Chancellor Blumenthal addresses regents on budget implications

(Chancellor George Blumenthal addressed the UC Board of Regents Wednesday on the implications of potential cuts in state funding. He was one of three UC chancellors to discuss the impacts of budget cuts. His remarks are as follows.)

Thank you, Provost Grey.

The excellence of the University, with its commitment to access and diversity are critical to the economic and intellectual well being of California.

I am deeply concerned about the budget situation we face. The anticipated cuts, exacerbated by increasing mandatory costs, mean that both the quality of our institution as well as basic access and affordability to the citizens of California are at risk.

For UC Santa Cruz, we will have no choice in this next round of budget cuts but to cut deeply into our academic programs; and this raises the specter that the progress we've made as a campus will be arrested (and perhaps even reversed) and that cuts to academic programs will erode the quality of a UCSC education.

Let me provide some context about UCSC's choices. The campus is heavily dependent on State funding and student fees to pay for our core instructional programs.

While we have significantly increased our contracts and grants and our private giving, these funds are generally restricted -- as President Yudof noted in his white paper on UC funding for the Regents' recent retreat.

We have worked over the past few years to be more efficient. We have consolidated and automated our business functions -- as well as our IT functions.

As a result, we were able to take a focused and nuanced approach to accommodating the 2008-09 budget cuts. We did not make across-the-board reductions. Rather, we have -- to the extent possible -- accommodated the priorities of our Strategic Academic Plan.

Academic units were cut, on average, by less than 1 percent -- recognizing the fact that enrollments grew, but we received no state funds to support these students.

Critical functions such as health and safety were exempted from cuts -- although these units still had to deal with de facto cuts given workload and inflationary costs.

Since the campus is preparing for its first comprehensive fundraising campaign, we also protected our development efforts.

In contrast, administrative units were cut by as much as 10 percent, effectively shifting much of the burden associated with these cuts to our academic support units. This strategy cannot be sustained. These units now operate on very thin margins -- if someone is sick, the work simply doesn't get done; support for business transactions that require human interaction has been cut back significantly; increases in maintenance backlogs are accelerating.

While we will continue to focus on improving administrative efficiencies, we are approaching the point of diminishing returns -- some of our essential units cannot be further reduced. For example, although we are half the size of our sister campus at Los Angeles, we cannot get by with half a chancellor.

We took our share of the $33.1 million of mid-year cuts on a one-time basis. While this "gets us through," it simply delays the impact until 2009-10, when we must absorb these cuts and further mid-year cuts on a permanent basis.

So, as part of our multi-year strategic planning, we have already invested to streamline our administrative operations, made difficult (and principled) decisions on how to distribute the budget reductions to date -- and are striving to sustain our progress as a campus in building the academic programs that will define our future, and to honor our commitments to provide access.

What are our options for further cuts?

This year we will serve almost 600 students for which we have not received State funding. We will need to explore the impact of further cuts on future enrollment as well as future faculty recruitments. And, we will need to leave more positions unfilled

We have delayed new academic programs for which we have already received approval (e.g., PhDs in Visual Studies and in Film and Digital Media) and have already suspended initiatives in which we cannot afford to make further investment (e.g., Institute for Science and Global Policy).

We are considering how we will accommodate further reductions in our State support --Provost Kliger and I have engaged our leadership team -- our deans, our vice chancellors, our vice provosts, and our Academic Senate -- to explore how we might design a stable, sustainable campus on a smaller State budget. This requires understanding our core functions and the level of support they require, identifying additional programs and services that might be consolidated, and identifying additional programs we can eliminate.

Additional cuts will likely

. First, involve reductions to our academic programs and hence instruction. This will be fundamentally inefficient in that it will affect our students' ability to make timely progress toward their degrees;

. Second, it will involve reductions in access-which will be unfortunate because California now, more than ever, needs higher education to help provide its population with the skills to address 21st century problems and to fuel its economy; and

. Third, it will involve further reductions in campus employment. Despite our progress in deploying technology to streamline our business processes, we still invest 86 percent of our State and student-fee funding in salaries and benefits.

Further reductions will not only affect our future plans, we anticipate that they will cut into the core of our existing academic programs -- those that have been responsible for fueling our campus's progress, our "upward trajectory" of excellence about which I often speak.

As a result of further reductions, our students will find that

. First, it is more difficult to get into classes and there will be more limited opportunities to participate directly in the research experience with faculty and graduate students;

. Second, there will be reduction in student academic support services, such as the writing center, library, etc, and more limited opportunities for enriching the college experience -- the living and learning experience that characterizes Santa Cruz; and,

. We may even lose some of our faculty-and thus the foundation for the very progress we have labored to sustain.

In summary, we recognize that the current economic conditions will persist for some time and that our campus must adjust to this new reality, at least in the near-term.

Our campus will continue to act deliberately and in a principled manner-looking to our strategic academic plan to provide us with the context within which we can set priorities, make difficult choices, and select among the opportunities available to us.

As I noted at the outset, I am concerned that with further budget reductions (compounded by increased mandatory costs) we will experience an erosion of both the quality of our institution and basic access to the citizens of California-something from which it may take years to recover.

Thank you.