Latest Budget Update 2009
Chancellor Block provides an update on the financial situation facing the University of California.
I know that all of you have been following the increasingly complex and worsening financial situation facing California and its impact on present and future funding for the University of California. The purpose of this letter is to lay out the scope of the current problem and the values and priorities that will guide us in implementing painful cuts to our campus. A draft budget reduction plan is being developed for my review by Executive Vice Chancellor and Provost Scott Waugh in consultation with the Academic Senate, vice chancellors, the academic deans and faculty advisory committees.
I would like to state at the outset my commitment to maintaining and enhancing UCLA as one of the greatest institutions of higher education in the world. From its founding 90 years ago, our university has educated some of the most prominent leaders in business, the professions, academics and public service. The research done by our stellar faculty, supported by excellent staff, has reshaped our nation and the world.
The next year will be painful, and, frankly, this crisis will likely be a multi-year problem. But I know we will emerge stronger than ever.
What is the scope of the current problem?
Since the passage of the earlier state budget in February, California’s fiscal picture has declined dramatically, and the May election did not deliver relief. We have been forced to shift from plans to reduce our general funds budget next year by $33 million (about 5% for most units) to a cut of $132 million. For the fiscal year beginning July 1, this represents an approximate 17% reduction in our general funds allocation. I should emphasize that the situation is still fluid, but these are our most current figures.
How do we plan to respond to this unprecedented loss of funding?
First, the campus will receive approximately $15.5 million in additional funds from the approved 10% increase in the Education Fee paid by our students. Of this amount, about half is needed to fund mandatory cost increases for the upcoming year, leaving only $7.5 million to offset state budget cuts.
Second, the 5% reduction in campus expenditures that we had already planned will save $33 million.
Third, the salary reduction/furlough options proposed by the Office of the President will save UCLA approximately $30 million in state funding, if implemented on August 1.
Fourth, while we still have some reserves to temporarily assist with the shortfall, we must implement at least another $40 million in budget cuts to balance our books. Soon after the Regents’ meeting on July 16, we will send further information to our academic units regarding reductions and appoint task forces to advise on targeted cuts. We must take this deep and sobering reduction in a way that maintains our stature as one of the world’s great universities and ensures that UCLA continues to fulfill its public mission.
What must we preserve in order for UCLA to remain UCLA? Our “core” values.
As we consider significant reductions, the following principles and priorities will help guide our decisions. We must:
Continue to offer the very best undergraduate and graduate students the opportunity to receive a world-class education. This means ensuring that our students progress toward their degrees and that students of all backgrounds receive the services and financial support they need to attend UCLA and flourish while they’re here. Our $500 million Bruin Scholars Initiative will play a key role in this effort; we have already raised almost $25 million.
Ensure that UCLA’s world-class faculty stays here, and continue to attract top scholars to our campus. A great university cannot survive without attracting and retaining scholars of the highest distinction. Becoming smaller, as I will outline later in this letter, does not mean growing weaker. We will do what it takes to increase faculty excellence.
Ensure that we support our outstanding staff, devoted individuals who provide critical service for our students, faculty, visitors and patients. A great university must have highly motivated and professional staff. UCLA is blessed with such a group, and we deeply appreciate their dedication to the university. In support of staff, we will continue to make training and development a priority.
Protect our faculty’s ability to engage in extraordinary scholarship. The hallmark of an eminent research university is outstanding research and the benefits it provides to students and society. We must ensure that our faculty have the time and research infrastructure to keep UCLA among the nation’s elite research institutions.
Protect UCLA’s attractiveness to a diverse student body, faculty and staff. In recent years we have made gains in diversity among our students, staff and faculty. I don’t have to tell you how fragile these advances are. We will maintain our focus in this area.
Emphasize our role as a public institution serving the people of California. Although we are deeply disappointed by the lack of state support, we recognize our responsibility to maintain critical engagement within our community, especially in the areas of healthcare and K-12 education. But we must become more efficient and cost-effective in how we deliver these services.
