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UC Press Release on Governor's Budget

Governor Arnold Schwarzenegger released his 2005-06 budget proposal yesterday afternoon. For your information, below is a press release from the Office of the President regarding the governor's proposal. The press release may also be accessed online at www.universityofcalifornia.edu/news/2005/jan10.html.

If you have any questions concerning this notice, please contact Sylvia Lepe-Askari at 4-5357.

Margaret F. Pryatel Assistant Vice Chancellor Resource Management

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GOVERNOR ISSUES 2005-06 STATE BUDGET PROPOSAL

The 2005-06 state budget proposal issued today (Jan. 10) by Gov. Arnold Schwarzenegger offers an increase in state funding for the University of California after four years of substantial cuts. The proposed increase includes funding for student enrollment growth, faculty and staff compensation, and the opening of UC Merced, among other things.

The proposal fulfills last year’s “compact” between the governor and UC, an agreement that provides the University with new budget stability by establishing funding and performance expectations over a multi-year period. Previously, over a four-year period ending this year, UC had taken a 15 percent cut in state funding while also seeing a 19 percent increase in enrollments.

“The governor’s overall budget proposal for UC is very welcome after years of cuts,” said UC President Robert C. Dynes. “The governor has fulfilled his commitments under the compact, providing many of the basic resources we need to begin rebuilding our programs and to sustain our contributions to California’s economic competitiveness and quality of life. We appreciate the governor’s support for higher education and its transformative impact on the state.”

The governor’s budget for 2005-06 also withdraws $17 million in state support that was provided to UC at the end of the 2004-05 budget process, as one-time funding outside the compact, and asks UC to take the cut in either enrollments or K-12 academic preparation programs, formerly known as “outreach.”

“The withdrawal of $17 million, intended to be targeted to either enrollment or academic preparation, is a concern to us,” Dynes said. “While we understand that the state’s fiscal condition is still serious, we intend to work with the governor and Legislature over the course of the budget process to demonstrate the importance of these programs and to seek restoration of this funding. Strong academic preparation programs and broad access to a college education are both important to California’s continued leadership in the global economy.”

Student admissions for fall 2005 will not be affected by the proposed $17 million withdrawal, and the University still expects to offer a place next fall to every eligible applicant. If the University’s efforts to restore the $17 million are not successful and enrollments ultimately are affected, there could be an impact on winter and spring admissions.

Overall, the governor’s budget calls for a $97.5 million increase in state general funds for UC operations, or 3.6 percent, over the 2004-05 fiscal year. UC’s state-funded operating budget in 2005-06 would total $2.806 billion under the governor’s proposal.

The governor’s budget will now be reviewed by the Legislature, which will hold hearings and make alternate proposals over the course of the spring. A final state budget traditionally is approved by both the governor and Legislature in the summer.

Anticipating the governor’s budget proposal, and acting to give maximum notice to students and their families, the UC Board of Regents set 2005-06 student fee levels at the board’s November meeting. The action included increases of 8 percent ($457) for resident undergraduates and 10 percent ($628) for resident graduate academic students. Details about student fees are available at www.ucop.edu/news/archives/2004/nov18.htm.

The governor’s budget does propose sufficient Cal Grant funding to cover the 2005-06 fee increases for eligible students.

In addition to its expenditure proposals, the governor’s budget emphasizes the importance of efforts by California public universities to help bolster the development of high-quality math and science teachers for California’s K-12 schools. For the last several months, UC has been leading an effort, working with its faculty, to develop a plan to increase the number of college students who receive math, science, and engineering bachelor’s degrees and to increase the number of these students who go on to become K-12 math and science teachers. UC will be working to refine its plans and move forward on this effort with the California State University in the coming months as another means of helping California stay competitive in the global economy.

Below are major elements of the UC budget as outlined in the governor’s proposal:

· Enrollments: Funding for enrollment growth of 5,000 full-time-equivalent students in 2005-06, a 2.5 percent increase, consistent with the compact.

· UC Merced: Continuation of $10 million in ongoing operating funds plus $14 million in one-time money for the new campus opening in fall 2005, along with enrollment funding (part of the above 5,000-student allocation) to enroll 1,000 students in 2005-06.

· Faculty and staff compensation: A 3 percent increase in UC’s base budget. This funding will support a 1.5 percent general salary increase for all eligible employees, funding for faculty and other academic merit programs, 1.5 percent for merit-based increases for eligible staff employees, and additional funds to help cover the cost of increasing employee health benefits and to address market-based and equity issues where newly hired faculty and staff are paid significantly more than current employees with similar experience and skills. These increases are needed because UC faculty salaries are now estimated to be 8-10 percent behind those of comparable institutions, with a similar problem affecting UC staff. (The above figures are for purposes of general description. Specific compensation levels are subject to collective bargaining where applicable.)

· Proposed reduction: Withdrawal of $17 million in state support that was provided to UC at the end of the 2004-05 budget process as one-time funding outside the compact. The budget asks UC to take the cut in either enrollments or K-12 academic preparation programs, formerly known as “outreach.” As noted above, UC will work with the governor and Legislature to seek restoration of this funding.

· Labor research: A reduction of $3.8 million in one-time funds for UC labor research programs. UC will work with the governor and Legislature in an effort to gain restoration of funding for this research.

· Capital improvements: Funding of $305.2 million from a voter-approved general obligation bond measure to expand and upgrade academic facilities to support enrollment growth and to maintain progress on seismic and other life-safety improvements while also addressing essential infrastructure and building renewal needs.

The governor’s budget documents are at http://govbud.dof.ca.gov/home.htm. The University’s budget documents are online at www.universityofcalifornia.edu/news/budget/.