| Issue
2 — May 2002 |
| BUDGET
TIMELINE |
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| November:
Regents adopt UC budget request for the coming year
and send it to the state for consideration |
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| January:
Governor introduces state budget proposal |
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| Spring:
Legislature holds hearings on the budget; each house
develops a budget proposal of its own |
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| May:
State revenues are updated and governor issues the
"May Revision" to his original budget
proposal |
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| Mid-June:
Legislature sends final budget to governor for action |
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| Late
June: Governor signs budget |
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| July
1: New fiscal year begins |
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| Mid-July:
Regents update original UC budget request to conform
to final budget adopted by the state |
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| October
1: Traditional date for most salary increases to
take effect |
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Dear
UC Colleague:
 This second
issue of our systemwide budget update for faculty and
staff is devoted to the May Revision, the annual event
in which the governor proposes a revised State budget
for the coming year based on new revenue estimates.
Unfortunately,
the story this year is not a very happy one. Facing a
major State budget shortfall, the governor has
proposed cuts to a wide range of State programs,
including programs at the University of California.
The proposed cuts at UC are distressing because they
affect valuable programs that provide important
services to the people of California. In many cases,
UC faculty and staff have spent the last several years
building these programs.
At
the same time, we recognize that the State is facing
an extremely difficult situation — trying to fill a
budget gap representing more than one-fourth of the
entire State budget. We know that the University must
participate in the solution in some way. And in that
context, we must acknowledge that the governor has
avoided across-the-board cuts, protected our core
instructional program, funded our basic student
enrollments, and preserved funds for a modest salary
increase for faculty and staff.
Budget
discussions have now moved to the Legislature, where
we expect much continuing debate over the issues
raised in the governor's May Revision. We will be
participating in those discussions to make the best
possible case for the University's needs. While there
are no easy choices for anyone participating in the
budget process, we will continue to emphasize the many
benefits the state realizes from a strong investment
in the University's programs.
I
hope you find the following update useful and
informative.
Fiat
Lux,
Richard
C. Atkinson
President |
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Governor's
Revised Budget Proposes Targeted Cuts at UC
Gov.
Gray Davis' May Revision to his 2002-03 budget proposal calls for
broad reductions in state spending to address a shortfall of almost
$24 billion in the state of California's nearly $80 billion General
Fund budget.
The
governor's office attributed the shortfall to "a combination of
the national economic recession, a sluggish stock market, the economic
aftershocks of the September 11 terrorist attack, and the collapse of
the dot-com economy in California." Much of the drop in state
revenue is specifically the result of a fall-off in capital gains and
stock options, the governor's office said.
The
May Revision proposed a variety of solutions for closing the gap,
including $7.5 billion in spending reductions affecting numerous state
programs.
The
revised budget proposes substantial cuts at the University of
California. However:
- It
avoids across-the-board cuts and reductions in the core
instructional program.
- And
it maintains the governor's original proposal of funding for an
average merit increase of approximately 1.5 percent for eligible
faculty and staff, subject to applicable collective bargaining
requirements.
The
state Assembly and Senate are now reviewing the May Revision and
making their own proposals for budget adjustments. Further changes to
the university's budget are possible and even likely. A final budget
traditionally is approved by both houses and signed by the governor by
early summer.
The
May Revision includes the following changes to the governor's January
budget proposal:
- A
$5.4 million augmentation allowing UC to enroll 600 more students
than assumed in the governor's January budget, resulting in total
enrollment growth of 7,700 students next year. UC, seeking to
maintain its commitments under the Master Plan for Higher
Education, requested the additional funding after seeing high
application volumes for fall 2002.
- A
$2.8 million augmentation for the rising cost of annuitant health
benefits.
- A
$32 million, or 10 percent, cut in state funding for UC research
programs. The governor's proposal would give the university the
authority to reduce spending on individual state-funded research
initiatives by between 6 percent and 30 percent.
- A
$28.4 million cut in state funding for K-12 outreach. This
reduction, when coupled with a $4.2 million outreach cut proposed
in January, would result in a 40 percent reduction in state
funding for UC outreach programs in 2002-03. The May proposal
includes:
- Elimination
of state funding for the School-University Partnerships
program ($12 million);
- Elimination
of state funding for the UC College Prep Initiative, which
offers online access to Advanced Placement courses ($8.4
million);
- A
$4.7 million cut to graduate and professional school outreach,
in addition to a $500,000 cut proposed in January;
- Elimination
of state funding for the ArtsBridge outreach program ($750,000
in addition to a $750,000 cut proposed in January);
- Elimination
of state funding for UC ACCORD, an outreach-related research
program ($500,000 in addition to a $300,000 cut proposed in
January); and
- Elimination
of $1.9 million in special augmentation funding for outreach
efforts specifically targeted at the Central Valley, though
other outreach programs in the region would continue.
