Black Monday for Univ. of California?

By John Conway | May 31, 2009 12:07 pm

All the signs are pointing to a major announcement by the University of California, possibly as early as tomorrow, in response to the large cuts in state funding in its next fiscal year, which begins July 1. The UC total budget of $19 billion includes core state funding which will be reduced from $3.3 to $2.8 billion, representing a 10% cut in state funding, which was 17% of the total university funding this year. On the table are furloughs, pay cuts, and staff reductions, some mix of which now seems inevitable.

The UC system has ten campuses, centrally administered from the UC Office of the President in Oakland. Earlier this spring the UCOP paved the way for legal authority to enact emergency measures in the face of fiscal emergencies such as this. Every department in the the entire system has been struggling to meet large budget reductions already, but the demise of the state ballot Propositions 1a and 1b meant that the reductions for the 2009/10 year were greater than hoped.

Then, on Friday, UC president Mark Yudof announced a 5% pay cut for senior management, down to the level of Vice Chancellors at each campus. It therefore seems rather likely that a general 5% reduction in some form is in the offing. The 23-campus California State University system faces a similar situation.

Overall, this is not that bad when you consider the fact that 235,000 California state workers will face a 14% pay reduction, and the the US economy as a whole is still shedding well over half a million jobs per month. But then, as the Chronicle of Higher Education asks, will higher education be the next bubble to burst?

  • Luis

    Ah, yes, the same University of California that recently hired three high-level administrators to the tune of ca. $400K a year plus various perks each. Those guys better start justifying their salaries real soon.

    Don’t get me wrong: I did my postdoc year at UC Santa Cruz, and I don’t think I could have picked a better place in the whole world. I would even be willing to leave my permanent position in Germany to return to UC (partly also because my fiancée still being there), even though at this particular point in time it might be a bad move in terms of job stability. Unfortunately, with the upcoming hiring freeze, I’m not sure I’ll have many chances.

  • Aaron

    (3.3 – 2.8) / 3.3 * 100 = 15%

  • Alice

    Some more corrections:

    — The California State University has 23 campuses (not 110) and about 450,000 students (although that enrollment number is rapidly being cut back).

    — Props 1A and 1B would not have had any bearing on the UC’s or CSU’s 2009/10 budgets. 1A would have extended a sales tax for the state’s general that is already in place. The extension would have begun in 2011, so no impact on revenue before then. It contained no guarantee as to how the general fund money beginning in 2011 would be spent. Between now and then the state legislature and governor could still adopt new revenue measures, if they wish. 1B only addressed funding for K-14, ie primary through community colleges. UC and CSU, which are four-year systems, would not have been helped. But the long-term spending cap that was part of 1A would have pegged all future UC and CSU public funding to their worst budget years. This would have been written into the state constitution, thereby establishing a funding limit on access to four-year universities long after the budget crisis has passed.

    — The only propositions on the ballot that would have added revenue to the state’s general fund (money that could have gone to the UC and CSU in 2009/10 if the governor and legislature had deemed to use it that way) would have come from Props 1C, 1D and 1E. These would have “found” money by selling off the state lottery (which was created to fund public education), and shifting money from health care for the mentally ill, sick children and indigent seniors. Voters rejected these measures.

  • Zach

    Not that it is nearly as large news, but the system in Nevada, our education budget is getting slashed 49%.

  • John

    Aaron, you are right that the contribution to the UC budget from the state is declining by 15%, but the shortfall is 5% of the total UC budget.

  • John

    Alice, my bad – I have corrected the post. There are 110 community colleges in California.

    As for Prop 1A, its failure did in fact it did have some effect on the UC budget, via the complicated budget deal reached in February, increasing the state reduction by $85 million. I did not vote for 1A, despite that fact. I only mentioned 1B because it had to do with education too, but you are quite correct that it was about K-14.

    The real reform that needs to happen in California is that we need to change from the present 2/3 majority required for budget actions to a simple majority. But, that’s just my opinion…

    Zach: ouch.

    Luis: yes, indeed. These folks are getting paid a lot… But consider that the new chancellor at UCSF, Susan Desmond-Hellman, took an enormous hit in salary. At Genentech, where she was before, she made $725,666 plus $1.3 million incentive (from patents?) and also stock. At UCSF she will take $450,000. Obviously she is motivated by more than money.

    Clearly it’s a lot of money, but private industry obviously pays a lot more for the top brass. Can it be justified? Could you find a $2000,000 chancellor who would do just as good a job and maintain the strength of the university through extended tough times like these? Maybe so, I have no idea. This question is above my pay scale…

  • Luis

    John: I just think that it is obscene to see $450K salaries at a time when UC grad students, such as my fiancée, are getting a large chunk of their health insurance cut out due to budget restrictions. A couple (married) of grad students we know had to move out of family student housing at UCSC because their combined stipends weren’t enough to pay for the rent there (!). This is absolutely insane. Maybe UC really needs an administrator like that, but it absolutely needs grads students to employ as cheap labour. They should get more respect than that.

