More than two-thirds of the additional money to be sought in Sacramento represents a restoration of previous state budget cuts enacted in the past two fiscal years. The Regents acted at the recommendation of President Mark G. Yudof, who said the budget "is designed to provide access, maintain quality and stabilize the fiscal health of the university."
The fee increases will be enacted in two stages: a mid-year fee increase for 2009-10, and fee increases for the 2010-11 academic year.
For California residents, the new fee levels include a mid-year fee increase in January 2010 of $585 or 15 percent for undergraduates and graduate professional degree students. The increase will be $111 or 2.6 percent for graduate academic degree students. For the 2010-11 academic year, fees will rise again by $1,334 or 15 percent for both resident undergraduates and graduate students starting in summer 2010.
The Regents also approved increases in professional degree fees for 2010-11 that range from $280 to $5,696. More information at www.universityofcalifornia.edu/regents/regmeet/nov09/f2.pdf.
As has been past practice, a third of the revenue from the fee increases will be set aside to provide need-based financial aid for undergraduates and professional school students, while one half will be set aside to help graduate academic students.
The Regents also approved an expansion of the Blue and Gold Opportunity Plan to ensure that qualified California undergraduates with financial need and family incomes of $70,000 or below will have all systemwide fees covered.
Yudof said it was important to view the increases in the context of the overall budget plan and the ongoing financial downturn that has all but paralyzed the state budget process.
"We can no longer tolerate fiscal uncertainty and continual cutting as we wait for Sacramento to navigate through this crisis," he said. "We will keep working hard with state political leaders to restore the university's funding to an appropriate level. In the meantime, however, we must act now to shore up our own finances if we are to preserve the quality and ensure the access that California expects from the world's premier public research university system.
"I know this is a painful day for university students and their families, but as I stand here today I can assure you this is our one best shot at preventing this recession from pulling down a great system toward mediocrity. In the long term, that would not be good for the students of today or tomorrow. And it would be devastating for California as a whole."
In presenting the budget plan, Yudof traced a long and steady pattern of state disinvestment in the university, a slide which began when many of UC's current students were not yet in kindergarten. As a result, he said, UC now receives from the state half as much in support for each student as it did in 1990.
Yudof said revenue from higher fees will allow UC campuses "to restore cancelled courses that students may need to graduate on time, along with some vital student services, such as more regular library hours. We will also use this revenue to hire more faculty, and to begin to address the issue of larger class sizes."
Taken together, the 2009-10 mid-year fee increase and the 2010-11 increases will generate approximately $505 million, of which $175 million will be set aside for financial aid.
That revenue will address only a portion of UC's budget shortfall, which was created by unprecedented state budget cuts of $814 million in 2008-09 and $637 million in 2009-10. In addition, UC campuses face $368 million in mandatory costs that the state failed to fund in the last two years, and an additional $218 million in mandatory costs for 2010-11. These costs are a result of a variety of factors — enrollments that the state has left unfunded, inflation, rising utility costs, health benefit increases and union pay raises required by collective bargaining agreements.
Beyond fee increases, a variety of other measures have been taken to balance the UC budget, including a one-year emergency furlough/salary reductions plan for faculty and staff that took effect Sept. 1 and is expected to generate $184 million in savings; a systemwide salary freeze for members of the senior management group that has been in place for the past two years; continued downsizing and restructuring of UC Office of the President that, so far, has yielded more than $60 million in savings; as well as debt restructuring, curtailment of freshmen enrollment, and other campuswide initiatives such as energy savings and centralized procurement strategies.
In addition to these systemwide actions, campuses are instituting a wide variety of cost-saving measures, including consolidation and elimination of programs, hiring reductions — despite continuing increases in enrollment — layoffs and significant curtailment of travel and other purchases.
Despite these actions, the severity of the state budget cuts and the rapidity with which UC campuses have been forced to absorb them threaten the basic quality of the education being provided to UC's students.
For example, faculty hiring has slowed dramatically and is not keeping up with enrollment demand; course sections have been eliminated; hours of service are being shortened for many programs of importance to students; staff positions are being eliminated and vacancies frozen.
Specifically, campuses report they are in the process of reducing instructional budgets by $139 million, laying off 1,900 employees, eliminating 3,800 positions and deferring hiring of nearly 1,600 positions, most of them faculty.
"This is not a sustainable pattern going forward," Yudof said. "We and all those who support the UC mission must advocate relentlessly in Sacramento for increased state funding. This funding is critical if the university is to continue serving Californians with superior educational, research and medical facilities."
