Campus budget update

To: UC Santa Cruz faculty and staff

From: Chancellor's Office

As we near the end of the fiscal year, I want to update you on what we know at this time about the University of California system and the UC Santa Cruz campus budget outlooks and what that means for our faculty and staff. I know how challenging these past few months have been and how the unknowns surrounding our fiscal future have added to the worries of many. I am so grateful for the dedication to our campus mission and to our students that you all have shown through this time. While I do not yet have answers for every question you might have regarding the upcoming fiscal year, I hope this update can provide some clarity on where things stand.

What we know currently about the UC budget

The governor and the state Legislature have reached agreement on a state budget. As written, effective July 1, the UC base budget would be cut by $300.8 million (8.1%) from current levels. We do not know yet how the cut will be applied across the campuses. Whether the cut will be permanent depends on whether the state receives $14 billion in new federal stimulus funds by Oct. 15. If the federal funding comes through, UC would receive up to $471.6 million to offset cuts. If realized, that federal funding could reverse the July 1 cuts and result in a net increase of $170.8 million (4.6%) compared to UC’s overall 2019-20 state budget allocation.

Of course, state funding is only one aspect of our fiscal picture. We won’t have clarity on our tuition revenue until we are about a month into the fall quarter. Currently, our enrollment figures look strong, but it is unclear how adjustments to our instructional delivery and operations in fall will impact the decisions of our students and their families.

Our sales and service operations (auxiliaries) have already seen large revenue reductions due to changes in operations and service resulting from COVID-19. Housing and dining operations for spring and summer saw a reduction in revenue of $49 million. Many other operations including TAPS and the Student Health Center have also experienced large revenue reductions. With COVID-19-related adjustments to campus operations this fall, we anticipate funds received in these areas will continue to decrease.

In areas experiencing increased costs directly related to COVID-19, our campus is pursuing Federal Emergency Management Agency claims for reimbursement to the extent possible. UCSC is also finalizing plans for spending our institutional CARES Act funds and the Minority Serving Institutions portion of CARES Act funding in support of increased costs related to transitioning to remote instruction, as required by the grant terms.

What this means for our employees

In spring 2020, the 10 UC chancellors committed to not having any COVID-19 related layoffs through the 2020 fiscal year, which ends today, June 30. This decision was made to provide some certainty to our employees during a very uncertain time. Though we cannot guarantee there will be no indefinite layoffs, we are working diligently to be strategic and creative to ensure we minimize to the greatest extent possible the need to use that strategy to address fiscal shortfalls over the next two years. I remain hopeful we will be able to utilize other means and can affirm that indefinite layoffs would be a last resort.

One of the strategies we have used to slow campus spending and decrease the commitment of permanent dollars is the position-management process. This has been working well over the past few months, and principal officers have been careful and conservative in reviewing open positions. We did not institute a hiring freeze, as we do need to fill certain positions that are critical to our core operations or those positions that can be revenue generating. In addition, principal officers have been asked to limit significant costs, and to be prudent with all spending to help reduce the need to lay off staff.

As revenue shortfalls impact certain services, the resulting service reductions or changes impact others. For example, during the summer months we typically furlough certain employees due to decreased demand for services. Though COVID-19 has resulted in additional service impacts, we have been able to avoid many furloughs through the redeployment of staff. We redeployed approximately 20 dining workers who would have otherwise been furloughed to support facilities. We continue to explore redeployment options in our custodial unit. In addition, we have found other creative ways to avoid furloughs and temporary layoffs in some areas. One such example is the county contract that Dining Services won to provide approximately 1,000 meals, daily, to local shelters and to emergency-service operations at 16 locations throughout north- and mid-Santa Cruz County beginning June 1. This was a win for the county, our campus, and our dining staff.

Other potential strategies we can deploy more broadly or are considering using to prevent the need for permanent layoffs include, but are not limited to:
  • Employee Reduction in Time (ERIT) program
  • Voluntary reductions in time/voluntary layoffs for career staff who are interested in transitioning from university employment
  • Transfers in lieu of layoff actions
While all of these programs differ, they provide unique opportunities for staff to evaluate if changes in their employment best fit the needs of the employee and their families. As new strategies emerge, we will share those with you.

Though I know many questions remain, I hope this information is helpful. As we learn more about the budget, I will update you.