    Obama’s salary is $400K a year. Schwarzenegger makes $200K. Do we really want to say that Desmond-Hellman deserves a salary higher than the president of the US’s, and over twice a high as the governor of the state she’s a public servant of?

  • Ellipsis

    (3.3 – 2.8) / 19. * 100 = 2.6%

    Hope you still have TAs left to do calculations for your classes 😉 However, perhaps 9 out of the 19 goes to fixed legal entitlement-type expenses like pensions, bond repayments, utilities, etc.

  • David Nataf

    I’m surprised that the UC system manages to get ~16/19 = ~85% of its funding from non- state government sources. I thought tuition rates were very subsidized for California residents.

  • John

    Ellipsis: jeez…should have used my trusty HP15. Post clarified. Here is a good link:

  • Jennifer West

    Luis, thanks for the numbers and the link – the article says that the salaries mentioned are double digit percent increases over the previous administrators – I’ve no idea what the UC people responsible for this were thinking. Disgusting.

  • incognegro

    Ah the principles of conservative ideology at work in the actual real world that real people live in.

    Cut government and taxes and, BIG SURPRISE!!! People come to the sudden realization that all those big gubment expenses that were demonized by FOX News and other idiots on the right are actually needed!

    Socialist bastards!

  • Krist

    What happened to all that ONE TRILLION dollars in stimulus spending? What happened to all the authors proclaiming this is a great day for science and academia?
    Obama only mitigates the crisis. This is the opposite of change.

  • Ben

    David Nataf,

    Many big university systems are now getting a substantial fraction of their budgets from non-state sources. There have been articles about this semi-privatization in the NY Times, the Chronicle of Higher Education, and other sources. This is the evolution of decades of cutting back by state legislatures.

    Tuition typically only covers a relatively small fraction of the cost of a public university undergrad education. Also, research and other external funding contributes a significant amount to the overall budget.

  • Lab Lemming

    According to the linked article, University costs have gone up by over 400% in the last 25 years.

    If this is the case, then one of the following should hold:
    1. Y’all have seen a 400% pay rise, so can take a 15% cut in stride.
    2. You are only teaching a quarter of the number of students you used to teach.
    3. The money is going somewhere else, and cuts can be made there.

  • John

    Ben, not only does external, federal support for research help fund the university, the state of California takes 22% on our overhead.

    The way it works is that we propose a budget, with support for personnel, students, travel, equipment, etc, and then the university charges overhead on top of that. OVerhead rates vary a lot at different universities, but ours, since we do our research off campus, is a relatively modest 26%. I’ve seen overhead rates can as high as 52% elsewhere.

    So take a grant for $1 million. The university takes 26% of that and splits it up into various funds, including sending it to the state as I say above, paying for power bills, capital projects, staff and faculty salaries, etc.

    From the university perspective, the sources of funding are tuition and fees, overhead on research grants (federal, state, and private), “core” state funds, and private donations. The large “state” research universities tend to get only a small fraction of funding from the state, but I wouldn’t call it privatization exactly.

    The University of California is a fantastic bargain for students, with annual tuition still less than $10k (for state residents). Compare that with private universities…

    Krist: the wheels of government turn slowly, and stimulus funds are just now starting to flow in academia. For example ,just last week I spent a good deal of time preparing a proposal for renovation of our 40-year-old lab space and new electronics equipment. This was for the Department of Energy Office of Science, who made a call for such proposals last month, due at the end of this week. I am not sure when they’ll decide which ones to fund, or when the money will actually come.

    In the mean time, we got a supplement to our grant for calendar year 2009 for supporting two more people (one postdoc, one grad student) and for travel. So these funds will make it into the economy rapidly, and yes, this is great for our scientific work!

    Lastly I will mention that the state of California used $85 billion in federal stimulus funds on an array of things, includeing education, but mainly to backfill the revenue lost due to the sagging economy. As Arnold points out, he isn’t allowed to print money, only the Feds can do that…

  • Andreas Karch

    Dear Lab Lemming,

    the article linked does not say that costs went up by 400%, but rather tuition went up by 400%. At least at the state universities (or at least at the University of Washington where I work and have some idea what is going on) tuition has been going up simply because the state government has been pulling out support. This year has just been a very bad one in a long series of bad ones. Here at UW this year is the first year that money from the state is only our 4th largest source of income (number 1 is federal grants, number 2 endowment, number 3 is now tuition – used to be number 4). Rising tuition doesn’t have to mean that the costs are exploding. But the burden of paying for higher education seems to be no longer something the public is willing to pay for and instead asks students to pay for themselves.


