Nov 07, 2009 | 12:33
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Mar 09, 2009
Budget bottom line: UCLA must increase revenue, cut costs
Now that California finally has a state budget for this and the next fiscal year, the scope of the challenge facing UCLA is clearer after months of uncertainty.The campus faces a one-time $6 million budget cut in state general fund money this fiscal year and two permanent reductions totaling $22 million — a $12.6 million cut that begins this fiscal year and a $9.7 million cut that begins in 2009-10.
On March 6, Vice Chancellor Steve Olsen told staff members attending a Budget Town Hall sponsored by Staff Assembly that the painful
Vice Chancellor Steve Olsen.
“The amount of new student fee revenue we’re going to get is going to nearly cover the loss of state funds,” said Olsen, UCLA's chief of planning, budget and capital programs.
So what’s the problem?
It’s that UCLA is going to have to pay out around $75 million from its general fund for big-ticket items that the state won’t cover, including $30 million for faculty merit increases and staff salary increases stipulated in collective bargaining agreements. The campus will also have to pay cost increases of $19 million for health care benefits, $8 million for utilities and $3 million for building maintenance. In addition, UCLA needs to pay $5 million to cover UC’s contribution to employees’ retirement plan for 2009-10 when contributions resume.
Although the deep cuts in state funding may only affect programs that depend on UCLA's general fund money, these hefty cost increases will impact all campus programs, Olsen explained.
While UCLA’s own fiscal health is good, with a balanced budget and adequate cash reserves thanks to prudent planning, the bottom line is that the campus has to raise new revenue and reduce spending “in order to remain in a balanced position,” Olsen explained.
Next week, he will begin having the first of 30 meetings over the next six weeks with vice chancellors and deans across the campus “to understand what the potential impact of different levels of funding reductions would mean to their operations.” Campus leaders have been working out various scenarios based on different levels of budget cuts up to 8 percent.
Then, together with Chancellor Gene Block and Executive Vice Chancellor Scott Waugh, said Olsen, “we will try to figure out how we can
reduce spending in a way that preserves our core mission of teaching, research and public service to minimize impact of the cuts on academic programs.” But the financial stress is already taking its toll on the campus. Unfortunately, there have already been some layoffs, and there are likely to be more, Olsen said. But there is no central plan laid out in Murphy Hall aimed at reducing the workforce. These decisions are not being made centrally. While Chancellor Block will make final budget decisions about the university’s overall resources, it will be the responsibility of the deans and vice chancellors to manage those resources within their units.
On the issue of furloughs, Olsen explained that the Office of the President has decided not to participate in the governor’s current program ordering state employees to take a day off without pay. But the Office of the President is examining a range of options to determine whether and how this type of program might be offered in the future to campuses as one way to manage dwindling resources.
“We are doing everything we can in order to minimize the impact,” Olsen said, including finding a way to leverage UCLA’s reserves, although this is only a temporary fix. Faculty and staff hiring has been reduced, and spending on equipment, travel, entertainment and contracts has been minimized. The campus has invested in energy conservation, and the consolidation of data centers, networks and e-mail is under way. Since December, three high-level campus committees have been focusing on finding ways to cut costs and achieve efficiencies, to raise revenue and realign academic programs.
Olsen urged everyone to remember that UCLA has some compelling strategic strengths, including a brand identity that is highly respected throughout the world. “It’s highly respected in a way that leads over a long period of time to financial success because there’s such a demand for the services it provides to California and the nation," he said.
UCLA also has the ability to raise revenue in diverse ways. In 2007-08, the campus earned $4.2 billion -- $900 million in contracts and grants alone. Six months after the new Ronald Reagan UCLA Medical Center opened, it is operating at a 105% occupancy rate. Its research and housing enterprises also bring in revenue, and its initiatives have put UCLA at the top of all public institutions in terms of funds raised.
Assistant Vice Chancellor Keith Parker
While this budget impasse was finally broken, there is still a real threat of paralyzing legislative gridlock ahead, because neither the Democrats nor Republicans are able to muster on their own a “super majority” of votes – 54 votes in the Assembly and 27 votes in the Senate -- needed to pass a budget.
Parker identified several important legislators who need to hear from their constituents. The most important person in the Assembly, Parker said, is Speaker Karen Bass (D-Los Angeles), who represents UCLA in the 47th Assembly District. “We are her constituents. We’re the largest employer in her district. So we are important to her,” Parker explained. “We need to communicate to Karen the value of what we do, of what we produce, of the importance of higher education. Karen is a good friend to us in higher education, but she still needs to hear our voices.”
Other influential legislative leaders in the Assembly are Julia Brownley (D-Woodland Hills), who chairs the education committee and represents Santa Monica, Agoura Hills, Malibu, Oxnard and Westlake Village; Cameron Smyth, who chairs the Assembly Republican caucus and represents Los Angeles, Santa Clarita, Simi Valley and Glendale; and Anthony Portantino (D-La Cañada Flintridge), who chairs the higher education committee and represents Altadena, Pasadena, La Canada, Eagle Rock, Monrovia and Duarte.
In the Senate, those who need to hear from employees living in their districts are Fran Pavley (D-Santa Monica), who represents UCLA as well as Santa Monica, Beverly Hills, Oxnard, West Los Angeles, Sherman Oaks and Studio City. Gloria Romero (D-East Los Angeles) represents the 24th Senate District that includes East Los Angeles, El Sereno, Lincoln Heights, the cities of Azusa, Baldwin Park, West Covina and other sections of Los Angeles. George Runner (R-Antelope Valley) represents the 17th Senate District that includes a section of northern Los Angeles County (Santa Clarita, Palmdale, Lancaster and parts of Ventura County and San Bernardino County. While Romero chairs the Senate education committee, Runner chairs the Senate Republican caucus.
“ We’ll work with our alumni advocates and all of you to get messages out to our elected representatives about the impact of the budget climate on us at UCLA and UC, in terms of what we provide to California,” said Parker.
On March 10, some of UCLA’s most committed volunteer advocates will be up north for the annual UC Day in Sacramento where they will meet with legislators and hear from UC President Mark Yudof. Advocates will describe how UC impacts the everyday lives of Californians and explain why the state needs to continue investing in UC.
To find out who represents you on the state and federal level, go to this website. All the tools you need to be a Bruin advocate are here.
You can keep up with the latest budget news at www.ucla.edu/about/budget. You can send in your suggestions on how the campus can save money or become more efficient from that site as well.
