Chancellor Linda P.B. Katehi and other top administrators wasted no time Monday (Jan. 10) in strategizing for the predictable bad news in Gov. Brown’s 2011-12 budget.

In fact, Katehi, newly installed Provost Ralph J. Hexter and others got a jump start, gathering at the Chancellor’s Residence for a half-day budget conference starting at 8 a.m., three hours before Brown unveiled his spending plan.

Then, first thing in the afternoon, Associate Vice Chancellor Kelly Ratliff (who also attended the morning meeting at the Chancellor’s Residence) convened her finance staff to look at a spreadsheet with the new budget numbers — including a $75 million reduction for UC Davis.

In a statement later in the day, Katehi said: “This would be a devastating hit … especially because it would immediately follow the budgetary damage of the past three years.

“If you combine that with the $25 million in additional fixed costs we will face in 2011-12, including increased contributions to the retirement system, UC Davis next year would face a $100 million — or 17 percent — shortfall.

“That follows the $222 million — or 38 percent — shortfall we’ve had to absorb over the past three years.”

The $75 million reduction is what UC Davis estimates as its share of an overall cut of $500 million to the UC system. Patrick Lenz, UC vice president of Budget and Capital Resources, described the cut as a “best-case scenario,” indicating that the state could cut more if Brown fails in his bid to put several tax extensions on the ballot, and if voters do not approve them.

Tuition would surpass state support

As it stands, Brown’s budget slashes general fund support to UC by 16.4 percent. Combined with previous reductions, state support — measured on a per-student basis and adjusted for inflation — will have fallen by 57 percent over 20 years, if Brown’s budget goes through, according to the UC Office of the President.

And, for the first time in UC’s 143-year history, the state would contribute less to the university’s general fund than what resident students pay in tuition: $2.5 billion from the state versus $2.7 billion in tuition.

“This is a sad day for California,” Yudof said in an open letter. “The crossing of this threshold transcends mere symbolism and should be profoundly disturbing to all Californians.

“Early and enduring support for the University of California has been critical to the state’s success, seeding the world’s eighth largest economy, shaping its society and serving its citizenry in myriad other ways.”

Brown’s proposed $2.5 billion allocation to UC would roughly equal what the state gave UC in 1998-99, when UC enrollment was 161,400, compared with 235,000 today. Over the same period, UC Davis enrollment has grown from nearly 25,000 to more than 32,000 — including overenrollment of more than 1,800 students for whom the state provides no funding.

Now, in the face of a further cut in state support, she declared: “We cannot and will not permit the educational opportunities we offer our students to be compromised.

“We must do a better job of informing the governor and the Legislature about the true value and contributions of UC Davis and our entire world-class UC system to the state, the nation and the world.

“But let’s be clear,” she said, “in the weeks and months ahead, there will be difficult — extraordinarily difficult — choices to be made.”

All the while, UC Davis will continue its advocacy for state support “not only to protect our students, but to maintain UC Davis’ role as the engine of economic growth in our region,” said Jason Murphy, director of state government relations in the Office of Government and Community Relations.

He said UC Davis will participate in UC Day, scheduled for March 1 at the Capitol, and Intersegmental Advocacy Day, a joint event April 5 with the California State University system and California Community Colleges.

UC Davis plans broad participation by campus leaders, faculty, students, and other friends and supporters of the university.

Protecting academic and research missions

Yudof said he will give budget reduction targets to each campus and ask them to report within six weeks on how they plan to meet those targets.

His main priority, he said, is to protect as best as possible the quality of the university’s core academic and research missions. He said he will attempt to maintain, if feasible, the financial aid programs “that are so crucial to our public mission of serving all qualified California students, regardless of family income level.”

Yudof also commented on the possibility of further systemwide fee increases on top of a succession of fee hikes over the last five years. For resident undergraduates, the cost for one year of school is up about 81 percent, from $6,141 (not counting campus-based fees) in 2006-07, to $11,124 in 2011-12.

“My preference, at this point, and my sense of where the Board of Regents stands on this issue, is to not seek an additional fee increase,” Yudof said. “That said, I cannot fully commit to this course until the board and I have assessed the impact of permanent reductions on campuses.”

A fee increase is apparently not what Brown has in mind. In a statement accompanying his $500 million cut to the UC system, Brown states his intent to “minimize fee and enrollment impacts on students by targeting actions that lower the costs of instruction and administration.”

Elsewhere in the UC budget, Brown allocated $7.1 million for retiree benefits, to cover additional costs for health and dental insurance.

But, just as Arnold Schwarzenegger and other governors have done in recent years, Brown did not allocate state funding to the UC Retirement Plan. That means the campuses must pay the employer contribution — adding $10 million to UC Davis’ shortfall for 2011-12.

For capital projects in the UC system, the governor proposed an allocation of $54.6 million to complete existing state projects and the Business Unit II building at UC Irvine.

However, Yudof said in a memo to the Board of Regents, “my office will be working with CSU on a joint proposal for the governor and the Legislature to fund additional capital facility projects in the same manner as the 2010-11 state budget.”

The 2010-11 effort resulted in $353 million for capital projects, compared with zero outlay in then-Gov. Schwarzenegger’s initial budget proposal.

‘Tough budget for tough times’

Yudof acknowledged that Brown had produced, “as he calls it, a tough budget for tough times” — that his hand had been forced.”

“The university will stand up and do all it can to help the state through what is a fiscal, structural and political crisis,” Yudof said. “There can be no business as usual.”

At the same time, Yudof joined the leaders of the California State University system (facing a $500 million cut) and the California Community Colleges ($400 million) in saying that “now is not the time to shrink public higher education, but to grow it,” given the vast demographic shifts under way in California.

“The road to recovery from this recession and prosperity far beyond it runs straight through our many campuses,” read a statement from Yudof; Charles B. Reed, chancellor of the CSU system; and Jack Scott, chancellor of the California Community Colleges. “These universities are the economic engines of California.”

Brown’s budget also could affect UC in other ways: financial aid (Cal Grants) and the medical centers (in terms of proposed changes to Medi-Cal, and other health and human services). The impacts in these areas are still being assessed.

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News release and additional information from UCOP