Budget plan would bring UC stability, Yudof says

The state has been an unreliable partner of the University of California for at least 20 years, said UC President Mark Yudof. It’s time that the system accepts that fact and adopts a realistic two-year budget plan that would rely on student fee increases in January and again in September.

 

"For 20 years, we have been engaged in faith-based budgeting," Yudof told UC editors and communicators who met via a teleconference that connected northern campus representatives meeting at Oakland with representatives of southern campuses at UCLA. "We have said that next year will be better,” he said. “We have said, 'If only we spent more time in Sacramento, if only Mary Smith or John Jones had been elected governor, if only the Democrats had two more votes.'" But faced with a dysfunctional state government and a systemic national trend that has seen the resources of colleges and universities shrink, "we have to end the faith-based budgeting."

 

UC now has 50 percent less funding per student than it had in 1990. In today's dollars, it was $15,000 then compared to just $7,600 today. UC now educates 14,000 students for which the state has not paid a dime, Yudof said. "If that's not a sign of being an unreliable partner, I don't know what is."

 

Many legislators now understand, the president said, that the state has decided it can no longer afford to build a highway to higher education, so "they're deliberately building toll roads. … You charge the users instead of the taxpayers."  

 

The UC regents will meet in November to consider the proposed fee increases and Yudof's two-year budget plan that would end the furloughs by summer of 2010, restart employer and employee contributions to the retirement plan and "end a fair amount of the suffering. … I don't know what we're going to do about staff raises. But I really feel I have to do faculty merit raises. We are already 19 percent below our peers," he explained.

 

"I don't see the state being in any position to help us," Yudof said. "We need more stability. … We need to cut down on the rhetoric and all the angst. These problems are structural. The problem is not with any individual. And the problem cannot be solved if no one is willing to share in the pain. … How do I make up a billion dollars (of cuts, unfunded mandatory costs and continuing obligations) that we're out this year?" The budget shortfall is expected to increase to more than $1.2 billion in 2010-11.

 

The plan that Yudof described will also depend on another enrollment reduction of 2,500 students at UC. But that's small, he noted, compared to the proposed reduction of 30,000 to 40,000 students in the Cal State system and 200,000 to 250,000 students in community colleges.

 

Yudof acknowledged that morale among staff and faculty, hard hit by the furloughs, has suffered. Approximately, 1,000 people were laid off during the last school year, with another 1,000 expected to be laid off in 2009-10.

 

Nevertheless, he said he remained optimistic that if his plan were adopted, it will be "a reset for the university … and then we will be in a position to move forward. … There is a way out of this fog if this budget can be adopted."

 

Yudof also responded to the "myth" that UC has a $5.3 billion reserve fund it can tap into to fill the current funding shortfall.

 

UC does not have billions of dollars in uncommitted funds that can be used to fill the gap, he said. "What we have is a checking account," Yudof said, that serves a variety of purposes. For example, he said, "we have to have money in the bank before we can build a building under the regents' rules." Because one tiny change in the Obama health care package could put all UC hospitals in the red, UC holds a 60-day reserve to support hospital operations, despite a bond industry recommendation that it hold a 110-day reserve. There are also endowments that are committed to specific uses.

 

"The real point is — these are not my reserves,” Yudof said. “There are 76,000 different accounts in the reserves" that belong to campus academic departments, student housing and many other units that must safeguard their resources.

 

"So it's a fiction," he said of the presumption that this pool of money is available for use by UC. The money is kept in a checking account so that UC can at least earn interest on it.

 

Yudof also addressed the myth that executive salaries are out of control. UC's highest paid chancellor is ranked 62nd in the nation for compensation among peers, "well behind a lot of privates, but also well behind a lot of publics," Yudof said. Salaries for chancellors are about 40 percent below market. In February, all senior management salaries were frozen. In June, senior managers took a 5 percent pay cut that is now around 10 percent because of the furlough, based on a progressive scale.

 

Among the 20 executives who recently got pay raises, Yudof urged employees to look carefully at the list. "Not one person got a raise for doing what they did the week before. Most of them are promotions. … So a professor becomes an associate dean. In a few cases to save money, we combined two jobs into one and gave someone a stipend. The word out there is that only fat cats got stipends. This is not true. There are thousands of stipends out there for staff."

 

Yudof said the choice UC has before it boils down to this: "Do we descend into mediocrity or do we save this great university?"

 

"We can't give in to mediocrity," he said, or give up UC's commitment to serve low-income students.

The Office of the President addresses the myths and misperceptions some employees have about the budget and UC funds at this website.