What does the state's fiscal crisis mean for the University of California? Patrick Lenz, UC’s vice president for budget, answers questions about what is happening with the budget and how it will impact the university.
 
Q. How would Gov. Arnold Schwarzenegger’s proposed 2009-10 state budget affect UC?

A. The governor’s 2009-10 state budget is not able to support UC’s compact funding to provide the money we need for enrollment growth of 2.5 percent or 5,400 students, compensation and health benefits (an increase of 4 percent in UC’s base budget), increasing utility costs, or core academic support such as instructional technology and equipment, library resources and building maintenance. The budget does provide the university with $20 million for UC to restart the retirement contributions; $2.5 million for UC to increase the number of MD and nursing students; and $11.3 million for retiree health benefits.

Q. UC Regents just approved plans to trim enrollment and freeze senior management pay. Why were those steps necessary and how much will they help?
 
A. The Regents’ decision to curtail enrollment was based on the lack of enrollment funding from the state in either the 2008-09 or the 2009-10 state budget. UC is currently 11,000 students over our state funded enrollment target at a cost of $121.8 million to the campuses. Even with the Regents’ approval of UC President Mark Yudof's enrollment recommendation, UC enrollment will still grow by approximately 700 students. That includes an increase by 500 students in the number of community college transfers we will enroll.  Regarding senior management pay, it is important for everyone to realize that all segments of the university community must make sacrifices to preserve the quality of our educational offerings. Freezing the salaries of UC's highest-paid employees is just one of the cost-saving steps we're taking. Read more about pay freeze and enrollment.

Q.What additional actions are being considered to address UC’s budget shortfall?
 
A. At this point, we are waiting for the governor and the Legislature to conclude their actions as part of the special session on the state budget before making any additional recommendations to address UC's budget shortfall. The Regents in the coming months will be considering increasing student fees, and President Yudof has been meeting with each campus chancellor for purposes of understanding their decision-making process and recommendations to reduce campus spending in the 2008-09 and 2009-10 fiscal years.

Q. What is happening with UC capital funding?
 
A. We are advising UC campuses of the State Treasurer’s Pooled Money Investment Board decision last December to not provide state funding to any state capital construction projects. For UC, this means over $1.1 billion in projects will be impacted by this decision. The Office of the President is working diligently with the board and the Department of Finance to get some claims paid and identify critical projects in the UC that will need state funds or face other costs to shut down the project.  We are also working with our campuses to encourage them to use non-state resources (gifts and other private donations) to continue construction on a given project until the state has resolved the fiscal crisis or the board amends or reverses its previous decision to not fund state capital projects.

Q. What’s next in the budget process?
 
A. The next step in the state budget process is really based on the decisions of the governor and the Legislature in the special session. We are closely monitoring recommendations in the president's economic stimulus package to better understand the operational support and capital facilities funding that would benefit UC.