As UC Davis deals with possible midyear budget cuts for 2008-09, the state’s deepening fiscal hole is prompting campus leaders to take a new budget tack for 2009-10.

“The scale of the state financial crisis makes it evident that we will not be able to absorb the anticipated budget reductions without systemic change,” Barbara Horwitz, interim provost and executive vice chancellor, said in a Nov. 14 letter to vice chancellors and deans, senior advisers, and faculty and staff leaders.

UC Davis already has taken actions to close a $33 million budget gap for 2008-09 and is awaiting word on midyear cuts that could approach $10 million. Gov. Schwarzenegger has proposed midyear cuts throughout state government to help deal with an estimated deficit of $11.2 billion for 2008-09 and an additional $13 billion deficit through June 2010.

What that continuing deficit means for the UC system is unclear. This week, the Board of Regents approved a 2009-10 budget proposal that asks for some $3.5 billion in state funding — an increase of $530 million over this year.

It may be pie in the sky, but UC officials said this is what the system needs “if it is to deliver on its mission for the people of California.”

As hopeful as UC might be for robust state funding, officials also are planning for further cuts. Horwitz’s strategy at UC Davis is to establish a Budget Advisory Committee and five subcommittees “to guide budget planning and to recommend specific changes to university business processes.”

She is aiming for input from “a wide variety of campus perspectives,” including the Academic Senate and Academic Federation, staff and students when appropriate.

The committees will be asked to make recommendations about the most critical programs and services that ought to be protected, to the extent possible; and to identify ways to reduce or consolidate services and expenses, reallocate resources and generate new resources.

“The overall goal is to offer a comprehensive strategy for effecting differential and strategic budget reductions across the campus that are consistent with campus values and our vision for the future,” Horwitz wrote. “In some cases, recommendations may identify a specific unit, but a unit-specific approach is not expected to serve as the primary focus of the committees’ work.”

The provost and executive vice chancellor will serve as chair of the Budget Advisory Committee. Starting Jan. 1, this job goes to Enrique Lavernia, who is taking over for Horwitz. She took the post on an interim basis in July 2007, replacing Virginia Hinshaw after she was appointed chancellor of the University of Hawaii-Manoa.

Lavernia has been dean of the College of Engineering since 2002. Like Horwitz, he will serve as interim provost and executive vice chancellor, having been appointed by Chancellor Larry Vanderhoef to a three-year term.

The Budget Advisory Committee also will include John Meyer, vice chancellor of the Office of Resource Management and Planning; and the co-chairs of the five subcommittees. Each subcommittee will have two co-chairs: one a senior campus administrator, the other a member of the Academic Senate.

“The worsening state budget circumstance makes the nature of this work time-sensitive,” Horwitz said. Therefore, she is giving campus leaders only until Dec. 8 to nominate subcommittee members. She said she will make her selections in December.

Horwitz identified the subcommittees as follows, and for each of them she gave examples of the kinds of systemic changes that may be examined:

Instruction and Research

For instruction, the provost suggested taking a look at minimum class sizes, the frequency of course offerings with low enrollment, undergraduate instruction by professional schools, faculty participation in graduate education, and changes to student-faculty ratios for ladder and nonladder faculty.

For research, she suggested taking a look at cost sharing practices, allocation of indirect costs and a discussion of ways to increase indirect cost recovery.

For academic support, the provost suggested the committee may want to ask: What services and functions must be protected, what services or functions are considered nonessential, and what services or processes can be streamlined?

Administration

This subcommittee, Horwitz said, may look at the use of administrative clusters or centralized administrative services, and common applications to streamline administrative processes (e.g., calendaring software). The subcommittee also may identify services that are most essential and those that are least essential.

Student Services

This subcommittee also may look at administrative clusters to support multiple service areas. Additionally, Horwitz suggested an examination of revenue and cost models for services and identification of services that are most essential and those that are least essential.

Self-Supporting Activities

What services are considered cost effective? What services are not viewed as cost effective? What steps should be taken to improve cost effectiveness and accountability? Are there changes-reductions that would generate savings to offset budget reductions (e.g., eliminate subsidies, recapture space, provide lower cost, similar quality services)? Should the recently implemented self-supporting assessment be changed? Are there barriers to using lower cost services? How can barriers be removed?

Capital Budget and Space Planning

What goals should the capital program emphasize (e.g., continued expansion to address unmet needs, building and infrastructure renewal, deferred maintenance, etc.)? What savings can be achieved in the near term and in the long term? What principles and criteria should be used to evaluate the use of additional central campus debt to advance capital priorities? How does the use of off-campus leased space help or hinder achieving campus capital and space needs? What process and metrics should be used to frame a 10-year capital plan?

ON THE NET

Read the provost’s entire budget planning framework.