The campus has been preparing for a number of months to meet the expected budget shortfalls. While the actual amount of the permanent budget reduction to UCSC in 2009-10 will remain uncertain for some time, it is clear that we cannot take a 'wait and see' approach to meeting the shortfall.
This series of budget questions and answers is here to respond to queries on California budget's impact on UC Santa Cruz and to address the concerns of faculty and staff:
- How much of UCSC's budget is funded by the State of California?
- How much does UCSC need to cut? How long will the cuts last?
- How are the 2009-10 budget cuts being implemented?
- What is UCSC doing to encourage efficiency and reduce its costs?
- Will enrollments be impacted?
- Why not suspend construction projects and use that funding to mitigate the cuts?
- Is there a hiring freeze? Will there be layoffs? Furloughs? Pay cuts? Will there be an incentive program for early retirement?
- Can faculty/staff expect salary increases in 2009-10?
- Will faculty/staff be expected to start contributing to UCRS?
- Will student fees increase?
- Will the campus protect student fee-funded programs?
- Can UCSC make up the budget shortfalls through fundraising? Through increasing federally funded research?
- What is the campus doing to convince the Governor and legislators that higher education should be a higher priority for State support?
- How can I communicate my ideas for saving money?
UC Santa Cruz has a 2008-09 operating budget of approximately $540 million. Of that $190 million comes from the State of California. These State funds, when combined with the educational fee and nonresident tuition and a portion of the campus's overhead receipts, comprise the general (or core) funds that are used to support instruction, research, library, admissions, registrar, financial aid offices, maintenance of State-funded facilities, and an array of administrative and health and safety services.
UC Santa Cruz's permanent cut in 2008-09 was $4.5 million. The campus also received a one-time, mid-year cut of $6 million, the majority of which was absorbed from campus central reserves.
The 2009-10 State budget-signed by the Governor on February 20, 2009-reduces UC's State funding by $115 million. The University expects that these budget cuts will be permanent.
UC Santa Cruz's share of this $115 million permanent reduction is about $7 million. In addition, the budget contains no funding for mandatory cost increases for employee compensation, benefits, utilities and building maintenance. These unfunded cost increases total at least $6 million, bringing UCSC's total budget shortfall for the 2009-10 fiscal year to $13 million.
The Campus Provost provided one-time funds to address the 2008-09 mid-year cuts. He asked principal officers to implement all reasonable cost-saving measures and to engage their staffs in identifying creative ways to invest limited resources as efficiently as possible.
For 2009-10, the $13 million reduction is being allocated to:
|Administrative divisions:||$8.5 million|
|Academic divisions:||$4.5 million|
Each principal officer has been assigned a target (effective July 1, 2009) and was delegated authority to implement the cuts within a number of broad parameters.
UC Santa Cruz has restructured information technology services, centralized most business and human resource functions, and invested in technology to automate labor- and paper-intensive activities. The campus has implemented energy and water conservation projects that are expected to help control future utility costs.
Given the magnitude of the cuts, the Campus Provost has recently established workgroups to evaluate the efficiency and effectiveness of existing instructional and academic advising activities.
Despite increasing student demand, both UC and the Santa Cruz campus has restricted the number of new California resident freshmen enrollments in 2009-10. For UC Santa Cruz, the recent Regental action translates into a 335 decrease (over 2008-09) in the size of our freshman class. This decision to curtail enrollments is a difficult one for UC and for the Santa Cruz campus given our commitment to providing access to UC-eligible California resident applicants under California's Master Plan for Higher Education.
State funding for construction comes from either General Obligation Bonds or from Lease Revenue Bonds services, neither of which can be used for any purpose other than the projects for which they were approved. In particular, such funds cannot be used to mitigate the cuts, avoid layoffs, or address other programmatic issues related to the operating budget.
The 18-month budget signed by the Governor in February did not include funding for the University's 2009-10 capital program and, because of the State's fiscal condition, funding for many of our existing State-funded capital projects has been suspended.
All principal officers have been encouraged to fill only essential positions. Further, the campus initiated a number of cash-conserving actions (e.g., leaving unfilled positions open, curtailing non-essential travel, deferring equipment purchases, etc.) and has implemented the START program, which allows voluntary reductions in time.
It is likely that there will be layoffs. The campus will provide outplacement services to employees who receive a layoff notice. For information about the transition support, please see the Staff Human Resources website.
UC President Yudof has commissioned a contingency plan for the possibility of employee furloughs and/or salary reductions. The President's goal is to produce for consideration by The Regents a broad framework for both systemwide and campus-by-campus furloughs and salary reductions, if they become necessary.
At this point there are no plans for an early retirement program.
As of this writing, we anticipate that:
- Faculty will continue to receive merit increases as per UC policy, but there will be no general increase;
- Non-represented staff will not receive general or merit increases; and
- Union-represented employees subject to collective bargaining will receive their negotiated salary increases.
The UC Regents approved an overall plan to resume both employer and employee contributions to the UC Retirement System (UCRS) in 2009-10.
The State contribution for this resumption of employer contributions to UCRS was not in the budget adopted in February 2009. UC continues to work with the Department of Finance and the Legislature about resuming such State contributions-as it does for other State employees. Thus, both the timing and the amount of those contributions have not yet been determined by the Regents.
The November 2008 Regents budget proposed a 9.4% increase in mandatory systemwide student fees. Regents are expected to take action on student fees at their May 2009 meeting.
In addition to its already robust student financial aid, the Regents adopted a new Blue and Gold Opportunity Plan that ensures all students with financial need and annual household incomes under $60,000 will have 100% of their fees covered.
Registration fees will continue to be used to support student services, although the campus is no longer in a position to subsidize student programs with core funds. The revenues from campus-based mandatory fees will be used consistent with the terms of the referendum.
If the mandatory costs exceed available revenues, student fee-funded programs will experience programmatic reductions.
Private giving does not substitute directly for on-going core funds like State general funds or student fees. Donors tend to be interested in specific targets for excellences and their gifts are typically one-time investments.
The use of research funds are specified in the contracts under which they are awarded. While they can't be used to replace cuts in State support for academic programs they play an absolutely critical role in UCSC's mission, for example, they support our graduate students and provide summer salary for our faculty who contribute to the research specified in these contracts.
Chancellor Blumenthal and campus government relations staff are meeting regularly with local legislators about these issues and their impact on the campus. Chancellor Blumenthal has also addressed The Regents on the implications the State budget will have on the campus.
UC Santa Cruz's University Relations has many ways in which to involve UCSC faculty, staff, and students as advocates for the University and public higher education. To find out how to get involved, visit the Government & Community Relations website or call (831) 459-3938.
Last updated on 3/30/2009.