SPECIAL EDITION - January 10, 2005

Dear UC Colleague:

Welcome to the new year. As you may know, the Governor has just issued his 2005-06 State budget proposal. I wanted you to know as soon as possible about its provisions for the University of California. For that reason, we have developed this special, abbreviated edition of “Our University.” We will be back next time with the newsletter’s normal format, including systemwide news and responses to the Dynes’ Desk emails I receive.

In a year in which the State of California continues to face a very difficult fiscal situation, and after years of cuts to the University of California, the Governor’s budget for 2005-06 proposes a welcome increase in State funding for the University. The Governor has fulfilled his commitments under his “compact” with the University, providing many of the basic resources we need to begin rebuilding programs, to provide faculty and staff salary increases, to fund student enrollment growth, and to sustain our contributions to California’s economic competitiveness and quality of life. I appreciate the Governor’s support, expressed in this budget, for higher education and its transformative impact on the state.

There are a couple of issues in the Governor’s budget that we will need to work through as the State budget process moves forward this year, including a proposed $17 million reduction in one-time funds that could affect funding for enrollments and academic preparation programs. I am concerned about this proposal and will be working with the Legislature and Governor to demonstrate the importance of this funding and to seek its restoration; you can read about the details below. Overall, however, I believe we have a good foundation for moving forward in our discussions with the Governor and Legislature. It is a testament to the value others place in the work all of you at the University do. Thank you.

Governor releases 2005-06 state budget proposal

After several years of substantial cuts at the University of California, the governor’s 2005-06 state budget proposal offers a $97.5 million (3.6 percent) increase in state general funds for the operations of the UC system. The proposed increase includes funding for student enrollment growth, faculty and staff compensation, and the opening of UC Merced, among other things.

The plan is consistent with UC’s “compact” with Gov. Schwarzenegger, which was aimed at restoring fiscal stability to the University. Over a four-year period ending this year, UC has absorbed a 15 percent cut in state funding while also seeing a 19 percent increase in enrollments.

The governor’s budget will now be reviewed by the Legislature, which will hold hearings and make alternate proposals over the course of the spring. A final state budget traditionally is approved by both the governor and Legislature in the summer.

The University’s press release on the governor’s budget proposal can be found at www.universityofcalifornia.edu/news/2005/jan10.html. Below are the major highlights:

• Enrollments: Funding for enrollment growth of 5,000 full-time-equivalent students in 2005-06, a 2.5 percent increase, consistent with the compact.
  
  
• UC Merced: Continuation of $10 million in ongoing operating funds plus $14 million in one-time money for the new campus opening in fall 2005, along with enrollment funding (part of the above 5,000-student allocation) to enroll 1,000 students in 2005-06.

• Faculty and staff compensation: A 3 percent increase in UC’s base budget.This funding will support a 1.5 percent general salary increase for all eligible employees, funding for faculty and other academic merit programs, 1.5 percent for merit-based increases for eligible staff employees, and additional funds to help cover the cost of increasing employee health benefits and to address market-based and equity issues where newly hired faculty and staff are paid significantly more than current employees with similar experience and skills. These increases are needed because UC faculty salaries are now estimated to be 8-10 percent behind those of comparable institutions, and a similar problem affects UC staff. (The above figures are for purposes of general description. Specific compensation levels are subject to collective bargaining where applicable.)

• Proposed reduction: Withdrawal of $17 million in state support that was provided to UC at the end of the 2004-05 budget process as one-time funding outside the compact. The budget asks UC to take the cut in either enrollments or K-12 academic preparation programs, formerly known as “outreach.” President Dynes expressed his concern about this proposal and said he will work with the governor and Legislature to demonstrate the importance of these programs and seek the restoration of this funding. “Strong academic preparation programs and broad access to a college education are both important to California’s continued leadership in the global economy,” he said.
  
  Student admissions for fall 2005 will not be affected by the proposed $17 million withdrawal, and the University still expects to offer a place next fall to every eligible applicant. If the University’s efforts to restore the $17 million are not successful and enrollments ultimately are affected, there could be an impact on winter and spring admissions.

• Labor research: A reduction of $3.8 million in one-time funds to UC labor research programs. UC will work with the governor and Legislature in an effort to gain restoration of funding for this research.

• Capital improvements: Funding of $305.2 million from a voter-approved general obligation bond measure to expand and upgrade academic facilities to support enrollment growth and to maintain progress on seismic and other life-safety improvements while also addressing essential infrastructure and building renewal needs.

Anticipating the governor’s budget proposal, and acting to give maximum notice to students and their families, the UC Board of Regents set 2005-06 student fee levels at the board’s November meeting. The action included increases of 8 percent ($457) for resident undergraduates and 10 percent ($628) for resident graduate academic students. Details about student fees are available at www.ucop.edu/news/archives/2004/nov18.htm.

In addition to its expenditure proposals, the governor’s budget emphasizes the importance of efforts by California public universities to help bolster the development of high-quality math and science teachers for California’s K-12 schools. For the last several months, UC has been leading an effort, working with its faculty, to develop a plan to increase the number of college students who receive math, science, and engineering bachelor’s degrees and to increase the number of these students who go on to become K-12 math and science teachers. UC will be working to refine its plans and move forward on this effort with the California State University in the coming months as another means of helping California stay competitive in the global economy.

Finally, the governor also has proposed a redesign of the Medi-Cal program, and UC will be analyzing its provisions in the coming days. Currently, Medi-Cal accounts for 22 percent of the patients seen by UC hospitals.

The governor’s budget proposals are online at http://govbud.dof.ca.gov/home.htm.

Update on pension proposal

In his recent State of the State address, Gov. Schwarzenegger indicated his intention to reform state pension plans in the near future by only offering defined contribution retirement plans to state employees hired on or after July 1, 2007. A constitutional amendment to this effect has been introduced in a special legislative session that the governor has called.

Although the constitutional amendment expressly includes the University, UC employees should be very clear that even if the governor’s proposal is passed by the Legislature and the California electorate, it would pertain only to UC employees hired on or after July 1, 2007 – current UC employees would not be impacted.

The University is in the process of analyzing this proposal, and UC representatives will be discussing it in detail with state leaders in the weeks ahead. Accordingly, it is too early to know what, if any, impact this proposal might ultimately have on UC.

There are many important considerations that must be taken into account in any proposal that seeks to include UC in this initiative. The University of California, with its ten campuses, five medical centers and three national laboratories, is a complex institution with distinct and diverse needs, and UC would be concerned that a constitutional amendment might restrict our flexibility to fashion suitable retirement plans for our unique employee populations.

We know this issue is of interest to everyone in the UC community, and we will promptly distribute additional information as it becomes available.

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UC NEWS
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UC SYSTEM
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