Regents face key decisions on salaries, student fees

By Cynthia Lee

A recent decision by UC leaders and the regents to offer admission to all eligible undergraduate applicants in 2008-09, even when the governor has indicated he will not fund additional enrollment, means that UC will have to dig deeper into other pockets to pay for it.

"This decision will add to the budget difficulties the university faces," said Vice Chancellor Steve Olsen of Finance, Budget and Capital Programs, who recently gave his assessment of UC's budget challenges to the Academic Senate's Legislative Assembly. "New resources will have to be found within the university's budget through the redirection of existing resources."

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November 2007 UC regents sent a budget request for 2008-09 to the governor.

January 2008 Gov. Arnold Schwarzenegger presented his 2008-09 state budget plan to the legislature. It included a funding proposal for UC. At UCLA, the Office of Academic Planning and Budget (APB), under Vice Chancellor Steve Olsen, began an analysis for Chancellor Gene Block and Acting Executive Vice Chancellor and Provost Scott Waugh.

Mid-February The Legislative Analyst's Office presented its analysis of state finances as well as a budget summary. At UCLA, the APB prepared a financial review for each unit. Meetings began with deans and vice chancellors.

March Meetings on budget allocations continue at UCLA and include Academic Senate leadership.

April State receives tax receipts after April 15 and refines its budget projections. At UCLA, EVC begins management review meetings with deans and vice chancellors to discuss issues based on an APB analysis or raised by the dean or vice chancellor involved.

Mid-May The governor submits a revised budget based on updated projections of revenues and expenditures. At UCLA, management review meetings continue.

June The state constitution requires the legislature pass a budget by June 15 and the governor sign it before July 1. At UCLA, the chancellor makes final campus budget decisions and sends out allocation letters to units. But a prolonged battle in Sacrmento could mean a late state budget.

July When a state budget is approved, regents adjust the UC budget based on the final state budget. UCLA implements the new budget plan.

The regents are trying to close a $417-million gap between their proposed budget plan and Gov. Arnold Schwarzenegger's plan. Under the 2004 compact agreement with the governor, UC should have received a 7% increase in funding; instead, UC would get 3% less than it received in 2007-08.

The budget shortfall could widen further when Schwarzenegger issues his revised budget in mid-May, based on updated projections of revenues and expenditures. Olsen said he and other analysts believe the state deficit is likely to be even larger than the $14 billion initially estimated.

While the regents will consider many other options in their hunt for budget cuts — including larger class sizes, a pay or job freeze, reduction of campus services and employee workforce reductions — there are two main questions to be answered, the vice chancellor explained.

Can UC afford to provide a range of merit adjustments for faculty and staff next year even if there are no new state funds to pay for it? And will the regents raise student fees?

In recent bad budget years, Olsen said, UC decided to provide funding to the campuses for faculty merit adjustments. But, he said, "the issue regarding range funding for both faculty and staff is more questionable and more expensive." A decision may be made later in the spring. Also, no one knows whether the regents will call a halt to a multiyear plan to rebuild the competitiveness of faculty salaries.

As for student fees, both the regents' and the governor's budget plans include increases of 7% in students' educational fee and 10% in the registration fee. Will they go even higher? "The issue is wide open in terms of range and possible outcomes," Olsen said.

The regents could wait as long as May to decide, although they are slated to vote March 19 on Lt. Gov. John Garamendi's resolution to cap fees at 2007-08 levels and limit future increases to the rate of inflation.

As for other possible budget cuts, UC is currently looking at system-wide programs that involve research and public service, Olsen said. At UCLA, he is consulting with deans and vice chancellors to examine the financial position of various operating units and impact of budget cuts. There will also be talks with Academic Senate leaders throughout the spring. Chancellor Gene Block will make final decisions on the campus budget in June.

"We will be communicating further with a range of campus constituencies," Olsen said. "And we'll get more information from Sacramento and Oakland as we get closer to the time for decisions."