UC Davis’ budget strategy for 2010-11 is not all about cutting, although there will certainly be plenty of that.

On the plus side, the University Library’s collection budget will be spared, units with a primary focus of revenue generation will be exempted from cuts, and academic units will receive transition funds for the purpose of spreading this round of budget pain over three years.

Chancellor Linda Katehi and Provost and Executive Vice Chancellor Enrique Lavernia outlined their strategy in a budget planning letter that went out last week.

For 2008-09, the campus resolved a shortfall of $43.5 million, and for 2009-10 the campus is dealing with a shortfall of $113.5 million—for a two-year total exceeding $150 million, or 25 percent of the general fund base budget.

Now comes a 2010-11 shortfall that at this time is projected at $77.7 million, but could change depending on what happens with the state budget. For now, here is how UC Davis plans to cover the projected shortfall:

• $24 million from increased student fees (already approved by the Board of Regents).

• $36 million in budget reductions in academic and administrative units.

• $17.7 million to be addressed centrally, from sources that include payroll savings from the last two months of the yearlong furlough program (scheduled to end Aug. 31), fee revenues from overenrollment, nonresident tuition, and debt restructuring at the systemwide level.

How the campus responds to the 2010-11 shortfall, Katehi and Lavernia said, is critical to three major challenges:

• The expected end of the furlough program.

• Sufficient funding to pay the employer’s share of renewed contributions to the UC Retirement Plan.

• Covering fixed costs such as increases in employee health benefits.

For 2010-11, Katehi and Lavernia said, they will continue to use a strategic approach that recognizes the campus’s core principles, including a budget reduction strategy that maintains a focus “on the excellence of our academic programs.”

Other core principles include the aggressive pursuit of new resources, and the streamlining and improvement of administrative processes.

Katehi and Lavernia directed academic units to trim $26 million from their budgets for 2010-11 — an 8.3 percent decrease in the general fund base budget. With transition, or “bridge” funds, the cuts will average 4 percent to 5 percent in 2010-11 and 2011-12.

The 2010-11 budget reduction target for administrative units is $10 million, or 8.7 percent of the general fund base.

By the end of 2010-11, as projected, the administrative side will have taken a three-year hit of about $39 million, or 30 percent of the administrative units’ general fund base budget. The University Library takes the smallest hit, at 10 percent.

On the academic side, the reduction over three years would total about $49 million, or 15.4 percent of the academic mission’s general fund base budget (which is significantly larger than the administrative units’ base).

In 2010-11, as the campus did in 2009-10, reduction targets in academic units will not be across the board. Instead, the campus will again use a metrics-based approach that reflects feedback from the deans and the Academic Senate’s Committee on Planning and Budget.

Budget officers said academic units will probably need two to three years to reach the 2010-11 target reduction of $26 million, thus the need for bridge funds.

“The impact of these reductions will be significant,” Katehi and Lavernia wrote.

Revenue-generating units that are exempt from budget cuts in 2010-11: Sponsored Programs, University Development, Undergraduate Admissions, and Graduate Admissions and Academic Services.

On the flip side, Katehi and Lavernia ordered higher reduction targets for Intercollegiate Athletics (including physical education) and the Mondavi Center for the Performing Arts. Budget cuts in these units will be phased in over three years, to enable a reasonable transition for program changes.

Administrative efficiencies

Katehi and Lavernia said administrative unit reviews will start soon for the Offices of the Chancellor and Provost, the Office of Research, and Information and Educational Technology.

“In addition, a shared service center is being developed to improve and streamline human resources and accounting functions,” Katehi and Lavernia said. The time frame is short: Their goal is to implement the service center in the fall.

“Moreover, later this academic year we will announce additional plans to strategically realign the campus’s administrative infrastructure to directly support our faculty,” Katehi and Lavernia wrote.

They also reported continuing progress on suggestions from the campus’s Budget Advisory Committees.For example, comments are due by Feb. 19 on a recommendation to increase the overhead charge on gifts provided for research, and Administrative and Resource Management is consulting with campus constituents about major revisions in the rate process for recharge activities.

“These are difficult times,” Katehi and Lavernia said. “But we remain optimistic that the strategic actions that you are taking will allow us to emerge from these challenges with a stable foundation.”

ON THE NET

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