Faced with a $437 million state budget shortfall, the University of California Board of Regents will consider a $662 undergraduate fee increase at its May 7 meeting.

Despite the need for UC to increase fees to maintain academic quality, federal stimulus funding and increases in the education tax credit will offset the higher fees for many students.

"The average Pell Grant is going up almost as much as our fee increase," said UC President Mark Yudof in announcing the proposed 9. 3 percent increase to reporters at a briefing today (April 29). "More than 81 percent of the families below $180,000 in household income won't pay the increase as a result of the federal tax credit and the increased Pell Grants."

The proposed increase would generate an estimated $152 million in new revenue. (Details of the fee increase are available at www.universityofcalifornia.edu/news/studentfees09-10.pdf.) Approximately 33 percent of the increase, or $54.2 million, will be set aside for financial aid.
 
The Blue and Gold Opportunity Plan Yudof developed and Regents approved in February will cover the fees for eligible UC students with family incomes under $60,000. Federal economic stimulus funds will cover the estimated $3 million cost of the plan in 2009-10.

The proposed fee increase is just one of the measures UC is undertaking to cope with dwindling state support and to increase operational efficiencies.

Also at the May 5 to 7 Regents' meeting, the first UC Accountability Report will be introduced. The report, which Yudof instituted shortly after arriving at UC in June 2008, is the university's first attempt to comprehensively assess its progress in meeting key research and teaching goals. The inaugural report measures 131 performance indicators in categories such as graduation rates, accessibility for low-income students and student diversity.

"The numbers allow us to make decisions about where we're coming up short," said Yudof. "It's a good management tool."

The 2009 Accountability Report will be available online so anyone who wants to check on the university's performance will have access to the data.

The accountability initiative is part of Yudof's efforts to improve the university's systemwide financial systems and to achieve a more cost-efficient operation. As part of the budget strategy, senior management salaries have been frozen and bonuses eliminated. At the Office of the President, downsizing and restructuring have reduced the work force by more than 600 and saved more than $60 million by eliminating positions and transferring some functions to campuses where they can be performed more cost-effectively. Campuses have cut back on hiring new professors and are cutting programs. Yudof is exploring the possibility of instituting employee furloughs and pay cuts. Still the university faces some excruciating decisions, he said, to deal with the decline in state funding.

"We submitted a budget that had no fee increase, but the budget the Legislature sent back to us assumed a 9.3 percent fee increase," Yudof said.

About half of the two-year $437 million shortfall the university is facing comes from actual cuts the Legislature has made in UC funding – $98 million in the 2008-09 fiscal year and $115 million in 2009-10. The rest of the shortfall comes from increases in employee health benefits, utilities and other inflationary costs and in unfunded enrollments. The university has 11,000 enrolled students for which it receives no state funding.

More information on the UC budget, the 2009 Accountability Report, the 2008 Senior Compensation Report, which will be introduced at the Regents May meeting, and the proposed student fee increase are available at:

Accountability
www.universityofcalifornia.edu/news/accountability2009.pdf

Senior Executive Compensation
www.universityofcalifornia.edu/news/execcomp2008.pdf

Keeping UC Strong for California
www.universityofcalifornia.edu/news/keepucstrong.pdf

Budget Myths & Facts
www.universityofcalifornia.edu/news/budgetmyths.pdf

Student Fees 2009-10
www.universityofcalifornia.edu/news/studentfees09-10.pdf

Budget Charts
www.universityofcalifornia.edu/news/budgetcharts.pdf