Thirty percent student fee hikes, cuts in outreach,
research and student services, the cancellation of expected faculty
pay increases ““Â all this may be just the beginning of
the University of California’s budget crisis. State lawmakers
““ facing growing pressure to pass an already late state
spending bill and unable to agree on what combination of tax
increases and program cuts should be used to fill a multi-billion
dollar hole ““ will likely rely heavily on borrowing from the
future to fund state programs next year. That would mean that
unless the economy swings higher than anyone expects it to, state
agencies, including the UC, could one year from now be in much the
same situation in which they find themselves today.
“They’re in the soup again for ’04-’05, and
this campus is anticipating that,” said Steve Olsen,
UCLA’s vice chancellor for finance and budget. Olsen and
other university administrators find themselves facing the
unfriendly task of managing reductions in state funding for the
upcoming year when they can’t even be sure how large those
reductions will be ““ and knowing they’ll probably have
to go through the whole process again next year. UCLA’s share
of what will likely be more than $300 million in cuts to the UC for
2003-2004, will likely be somewhere around $20 million, Olsen
said. About $9 million of that sum will be composed of cuts to
outreach, research, student services and other areas specifically
defined by the state. But the remaining $11 million comes in the
form of a general reduction, as UCLA’s “operating
units” ““ administration, libraries, academic support,
teaching hospitals, etc. ““Â will each face a 2 percent to
5 percent permanent cut, Oslen said. UCLA is not alone. The
state’s 2003-04 fiscal outlook is marred by the largest state
budget hole in the history of the United States, and nearly all of
California’s public agencies will be negatively affected. The
current year’s problems have helped contribute to a growing
campaign to recall Gov. Gray Davis and are regularly reported by
national media outlets. But as far as UCLA is concerned, 2004-05
could be even worse than 2003-04. Olsen said he is telling
administrators to prepare for a $16 million general reduction for
2004-05 ““Â $5 million more than the upcoming year’s
expected $11 million reduction. Systemwide, the outlook appears to
be no better. Larry Hershman, the UC’s vice president for
budget, said at this past week’s regents meeting that
“the way (the 2003-04) budget looks, we’re going face a
bigger problem next year.” UC Spokeswoman Abby Lunardini said
the UC Office of the President, still busy with the upcoming
year’s budget, has not yet gotten down to specifics on what
cuts will need to be made the following year, but UCOP will be
doing so shortly. “This is going to be a several-year budget
crisis,” she said.
Possible Solutions Though no plans have been solidified for
2004-05 or beyond, outgoing UC President Richard Atkinson did float
the idea recently that the university may have to cap or limit
enrollment growth. Such a decision would represent more than a
policy adjustment, but a fundamental change in the
university’s relationship with the state. Since 1960, when
the California Masterplan for Higher Education went into effect,
the UC has admitted the top 12.5 percent of the state’s high
school graduates. Currently, the population of college age students
in California is increasing dramatically, as the sons and daughters
of baby boomers graduate from high school in droves. The enrollment
surge was predicted: A Partnership, established between the state
and university in the late 1990s, provided that the state would
fund the university to enroll as many as 60,000 additional students
over a 10 year period. But now, that agreement is all but in
tatters after state revenues declined dramatically and the
government failed to fully fund the Partnership. The UC president
says cutting back on expected growth may be the only way to
maintain the university’s quality. Still, Atkinson
acknowledged that “reducing enrollments clearly would be
distressing.” “UC has a proud tradition of guaranteeing
access to a high-quality education for the state’s very best
students. But continuing state budget cuts could very well leave us
with no choice,” he said in a statement earlier this month.