  • Librarian

    This morning UC staff received the email below.
    May 29, 2009


    I write to share with you the attached memorandum from President Yudof to Chancellors and Executive Vice Chancellors outlining a pay reduction they will be instituting for themselves and other UC senior managers.

    Next week, we expect to have more information regarding other courses of action that may be taken to deal with the latest state budget cuts. You should know that your leaders at both the systemwide and campus level will work hard and thoughtfully to guide UC through these very difficult circumstances. As fellow UC employees, we want to be sure to share clear, real time information with you as soon as it is available. Additional information will be sent out as we work though these issues and develop solutions.


    Dwaine B. Duckett
    Vice President
    UC Systemwide Human Resources

  • Rich

    You mean, Red Monday, right? If you’re going to refer to finances in relation to days of the week you should stick with the standards. If you’re trying to set a new standard, I think a lot of marketing people are going to be calling you in reference to “Black Friday.”

  • John

    Monday, June 1, 2009
    University of California Office of the President (510) 987-9200

    UC president describes stark consequences of proposed budget cuts

    Testifying before the state’s Joint Legislative Conference Committee on Budget, UC President Mark Yudof today (June 1) described the devastating consequences of the proposed state budget cuts for the university, its students and the services it provides to the state.

    Yudof said the reduction in the state’s General Fund commitment, which totals almost $800 million for the 2008-09 and 2009-10 fiscal years, would place in jeopardy its historic commitment to provide access to all eligible high school graduates and would force UC to rely more heavily on higher student fees.

    “We recognize the need to be part of the solution to solve the state’s fiscal crisis,” Yudof said in remarks prepared in advance of his testimony. “But cuts of the magnitude proposed in Gov. Arnold Schwarzenegger’s budget proposal will require us to consider extremely painful options. These include the possibility of further reducing first-time freshman admissions for 2010-11, revisiting the fee increase levels for 2009-10 and implementing furloughs, more layoffs and salary reductions for our employees.”

    Yudof said the proposal to eliminate the Cal Grant program would be particularly devastating to low- and middle-income students attending UC. Eliminating new awards in 2009-10 and failing to cover the 2009-10 fee increase for renewal awards would result in a loss of about $110 million in aid for UC undergraduates next year alone.

    Given the severity of this proposal, and the reliance students already have placed on promises of student aid in accepting admission from UC, Yudof told the committee he believes this action requires more notice to students and their families and urged committee members to reject it for 2009-10.

    Yudof stressed that both the campuses and the central office already have taken a series of actions to deal with the shortfall in state funding. The Office of the President has downsized by $67 million, or nearly 19 percent, and has reduced the number of employees by 628, or 30 percent of its work force. Meanwhile, the campuses have achieved a range of budget cuts, including reducing or freezing hiring, curtailing faculty recruitment, and, in some cases, laying off staff.

    In addition, Yudof called the proposed elimination of $31.3 million in funding for UC’s academic preparation programs shortsighted. If a reduction of this magnitude is required, he said, it should be made as an unallocated cut rather than targeted at valuable programs that help educationally disadvantaged students across the state prepare for college.

    Addressing the issue of student access, he warned that without funding for enrollment growth, and given the magnitude of the proposed cuts, UC would be unable to hire the faculty and offer the sections to meet the overwhelming demand for access by qualified applicants. He said the university and the Regents would have to consider further reductions in freshman enrollments for the entering class of 2010-11 to bring them more closely into alignment with UC’s resources.

    Finally, the nearly $800 million reduction in state funding for UC for the 2008-09 and 2009-10 fiscal years would require the university to revisit the fee increases approved for the 2009-10 academic year, Yudof said.

    “The long-term solution for our economy is to heighten investment in UC, the CSU and the Community Colleges,” Yudof said. “In the near term, unfortunately, the utter severity of the cuts proposed leaves us only difficult options to consider.

    “But the Regents and I will have to act in order to ensure that UC can continue to offer the high-caliber education, research and patient care that Californians expect of us. Mediocrity is not an option.”

  • spyder

    Well, let’s also not discount the proposed elimination of CALGrants which have helped fund financial loans for UC and CSU students. Cut salaries, whole fields, and staff; raise tuition and fees; and lose 15% to 28% of your student body–these aren’t the sort of changes that serve to help make the US a place for “high-caliber education, research, and patient care.”

  • Matt

    I am a postdoc at a public university in North Carolina, and they have already cut all state employee’s salaries including teachers, professors, etc. and enforced a furlough with it. Stunningly, my pay was cut even though I am funded by the federal government and not the state…that’s what we get when non-academics control academic money!

  • UC Postdoc

    Can someone explain to me why the UC would cut the pay of an NIH funded post-doc? What is the justification? It seriously makes me want to work in another lab at a non-UC school. That might be professional suicide, but I don’t want to work for a system that is completely illogical.

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