Gov. Gray Davis last week announced $86 million in immediate cuts to this year's University of California budget in an effort to reduce overall state spending by $2.25 billion. In addition to those cuts, which require legislative action, the governor also said he will submit to the Legislature further budget revisions for consideration during a special session in January.

At the same time, the UC Board of Regents approved a draft budget for next year requesting $3.65 billion, an 8.7% increase over the current year.

Davis proposed the following cuts:

• Shifting $50 million in funds from the California Institutes for Science and Innovation -including the UCLA-Santa Barbara California NanoSystems Institute (CNSI). This is a shift in funding source only from General Fund to lease-revenue bonds. There should be no impact on the institute's progress, said Martha Krebs, CNSI director.
• Eliminating $25 million appropriated for unanticipated increases in natural gas costs -leaving $50.6 million for the campuses.
• Cutting $5 million in clinical teaching support at the UC's medical centers. These were new one-time funds provided in the 2001 Budget Act and have not yet been expended. UCLA received $400,000 for clinical teaching support, $1.7 million for NPI and $250,000 for dental teaching clinics, according to Steve Olsen, vice chancellor of finance and budget. These funds would all be returned to the state.
• Reducing $6 million from the Professional Development Institutes budget, which could reduce the number of teachers trained under the programs.

"It is, of course, disappointing to begin considering budget cuts at the university at a time when we are really just beginning to recover from the sharp cuts of the early 1990s," said Larry Hershman, UC vice president for budget. "However, we know the state is facing a serious fiscal situation, and we are committed to playing a part in the solution."

UCLA's Olsen is monitoring the situation carefully.

"The most important aspect of how this could affect UCLA really is the high level of uncertainty," Olsen said. "It's like trying to look into a pretty cloudy crystal ball and figure out what might happen.

"It's unfortunate to lose these funds," Olsen added. "Fortunately, the governor's actions will allow UCLA to continue with the construction of the CNSI facility. Much of the other funding supports relatively new programs, and we will do what we can to minimize the impact. The UCLA community needs to understand, however, that the governor's actions still leave the state with at least a $9-billion problem next year, and the alternatives are only getting tougher."

Because of the state's economic troubles -the Legislative Analyst's Office projects a $12.4-billion shortfall by the 2002-03 fiscal year, reflecting the sharpest decline in state revenues since World War II -Davis had earlier ordered a statewide hiring freeze and warned state agencies to be prepared to cut costs this year and next.

What's more, the governor directed all agencies to come up with options for possible reductions of up to 15% in state funds next year. For UC, a 15% reduction would amount to $475 million. For UCLA, that might translate into a $90-million cut, Olsen said.

The governor's proposals brought relief to at least one campus unit, CNSI. "It's certainly a measure of the governor's commitment to the institute," Krebs said. "So, considering how difficult the economic circumstances are, this is really a good solution, and we're working with the UC Office of the President and state officials to give them all the information they need to make this conversion (to lease-revenue bonds) possible."

But for UCLA's School of Medicine, the proposed cuts were one more blow to already battered academic medical centers.

"Any reduction in funding, even though it is funding that was increased from last year, is devastating," said Vice Provost of Administration James Terwilliger, associate director of the UCLA Medical Center.

"It's a challenge in this environment to make up any decrease in funding. You can't look at this reduction in isolation," he noted, given that teaching hospitals have already suffered greatly in the last four to five years.