March 2011 Campus Budget Update

Financial Stability

Chancellor Block provides a budget update to the campus community.

I am writing to share details of our campus planning in response to Governor Jerry Brown’s 2011-12 budget proposal. The governor’s budget would reduce funding to the University of California by $500 million; as a result, the UC Office of the President has asked UCLA to prepare for a reduction of $96 million in 2011-12.

As you know, California is in the midst of a monumental shift in the way public higher education is funded. At UCLA, these changes have led to dramatic reductions in the amount of revenue available for core operations such as academic programs, student services and facilities and maintenance. At the same time, we also are absorbing increased costs for faculty and staff salaries, health benefits, employer contributions to retirement plans, utilities and building operations.

The good news is that we have been planning prudently for declining state support for several years. For example, we have kept vacant almost 525 staff positions, and we have held in reserve funding that was allocated to us by the state last fall. Thanks to our conservative budgeting, we are in a relatively strong position to adapt to the latest reduction in support proposed for 2011-12.

The less pleasant news is that we still face a permanent recurring reduction and need to plan now for the 2012-13 fiscal year. We must continue to exert discipline in our spending and further increase revenues to adjust to the new financial reality. As a community, we must intensify our efforts to ensure UCLA’s financial health and protect the academic excellence that students and the entire state deserve. Our plan—much of it already under way with ongoing input from the Restructuring Steering Committee—relies on four core strategies:

• Generate new revenues.
  This includes an increased focus on philanthropy and licensing intellectual property as well as increasing the number of nonresident students. In the first two months of 2011, we received two extraordinary gifts that, combined, exceeded $200 million, reflecting great confidence by generous donors in UCLA’s ability to carry out our mission. In addition, our goal is to increase nonresident student enrollment from 9 percent of undergraduates to 18 percent by 2013-14, generating new revenues through the higher tuition that nonresident students pay. By maintaining high graduation rates, we believe we can accomplish this without reducing enrollment levels of California residents, although class sizes will increase.
• Restructure our academic program.
  Two graduate professional programs at the UCLA Graduate School of Education and Information Studies and the UCLA School of Law have been converted from state-funded to self-supporting, and we are examining similar changes elsewhere. Converting the Anderson MBA program to a self-supporting degree program would redirect millions in state support for use toward academic programs elsewhere on campus. In addition, strategic mergers of academic programs and the aggregation of various computing centers are under consideration as a way to increase administrative efficiencies.
• Restructure our administrative services.
  UCLA is a leader among UC campuses in strategic purchasing and we have identified significant potential savings through consolidation of contracts for computer software, network equipment and other products. We are looking at consolidating IT services, rather than retaining separate department-by-department services. In addition, we are in the third year of a four-year plan to reduce energy costs through replacement of inefficient heating and cooling units and light fixtures.
• Build partnerships with the UC Office of the President and other UC campuses.
  We are engaged with UCOP and other campuses in multiple initiatives to generate savings through enhanced productivity. For example, UCLA generates revenue by providing business services to UCOP and the Merced campus, and other partnerships are being explored.

I encourage you to review the budget plan presented by UCLA to the UC Office of the President, which includes additional details about how we intend to implement our share of the reductions.

UCLA is fortunate to have tremendously talented and dedicated students, staff and faculty who contribute to the economic and social welfare of our state by generating important new knowledge and addressing pressing civic challenges. Every year at commencement we provide to California and the nation the extraordinary minds that will protect and transform our future. Through innovative thinking, I am confident that UCLA will adjust to new economic realities and remain a beacon of opportunity among the world’s leading research universities.

Nevertheless, it remains essential that we remind lawmakers how vital UCLA and the rest of the UC system are to the future of the state. Please join our advocacy effort by clicking the Get Involved link at advocacy.ucla.edu.