I want to take the opportunity today to share the proposal I'll be putting before the Board of Regents next week.

Twenty-five thousand people viewed my prior video, and we've heard from 3,000 who have written letters - some of them signed by faculty members and staff members. And I genuinely appreciate your input, and I think you can see you've had an effect on the ultimate plan.

Some of the primary themes are that the staff and faculty would get additional time off as a result of the program. There's flexibility on when that time is to be taken, and the holidays will not go unpaid. We're spreading out the reductions over the year so they do not congregate at one point of the year or the other. It's pretty even over the 12 months. I'm recommending that we protect the pension benefits at the level of the pre-furlough salaries.

There's a graduated approach, which many of you recommended. That is, at the lower salary levels only 4 percent will be taken; at the higher salary levels, it will be about 10 percent. There will be added flexibility for the medical centers and for the hospitals and in some cases, for different employee groups. I've tried to take all of your concerns to heart although obviously there was a diversity of views, and I could not accede to all of them.

I've called it a hybrid, flexible furlough approach. It's a hybrid in the sense that the deduction will be made each month, regardless of whether the furloughs are taken that month, but by the end of the year, each person will be expected to have taken the requisite number of furlough days.

There are seven graduated tiers. The bottom tier is 11 furlough days for those below $40,000 or roughly a 4 percent pay cut. For those making over $240,000 a year, there will be 26 furlough days, or roughly a 10 percent pay cut. For senior management, the number of furlough days will be limited to 10.

I have, as I said, indicated strongly to the board that we should protect the pension benefits, and I'm very hopeful, at least for this coming year, that that will occur. We're a very complex institution - it's not been easy to come up with a plan. We do many different things from treating patients to running hospitals to running auxiliary enterprises to the more traditional academic pursuits of undergraduate and graduate education. And we've tried to provide some flexibility in all of that.

We did not consider straight pay cuts because it appears clear that neither faculty nor staff favored that. They preferred that there be some reduction in the work effort. But some special elements to the plan - we have different tables for the faculty on nine month and 12 month salaries.

The Lawrence Berkeley Lab will not be included in the furlough provisions. Those who are 100 percent on research contracts will not be affected by the furloughs, and we're still investigating how to handle situations where a staff member or faculty member is partly on a state budget and partly on federal research dollars.

We've exempted certain student employees, like graduate students, we've accommodated the START program, so that the START employees are not hit twice and, of course, we're going to undertake a course to bargain with the bargaining representatives with regard to furloughs. We cannot impose them without some sort of agreement between the parties.

The result is that we're saving $184 million in general funds and combined with the hope for savings in restructuring our debt, combined with the $200 million in previously approved fee increases for students, we're a long ways to eliminating this $800 million plus deficit. But I have to be honest. Other things are going to occur.

The campuses have to absorb an additional $300 million or so out of their local budgets, and we see all sorts of things happening. We see Berkeley, for example, reducing its faculty searches from 100 down to 10; we see Irvine, which has halted admissions to its EDD program; UCLA reducing some state-funded research centers by 50 percent and unfortunately, this list is going to go on and on.

This is very painful, and there's no single silver bullet. You need a multiple approach to deal with what is essentially a 20 percent reduction in state funding in a single year. It's probably little comfort to anyone out there, but it is true that the state government's going through that. There's a two-day a month mandatory furlough; municipalities are going through it, private corporations - so, we're not alone and I hope people understand that.

After many years of teaching constitutional law, I'm firmly of the opinion that there's no perfect justice out there. There are no perfect choices. We deal with an imperfect world and we do the best that we can. And we tried as best we could to be fair, to be responsive to what we're hearing from faculty and staff and I hope if you're not totally enthusiastic about all the responses that we've made, you'll at least understand that these were very difficult choices, and I think it's very important that we stand together on this.

We'll get through this period. The University of California will recover. It's the greatest university system in the world and in my judgment, will continue to be so in the decades ahead. So, thank you very much.