SAN FRANCISCO ““ Though a state budget is two weeks overdue
and the University of California will likely absorb over $300
million in budget cuts this year, the university’s top
financial official said he was optimistic about the UC’s
budget situation during UC Board of Regents’ bimonthly
meeting Wednesday.
Larry Hershman, the UC vice president of budget, said his
optimism was largely founded on the university’s May
agreement with Gov. Arnold Schwarzenegger. Known as the
“compact,” the agreement says the state will cut the
university funding by $372 million in exchange for increases in
state funding starting in 2005-2006.
The compact seeks to restore some predictability to what has
been a fluid state budget situation over the past couple years, but
has come under fire from numerous critics.
Some students and faculty have said the UC “sold them
out” by taking budget cuts which equate to fee increases and
no guarantee of salary increases. Democratic legislators have
complained the compact undermines their ability to negotiate for
more funding to education.
Also, some financial analysts say the state may only honor its
part of the compact if the state economy improves, a condition
which is far from certain. The state is still in the middle of a
budget crisis and is facing a $7 billion structural deficit next
year.
But Hershman called the compact “critical” to the
future of the university and said it is an assurance from
“people who set priorities” that the UC will be funded
in the future.
“I do feel very confident that we will be able to maintain
our priorities,” he said.
Hershman pointed to an increase in state revenues last month as
a sign that the state’s economy was starting to recover.
Revenues in June totaled $8.8 billion, 10 percent higher than had
been projected, according to the office of the state
controller.
Hershman also said he expected a state budget to pass within a
couple weeks, if not a couple days.
Because of the compact, the state budget will likely hold little
surprise for the university. The regents have already increased
undergraduate in-state student fees by 14 percent and graduate
student fees by 20 percent in anticipation of the $372 million
cut.
In addition, the university recently cut enrollment by 3,200
students and deferred admission to 5,700 students, the first time
the university was forced to deny admission to all eligible
students.
Hershman said the compact should secure the funds necessary for
the UC to make up for the lost ground.
“It looks like we’ll be back on track again for
funding for enrollments and adhering to the Master Plan,” he
said, referring to the document which determines what role the UC
is supposed to play in California higher education.
The university’s top budget priorities are still funding
enrollment, dealing with cuts to outreach programs, and securing
funding to open UC Merced, the newest UC campus, in 2005, Hershman
said.
He also mentioned some proposals in the works for the
university’s 2005-2006 budget. The university is planning on
increasing enrollment by 5,000 students and increasing faculty
salaries by 3 percent, he said.
But he also said student fees will increase again based on the
compact. According to the compact, undergraduate fees will increase
by 8 percent and graduate fees by 10 percent.
Most of the regents accepted Hershman’s optimism, but some
qualified their acceptance with apprehension. Regent Ward Connerly
said he “buys off” on most of the compact, but warned
the regents to read the compact very carefully before voting on
it.
Connerly expressed concern over some conditions in the compact,
such as the one that sets future levels of student fee
increases.
“There are some very significant structural reforms for
the UC on that compact,” he said.
Other regents made it clear that if the state fails to follow
its part of the compact, the university is no longer obligated to
honor the compact either.
Such caution is not unfounded. The university entered into
compacts with the two governors before Schwarzenegger, and both
compacts were broken by the state. The state, under former Gov.
Gray Davis, underfunded the UC by 16 percent.
“The truth of the matter is that we still have a
fundamentally unreliable partner in the state of California,”
said Regent Richard Blum.
But despite the regents’ unease, it is unlikely they can
alter the compact, especially now that budget negotiations are
nearing their final stages.
Regent chair Gerald Parsky summed up this situation when he said
to Hershman, “We just hope your optimism turns into
reality.”