- An
$11.3 million reduction for the California Subject Matter
Projects, which provide professional development for K-12
teachers. The reduction is in addition to a $4 million reduction
proposed in January and would leave the program with $20 million
in funding. On a related matter, the governor proposes to remove
$50.9 million in state funding for the California Professional
Development Institutes for K-12 teachers, believing that an
equivalent or greater amount of federal and state funding in the
K-12 budget is available for teacher professional development
activities.
- A
one-time cut of $29 million from the university's $150 million
budget for equipment, library materials, deferred maintenance, and
instructional technology. The governor's proposal indicated that
this funding would be restored in the 2003-04 fiscal year.
- A
$5.2 million reduction in funding provided to UC to help expand
K-12 schools' access to the next-generation Internet2. The
reduction, on top of a $4.8 million reduction earlier this year,
would leave $22 million for the program.
Including
some other technical changes, the May Revision proposes a net
reduction of $162 million in the University of California's budget.
The university's state-funded operating budget would total $3.2
billion in 2002-03.
In
addition, a series of proposed cuts in the state's Medi-Cal program
— including
co-payment increases, provider rate reductions, and cuts in
reimbursements to hospitals serving a disproportionate share of
low-income patients, among other things
— are
expected to have a significant fiscal effect on UC medical centers.
The
governor's May Revision is available online at www.dof.ca.gov.
Highlights
of Other News
- Domestic-partner
benefits extended: The UC Board of Regents has approved
retirement benefits for UC employees with domestic partners,
mirroring the retirement benefits currently offered to married UC
employees. Qualified domestic partners of UC employees who are
members of the UC Retirement Plan (UCRP) will now be able to
receive pre-retirement or post-retirement survivor income if the
UCRP member dies. For more information, see http://www.ucop.edu/news/archives/2002/may16art2.htm.
- Funding
approved for facilities: Gov. Davis and the Legislature have
placed bond measures for education facilities on the ballot in
both 2002 and 2004. If approved, the bonds would provide UC with
funding for a range of building projects at all campuses
— including
seismic-retrofit projects; new construction to accommodate growing
numbers of UC students, faculty and staff; and improvements to
aging infrastructure. The governor and Legislature also have
approved the final increment of state capital funding for the four
UC-based California Institutes for Science and Innovation, which
are pursuing scientific research in fields critical to the future
of the California economy. For more on the bonds, visit http://www.ucop.edu/news/archives/2002/may16art3.htm.
And for more on the Institutes, see http://www.ucop.edu/news/archives/2002/may7art1.html.
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Questions
and Answers
Q. Will the new state budget result
in layoffs at UC?
A. It does not appear
there will be layoffs on an across-the-board basis. Because
certain programs have been targeted for fairly deep cuts in
the May Revision, however, it is possible that layoffs will
occur in some of those individual programs. The university
will make every effort to achieve budget reductions without
layoffs, but they cannot be ruled out in those programs
identified for major budget reductions. At this point, nothing
is final
— the
budget-cutting proposals that have been made are still under
discussion in Sacramento.
Q.
Why isn't a student fee increase being considered?
A. Gov. Davis has consistently opposed a student
fee increase for next year. For its part, UC is urging the
state's leaders in government and higher education to develop
a new, long-term policy that would guide the setting of
student fees. Such a policy would bring more predictability to
the process and allow students, parents, the university, and
the state to budget their resources with less uncertainty from
year to year. Discussions of such a policy are in their very
early stages.
Q.
Why isn't UC making better use of facilities in the summer to
help close the budget gap?
A. Actually, we are. With state support, UC
campuses have expanded their summer instructional offerings,
and summer student fees have now been reduced to the
equivalent of the rest of the year as a means of encouraging
more students to attend. Many UC buildings also are used in
the summer for conferences, camps, and other
revenue-generating activities.
Got
a question? Send it to budgetquestions@ucop.edu.
Your submissions will be the source of the questions and
answers appearing in the next edition of this newsletter.
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FOR
MORE INFORMATION ON:
BUDGET
www.ucop.edu/news/budget
UC AND THE ENRON SITUATION
www.ucop.edu/news/enron
BENEFITS INFORMATION
www.ucop.edu/bencom
UPDATES ON UNION NEGOTIATIONS
www.ucop.edu/humres/labor
NEWS ON OTHER UC SYSTEMWIDE ISSUES
www.ucop.edu/news
This
newsletter also is available on the web at www.ucop.edu/news/budget/.
Go back to Senate Newsletter
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