UNIVERSITY OF CALIFORNIA BUDGET
PROBLEMS
The information below was written in November 2009.
Two years later and there are still further cuts.
From http://www.universityofcalifornia.edu/news/article/25880
direct state support to the university has fallen over four years by
27% in nominal terms and even more in real terms.
"Gov. Brown had proposed a funding reduction of $500 million in
January, but the budget plan he signed Thursday (June 30) cut UC's
funding by $650 million for 2011-12, decreasing state support for the
university from a high of $3.25 billion in 2007-08 to $2.37 billion.
The total reduction could rise to $750 million if projected state
revenues do not materialize."
The older material follows ....
What article(s) best explains the current budgetary challenges for the
University of California?
Why is U.C. facing a budgetary
challenge? From http://www.universityofcalifornia.edu/budget/?page_id=126
- The UC annual budget is $19 billion -but much of that is
restricted and comes from hospital revenues from treating patients,
research grants and contracts.
- The UC core operating budget is actually $5.3 billion.
- The core budget pays for teaching and research not supported by
research grants (all faculty are expected to do substantial research
even in disciplines where there are few research grants given).
- This core budget is funded by direct state appropriation, student
fees, and overhead on research grants.
- The state appropriation fell from orignal plan of $3.25 biilion
in 2008-09 to $2.61 billion in 2009-10.
- IN ONE YEAR THERE HAS BEEN A 20%
REDUCTION IN THE STATE APPROPRIATION TO UC AND A 12% REDUCTION IN UC
CORE FUNDS.
How has U.C. responded?
- One year pay cuts from Oct 2009 to Sept 2010 averaging 8% for
faculty (range across all staff is 4% to 105).
- Dramatic increase in student fees - see Regents
Raise
College Tuition in California by 32 Percent.
- Layoffs of staff and almost compete cessation of faculty
hiring.
- Increased class sizes and fewer classes.
Why has the state squeezed U.C.?
- In the short-term because revenues fell dramatically: STATE
GOVERNMENT GENERAL FUND REVENUE FELL BY 18% IN ONE YEAR from 2007-08 to
2008-09.
- From Legislative
Analysts
Office
general funds revenue (unadjusted for inflation or population growth)
was $71 billion in 2000-01, $72b in 01-02, $80b in 02-03, $77b in
03-04, $82b in 04-05, $93b in 05-06, $95b in 06-07, $102b in 07-08,
$84b in 08-09.
- In the long-run the state government has continually reduced its
support as it has favored spending money on other things.
- The state’s funding for per-student education at UC has fallen
from 78 percent of the total cost of education in 1990 to 58 percent
today - see UC
Commission on the Future.
Are UC employees overpaid?
What is the future for UC?
- The state budget situation is so grim - see The
2010-11
Budget: California's Fiscal Outlook - that this time around
there is no possible bail out of UC by the state.
- To attain its current quality the university needs to bring in
money from other sources - student fees and donations. Or it can let
quality decline.
- The university will also need to reduce its expenses, primarily
through cutting administrative expenses. One possibility is Universities
Turn
to Consultants to Trim Budget
- On top of other problems the university also has an enormous
unfunded pension liability and retiree health expense liability that it
needs to meet. By 2013 $19 billion for retiree health care and $18
billion for pension - see Retirement
contribution
plan found lacking and Powerpoint slides.
The
pension problems will require an increase in the combined
employer-employee contribution to pension of between 10 percent and 18
percent of salary.
A. Colin Cameron / University of California - Davis / http://www.econ.ucdavis.edu/faculty/cameron