation are increasingly adopting such fees,
and access to state-of-the-art technology is seen as an important way
to attract top students and faculty.

As for general student fees, they have not increased in two years. The
recommended fee increase of $330 per student would generate about $49.5
million in new revenue, with a third or approximately $16.5 million set
aside for financial aid. The remainder would cover fixed cost increases
in student programs and help fund the general operating budget.

With the proposed general fee increase and the instructional
technology fee, total mandatory universitywide fees would be $4,169 in
1997-98. With the addition of miscellaneous campus fees, total
mandatory fees for resident students would average $4,536 for
undergraduates and $5,037 for graduate students in 1997-98. Under the
recommendation, resident students would pay about 30 percent of the
average cost of instruction, with the state subsidizing most of the
remainder. Even with the proposed increase, UC fees would be about
$500 less than the average of the four most comparable public
universities.

An accompanying increase in financial aid, together with anticipated
increases in state Cal Grant funding, should provide funds to cover
the recommended fee increases for the 50 percent of UC students that
demonstrate financial need.

A $590 increase is also recommended in out-of-state tuition. This
would bring out-of-state tuition to $8,984. In addition to tuition,
out-of-state students pay the general fees, thus their total fees
would be about $13,500 a year.

The plan also calls for a continuation of the differential fee
structure for students in selected professional schools, consistent
with the plans previously presented to the Regents.