Yudof said he recognized the fiscal challenges the state government still faces, given a deficit already projected to reach $7 billion to $8 billion for 2010-11, but he felt compelled to submit a UC budget request that truly reflects the needs and priorities of the university.
Accordingly, UC's budget plan for 2010-11 seeks an increase of $913 million in state general funds that includes:
- Unfunded enrollments (14,000) — $155.8 million
For the last two years, 2008-09 and 2009-10, the state has not provided funding for enrollment growth at UC, even as demand for access has grown. As a result, UC is currently overenrolled by approximately 14,000 students for whom it receives no state funding. This request asks the state to provide funding for those students to ensure timely access to classes, to improve the student-to-faculty contact and to re-establish the breadth and depth of UC's course offerings.
As part of the request, the Regents' Committee on Finance approved a plan to further curtail California freshman enrollment if funding for UC's 14,000 unfunded students is not included in the governor's 2010-11 budget proposal to be released in January. In that case, the university would curtail California freshman enrollments by an additional 2,300 students (for a two-year total of 4,600 students) and increase enrollment of community college transfer students by 250 in 2010-11.
- Restoration of one-time cuts — $305 million; re-investment in academic excellence — $332.1 million
The revenue from the restoration of this funding would be used to reinvest in academic excellence by restoring programs to previous levels, including hiring more faculty, restoring course offerings, reinstituting service hours, such as those for libraries and student services, and restoring instructional and academic support.
- State obligation to UCRP and retiree health benefits — $109.8 million
The university is requesting funding of the state's obligations to UC retirees, consistent with the state's treatment of state and CSU employees.
- Health sciences initiatives — $10.4 million
The university is requesting $10 million in funding to help support a new medical school at the Riverside campus. This funding would provide necessary startup and core academic support for the state's first new public medical school in over 30 years. In addition, the university is requesting $444,000 for the first year of enrollments at the new nursing school at the Davis campus.
Financial aid to mitigate impact of higher fees
- Expansion of the Blue and Gold Opportunity Plan
The Regents also approved an expansion of the Blue and Gold Opportunity Plan. In 2010-11 the Blue and Gold Opportunity Plan will be expanded to include eligible resident undergraduates with family incomes up to $70,000. Under the higher income ceiling, California residents with financial need and family incomes of $70,000 or below are assured that they will receive gift assistance that will, at a minimum, cover all their mandatory systemwide fees.
With the expansion, the plan is expected to provide full fee coverage to an additional 800 undergraduates who were not previously eligible, and UC projects that overall 52,000 undergraduates will be covered under the Blue and Gold Opportunity Plan in 2010-11. The plan's expansion is anticipated to cost $2.7 million; UC is currently examining options for funding the added costs. The plan is expected not only to benefit more UC students, but to encourage a greater number of low-income Californians to apply to and enroll at UC.
- $1 billion student fundraising effort
The university has also announced Project You Can, an ambitious effort in which all 10 UC campuses have committed to raise $1 billion in the aggregate over the next four years from private sources. This effort would double the amount of private support the system has raised for scholarships, fellowships and other gift aid in the previous five years. The effort recognizes the need to focus fundraising efforts more sharply on student support.
- Return-to-aid and other assistance
UC intends to maintain its commitment to assisting financially needy low- and middle-income students through its strong institutional financial aid program and the Blue and Gold Opportunity Plan. Furthermore, UC will work with the state to ensure that the Cal Grant Program continues to cover mandatory systemwide fees for eligible UC students.
As UC has historically done, 33 percent of the revenue generated from the approved fee increases will be set aside to mitigate the impact of higher fees and other costs on undergraduate students with financial need. Similarly, 50 and 33 percent of revenue generated by the increases will be set aside to provide financial aid for graduate academic students and professional school students, respectively.
These amounts, combined with 2009-10 increases in Cal Grants, federal Pell Grants and federal tuition tax credits, will provide enough additional resources to cover the full amount of the fee increases already approved for 2009-10, along with the 2009-10 mid-year increase for three-quarters of students with family incomes below $180,000.
For 2010-11, these new resources, along with further expected increases in UC grants and Cal Grants should cover the additional 2010-11 fee increase for the 45 percent of students who receive these awards. Students with family incomes up to $70,000 per year typically qualify for Cal Grants and UC grants.
Other students with financial need will have half of the 2010-11 fee increase covered if their parents' income falls below $120,000 — an increase in the cap from $100,000 in prior years. Middle-income families will also continue to benefit from federal higher education tax credits in 2010.