Gov. Arnold Schwarzenegger has proposed a 2008-09 state budget that includes across-the-board cuts in state spending, including at UC, to close a $14.5 billion state budget deficit. At their January meeting, members of the UC Board of Regents expressed dismay at the magnitude of the cuts and their potential impact on students, employees and California's economic future.

The governor's proposal would increase funding under his "compact" with UC but then apply a cut of $332 million, or 10 percent. The true challenge facing UC, however, is $417 million – the difference between the governor's plan and the Regents' budget request for 2008-09.

"This budget proposal will have serious impacts on our ability to deliver on our mission for our students and for the people of California," said UC President Robert Dynes. "State funding for the university is not an expenditure but an investment – an investment that produces real returns through an educated work force, a dynamic economy, job creation and new tax revenue."

Regents did not make any budget or fee decisions at their January meeting but urged aggressive efforts to educate the public and elected leaders about the economic value to California of its investment in public higher education.

At the meeting, UC Executive Vice President Katie Lapp walked Regents through a variety of options for closing the budget gap under the governor's proposal. Closing a $417 million gap could potentially require all of the following (or alternatives that would save equivalent dollars):

• No enrollment growth, affecting up to 5,000 student applicants;
• A student fee increase of 10 percent or more, up from the 7 percent already budgeted;
• Elimination of most 2008-09 increases for employee salaries and health benefit costs (subject to collective bargaining where applicable);
• A halt to a multiyear plan to rebuild the competitiveness of faculty salaries;
• A halt to a multiyear plan to improve support for graduate students;
• A halt to a multiyear plan to rebuild support for instruction and infrastructure improvements;
• No funding for inflationary cost hikes, meaning all programs absorb those costs;
• $68 million in administrative savings, up from the $28 million in the Regents' budget.

There could be other, or deeper, impacts than those listed above. These simply provide an illustration of one way of closing the budget gap, Lapp told the Regents.

Regents will discuss these and other possible budget tradeoffs at future meetings. A task force of campus and systemwide leaders has begun meeting regularly to discuss budget options, and consultations will be occurring with other groups in the university community as well.

More in formation about the governor's proposal can be found at www.universityofcalifornia.edu/news/article/17131. Executive Vice President Lapp's presentation to the Board of Regents is available at www.universityofcalifornia.edu/regents/regmeet/jan08/f7pp.pdf.