How can we protect these core values, maintain academic excellence and yet drastically reduce our budget?
Reduce undergraduate over-enrollment. UCLA is bursting at the seams with students. This year, we enrolled approximately 1,750 students over our target. This is largely because of the extraordinary qualifications of our applicants and our desire to serve as many students as we can. But we must reduce our student population to ensure that we have the resources to offer a quality education. We also will consider increasing the proportion of non-resident students. UCLA currently enrolls a greater proportion of state residents than our peer public institutions. There are strong intellectual arguments for geographical diversity; non-resident students can enrich the educational experience for all. A moderate increase in the proportion of non-residents would generate millions of dollars in new revenue to protect instructional programs for all UCLA students.
Operate with a smaller faculty and administration. EVC Waugh has limited faculty recruitment next year to 25 searches campus-wide. (For 2008-09, we hired 75 new faculty, reflecting more than 100 searches.) We will do all we can to retain our distinguished and highly productive faculty as we continue to aggressively recruit distinguished senior faculty and promising junior faculty. But their numbers will be smaller to match a reduced student body. In addition, I will be proposing an initiative to achieve administrative cost savings through streamlining and consolidating campus business processes.
Reduce the number of educational programs we offer. UCLA offers an astounding array of majors and interdisciplinary programs. Some are among the very best in the nation, but not all remain vital and of significant interest to our students. Pruning programs will help us emphasize areas in which we are strongest. Academic advisory groups, working with EVC Waugh, will identify areas that can no longer be supported by general funds.
Remove redundant functions, both administrative and educational, that have arisen over time, in order to enhance our effectiveness and efficiency. In addition to measures we are already taking related to energy use, travel and campus systems, we will consider centralizing and/or combining functions in such areas as business operations and institutional assessment. We are asking deans to consider reasoned reductions in major requirements, elimination of redundant course offerings among departments, enhanced use of information technology, and any other efforts that would improve efficiencies in the curriculum.
Reduce the use of general funds to support research, and instead attract funding from other sources. Many research programs receiving regular state support can obtain competitive funds from federal sources, foundations or philanthropy. In most cases, general fund support of research should be temporary and used to catalyze and leverage other forms of funding. There is little justification for programs that are fully supportable by outside agencies to continue to receive large amounts of general fund support.
Recognize that the reduced level of state support will be a multi-year problem. Immediate modifications in our budget for 2009-10 must be followed by systemic actions that permanently reduce our need for state support.
Take full advantage of vacant positions following retirements and voluntary work reductions to minimize the need for layoffs. Most of our expenditures at UCLA are labor costs. We can speak of “consolidation,” “increasing efficiency” or “program reductions,” but in the end, these measures result in fewer jobs for faculty and staff and fewer employment opportunities for students. This means not replacing individuals who retire, allowing individuals to reduce their working hours through the START program, not renewing annual contracts and, unfortunately, layoffs.
Rededicate ourselves to philanthropic efforts. Alumni and friends of UCLA have been remarkably supportive of our university in the past. Without a change in the downward spiral of state support, UCLA increasingly will need to be privately funded. We especially must focus on growing endowments for undergraduate aid, graduate fellowships, faculty chairs, and research centers and programs.
We still have much to celebrate.
Despite the current fiscal challenges, however, we must never forget how much we have to be proud of at UCLA. In my nearly two years here, I have been amazed by the dedication, ingenuity and professionalism of our faculty and staff. Students often tell me how well they are served both in and out of the classroom. Our faculty consistently win prestigious awards, and our staff likewise deserve special recognition. Our hospital personnel gleam with pride over the seamless move to the new hospital and the high level of patient satisfaction. Our students are impressive in every dimension. Many of our undergraduates represent the first generation in their families to attend college. Bruin athletic teams have won more NCAA titles than those at any other institution.
UCLA clearly is no ordinary place. It is one of the finest institutions of higher education in the world, impacting millions of people through education, research and outreach. Together, we must and we will keep UCLA extraordinary. I deeply appreciate the part each of you is playing as we navigate our way through this unprecedented crisis.