SUBJECT:

UC Press Release on 2008/09 State Budget

Governor Arnold Schwarzenegger signed the 2008/09 State budget on Tuesday, September 23, 2008. For your information, below is a press release from the Office of the President. The press release may also be accessed online at

UC Press Release on 2008/09 State Budget

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

Sylvia Lepe- Askari Assistant Vice Chancellor - Campus Budget Office

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Gov. Arnold Schwarzenegger today (Sept. 23) signed a 2008-09 state budget that includes essentially flat state funding for the University of California system.

The budget restores nearly $100 million that was proposed to be cut earlier in the budget process. However, because it does not provide funding increases for student enrollment growth or inflation-based cost increases, the 10 UC campuses will still need to reduce expenditures by about $100 million through budget cuts and use of reserves in order to accommodate these rising costs. UC's Office of the President in Oakland already has taken steps to reduce central office positions and administrative expenditures by more than $20 million, and these savings will be passed along to the campuses.

UC kept its promise to offer a place to all eligible undergraduate applicants this fall and total enrollment is expected to increase by several thousand students, even though the university is not receiving state funding to enroll additional students beyond last year's levels. UC Regents in May approved a 7.4 percent student fee increase for the 2008-09 year, earmarking one-third of the revenue for financial aid in order to help preserve affordability for lower-income students. Funding for Cal Grants for college students also will increase under the final state budget.

The budget also contains lease-revenue bond funding for six critical facilities projects on UC campuses, included by the governor as part of his economic stimulus plan.

"We are gratified that the governor and Legislature have brought this year's state budget process to a conclusion," said UC President Mark G. Yudof. "The final budget for UC is probably the best we could have achieved in a difficult fiscal environment, but it falls far short in terms of maintaining and enhancing our competitiveness in educational and research programs. We will need to do more with less.

"While we are well on our way to reducing administrative costs and achieving greater efficiencies, belt tightening alone will not be enough to meet the financial challenges ahead for the university. Increasing student populations, rising costs of health care, escalating competition to attract and retain world-class faculty, and the challenges of maintaining a fully funded retirement system all contribute to higher costs. Simply maintaining the status quo in funding from the state will not enable us to meet these challenges for California over the longer term."

The final 2008-09 state-funded operating budget for UC is $3.256 billion. The state budget also includes an additional $204 million in lease-revenue bond funding will support facilities projects at UC Berkeley (Biomedical and Health Sciences Building), UC Davis (Veterinary Medicine), UCLA (Hershey Hall), UC Riverside (Environmental Health and Safety), UC San Diego (Management School), and UC Santa Barbara (Arts Building).

The operating budget continues state funding for UC academic preparation programs serving K-12 and community college students, and the student fee increase associated with the budget will help fund continued expansion of student mental health services on UC campuses.

By keeping the university's funding flat relative to last year, the budget does not provide the normal state funding for employee compensation increases. The administration and Board of Regents are looking closely at this issue, as well as health insurance costs for 2009, and expect to clarify in the next few weeks what the final state budget dictates in terms of employee compensation and benefits.

More information on the final state budget is available at

http://www.ebudget.ca.gov. Background on student fees for 2008-09 is at

http://www.universityofcalifornia.edu/news/budget/fee_fact_sheet08.pdf

The University of California, recognized worldwide for its academic distinction, includes more than 220,000 students, 170,000 faculty and staff, and nearly $19 billion in funding from all sources at its 10 campuses at Berkeley, Davis, Irvine, Los Angeles, Merced, Riverside, San Diego, San Francisco, Santa Barbara and Santa Cruz. UC's five medical centers support the clinical teaching programs of the university's medical and health sciences schools and handle more than three million patient visits each year. The university offers programs in more than 150 disciplines, many of which are ranked among the top 10 nationally, and for the last 12 years has generated more patents than any other university in the nation. The UC system also is involved in managing U.S. Department of Energy laboratories at Berkeley, Livermore and Los Alamos, N.M. For more information about the UC system, visit

http://www.universityofcalifornia.edu.