Cutting enrollment by 5,000 students in 2004-05 would save the
university $45 million, the statement said. Enrollment caps,
however, would be of more significance to campuses like UC Santa
Cruz and UC Riverside, scheduled to endure massive enrollment
boosts, than to UC Berkeley or UCLA ““Â two of the
system’s “mature” campuses for which planned
growth is comparatively small. UCLA, which will grow by nearly
1,000 students in the upcoming year, is only scheduled to grow by
200 for the 2004-05 year ““ the first year caps could be
implemented. That difference of enrollment would not much help UCLA
financially, Olsen said. And the idea is downright unpopular with
some ““ particularly student lobbyists. Matt Kaczmarek, the
external vice president for UCLA’s undergraduate student
government, said preventing enrollment caps from being implemented
would be a top priority of his in the upcoming year. As EVP,
Kaczmarek is a member of the UC Students Association, the chief
lobbying organization for the UC’s students. Kaczmarek said,
“UCSA has always fought to maintain and increase access to
this university” and will continue to do so by opposing caps.
Kaczmarek also said he planned to lobby for a freeze in student fee
levels and an end to budget cuts to student services. When the
universities’ fiscal situation is considered along with a
UCSA-opposed attempt by Regent Ward Connerly to ban race data
collection, Kaczmarek said, “It is going to be an incredibly
critical year for our lobbying efforts.” Kaczmarek and Olsen
agree it appears that student services will take a brunt of the
UC’s 2003-04 cuts. But failing a remarkable turn-around,
difficult decisions will be inevitable. The university’s
other sources of funding cannot provide relief for lack-luster
state support. While both Olsen and Chancellor Albert Carnesale
assert that UCLA’s private donations have not fallen off with
a slowed economy, they also say that outstanding fundraising is no
substitute for a lack of tax-payer dollars. Private donations
contribute well to scholarships, specific research projects and
capital developments but do not provide the university with a pool
of general funds that can be drawn from to cure general budget
woes. An example: “There has yet to be a multi-million dollar
endowment to the philosophy department,” Olsen said. He later
added, “The state of California is our endowment.” The
university also draws a significant amount of money from federal
sources, which so far, Olsen said, have continued to fund UCLA
adequately. He noted that only two universities receive more
federal money for research than UCLA does. But he said that a $450
billion federal deficit does not bode well. His skepticism has
nothing to do with UCLA or the quality of the research it is doing.
Rather, federal funding for universities falls in the category of
“discretionary” funding and Olsen said, “The pie
is not expected to get larger.”
A brighter future? “It’s the economy that got us
here. It’s ultimately the economy that will get us out of
it,” said Tom Lieser, the director of the Anderson
School’s economic forecast. He added that in the meantime,
cuts in expenditures are inevitable. When the Anderson School gave
its quarterly economic forecast in early June, Lieser released a
report entitled “California: A Weak Expansion Would Be
Welcome.” In the report, Lieser asserted that California was
still in recession and lagged behind the national economy. Lieser
did predict the state downturn would end in the second half of 2003
““Â “because it is time for it to end,” his
report said ““Â and that the beginning of 2004 would bring
modest growth. But both Lieser and Olsen said any growth the state
would experience would not close what they both expect will be
““ once again ““ a multi-billion dollar discrepancy
between tax revenues and state expenditures. Lieser noted that the
state seems to be taking a path of stretching budget difficulties
over time ““Â rather than taking the medicine all at once.
“If you bite the bullet now, the surgery has to be of a major
sort,” Lieser said. Originally, it was the governor’s
aim to do just that and avoid passing this year’s budget
problems onto next year. In January he released his initial
spending plan that called for massive cuts. After a period of
lobbying and legislative comment on his proposal, Davis released
the May Revision to his budget, restoring some of his cuts, calling
for more tax increases and relying more on borrowing. The
non-partisan Legislative Analyst’s office predicted that plan
would blow a $7 billion hole in next year’s budget. LAO
predicts some of the plans put forth by the legislature would lead
to an even darker fiscal outlook for 2004-05. And now reports that
Republicans and Democrats may reach a deal on a budget that does
not raise taxes significantly and avoids even deeper spending cuts
could indicate that even more of this year’s problems will be
pushed onto next year. And so there are predictions ““ from
Olsen, from Hershman, from Kaczmarek ““Â that the
university will go through something like what it has gone through
in the last few months, again next year. As Kaczmarek considered
the challenge that lay ahead for himself and UCSA, he said,
“We’re setting ourselves up for a crazy
year.”
With reports from Charles Proctor, Bruin Senior Staff, from
San Francisco