Though final budget reductions will be strategic rather than across-the-board, Provost and Executive Vice Chancellor Virginia Hinshaw has directed all deans, vice chancellors and vice provosts to develop preliminary plans for cutting 8 percent from their 2002-03 general fund and student fee budgets.

"Although we will all be working with the same 8 percent target, the actual budget reduction will not be the same for every unit," Hinshaw wrote in a mid-December letter. "Instead, final budget reductions will be based on the strategic directions that we decide to pursue."

Hinshaw noted that the size or nature of a permanent reduction for 2002-03 is not yet known but "it is critical to start some early planning now to provide context for discussions about campus priorities, particularly with regard to faculty and staff hiring in support of strategic budget reduction decisions."

Campus units will not be required to cut from their current-year budgets to accommodate a mid-year reduction in state funds. Hinshaw said she will fund this one-time spending reduction of $1.4 million by tapping the contingency reserve in the chancellor’s discretionary funds, permitting campus units instead to focus on permanent reductions required for 2002-03.

Units are asked to plan for an 8 percent permanent reduction that would be phased in over two years, with a combination of permanent cuts and one-time savings totaling 8 percent required by July 1, 2002, and additional permanent reductions as necessary by July 1, 2003 to bring the two-year cumulative total of permanent cuts to 8 percent.

Administrators who believe a two-year phase-in period is too short may provide a supplemental proposal that phases in the required permanent reduction over three years and articulates the specific strategic advantages of doing so. But Hinshaw cautions that a longer phase-in period is more likely to put the campus in the awkward position of continuing to cut budgets in a time of economic recovery.

The reduction proposals, due by Feb. 4, will be reviewed by Hinshaw with the advice of the Office of Resource Management and Planning and in consultation with a small working group of administrators, staff and faculty. Hinshaw will advise the deans, vice chancellors and vice provosts of her initial reaction to their proposals in late February, and then will prepare and share a draft budget strategy for campus comment in March and April. In May, she plans to announce a final 2002-03 budget strategy.

Hinshaw’s budget letter also indicated that:

• The biennial budget process will be paused. "If budget circumstances improve, you should anticipate a call for biennial budget proposals next fall for the 2003-04 year."

• Departments will not receive additional funding to offset increased rangme adjustment for general-assistance-covered positions in 2001-02 and likely not in 2002-03. Because the state didn’t fully fund the staff salary program this year, suspending the range adjustment "will enable the campus to partially close the gaps without compromising existing programs." Eligible employees, however, will continue to receive the adjustment.

• Enrollment growth targets for 2002-03 are not yet known.

"I anticipate that we will not have reliable enrollment growth information until the governor’s budget is released in January and perhaps not until the May Revision of the governor’s gudget. Therefore, it is very likely that I will not make faculty position allocations for 2002-03 until June or July."

• Academic initiatives will be re-evaluated and, if necessary, implementation may be delayed. "I will consult with deans to develop a strategy for moving forward with the initiatives at an appropriate pace. It is critical that the implementation plan ... provide a balance between the current budget circumstance, the academic priorities for the campus, and opportunities to obtain a positive return on investment."

• Rate increases for self-supporting activities will only be considered under special circumstances in order to provide cost relief to campus users.

• Planning for year-round operations will continue, with the potential for some initiatives to be funded from Summer Sessions revenues. "It is in the best interest of the campus to continue to make modest investments to expand summer session enrollments in preparation for a future state-supported summer session."

For the latest budget news, continue to check www.news.ucdavis.edu/budget/.