As the chief financial officer for the campus, Provost and Executive Vice Chancellor Virginia Hinshaw has been meeting with various groups, laying out the principles she believes should guide UC Davis as state funding decreases this year and in 2002-03. Below, she offers Dateline readers her perspective about how to address these financial challenges.

Q: What is the magnitude of the cuts in state funding expected for this year and for next? How difficult will it be for the campus to accommodate these reductions?

A: The magnitude of the cuts in state funding expected for the current budget year (2001-02) is still uncertain, but is expected to be modest compared to next year. There are several proposals for addressing the current year's reduction, and our view is that this reduction will be accommodated by budget changes that will not heavily impact our current programs.

The bigger issue is the magnitude of the cuts for the 2002-03 budget year. These cuts have been estimated to range from 5 to 15 percent but have not yet been well defined. We will have more clarity on this issue when the Governor's budget is released in early January. The magnitude of the cut will determine the difficulty for the campus. It is clear that there will be cuts of some level, so that knowledge does require us to reduce our current spending in preparation for this expected shortfall in funds.

Q: How will the campus go about making mandatory cuts? What are the principles that will guide the process?

A: From my perspective, the campus will develop plans to handle any level of budget cuts on the basis of these principles:

• The reductions will be strategic, not across the board.
• Programs must be prioritized; fulfilling our academic mission is our highest priority and requires both faculty and staff, so our decisions will reflect that need.
• Communication about budget reductions will be open, honest and frequent.
• Consultation about reductions will be broad to determine the best routes we can take.
• Current processes and procedures should be streamlined to help reduce expenditures.
• We must seek new resources (for example, through fund-raising, new research programs and public-private partnerships).
• We must increase student access through alternative approaches (for example, through expanding summer instruction over time).

These are principles I have on my list, and I am currently requesting input on any additional principles we should apply during this time.

Q: Do you anticipate implementing a hiring freeze?

A: At this point, we have not imposed a hiring freeze on faculty or staff positions. We have, however, advised administrators to consider program priorities very carefully as they fill open positions and factor in the strong likelihood of a significant budget reduction in 2002-03 as they make hiring decisions. I have asked the deans and vice chancellors to advise me in the next few weeks about how they would accommodate a 7 percent to 8 percent budget reduction in 2002-03. I will decide on the necessity for selective pauses in hiring after I have reviewed the deans' and vice chancellors' plans.

Q: Have we learned things from the budget-cutting process of the early 1990s that will help us through this difficulty now?

A: Yes, I have met with a number of folks who experienced the financial challenges of the 1990s, and our campus has certainly learned a great deal that will help during this new period of retrenchment. First of all, we have learned that we can survive and even thrive in the face of downward turns. Our chancellor has been through these events before so that experience will be very helpful. And the University will consider a full range of options in accommodating expected cuts.

Examples of important do's for this time include recognizing the seriousness of the situation immediately; making strategic decisions early in the process; working closely with the deans and vice chancellors in applying our principles to the process; communicating and consulting frequently and honestly (even about what we don't know); and maintaining adequate staffing to ensure needed student and faculty support.

Q: To achieve savings, will the university again offer an early retirement incentive program as well as the opportunity for employees to voluntarily reduce their hours of work to less than full time?

A: There is currently no discussion about an early retirement incentive program or voluntary reductions; however, I am aware that these both occurred during the 1990s. As we learn the extent of the budget cuts, options that could be available will be communicated to the campus.

Q: In the 1990s, budget cuts heavily impacted staff, with positions eliminated and workload increased. Do you expect staff to be similarly affected this time around?

A: One of our principles is that our academic mission must be our highest priority. Fulfilling our mission requires both faculty and staff, so the cuts must be shared. We must preserve an adequate level of staffing or faculty cannot do their jobs and students cannot receive the education we've promised them. So our decision-making must accommodate limiting faculty and staff growth together.

Q: The campus continues to grow, with an enrollment of 31,000 students expected by 2010. In the face of cuts, how can we continue to accommodate these additional students?

A: The regents have taken a firm stand that our enrollment will increase only if our budget supports that growth. Toward that end, several options are being discussed, such as increased student fees, limited enrollment growth, deferred enrollment (having newly admitted students attend a community college for the first two years), etc. At this point, no decisions have been made about these various options.

Q: This growth in students also makes possible new academic initiatives by providing new faculty positions. Several such initiatives are in various stages of launching. Will the budget shortfall affect them?

A: Some initiatives must move forward at the initially anticipated rate because of academic and financial reasons. Others may have to pause or develop at a slower rate than we proposed. But we will continue to move forward on our initiatives.

Q: The campus is in the middle of a construction boom. Will budget cutbacks slow or stop construction, or affect the Long Range Development Plan update?

A: The proposed capital budget is still moving forward as planned; however, the proposed general obligation bond measure for higher education is critical to our forward progress. That proposed bond measure has not yet been approved by the Legislature for either the March or November 2002 ballot. We all need to do our part to communicate with the public that supporting that bond is important for the future of California.

I should note that capital bond funds cannot be used to support the operating budget. In addition, private gifts such as the recently announced Mondavi donation help support the campus's capital program.

Q: What can we as a campus do to generate new resources during a time of state budget limitations?

A: As a community, our goal is to excel within our resource constraints and seek ways to bring new resources to our campus. Several options exist, such as:

• Time recovery. All of us as faculty and staff must seriously and thoroughly consider ways to recover time by making our processes or practices more efficient and productive. I don't believe that we can continue to do more, in view of current workload demands, but rather we need to accomplish our activities in a different and better way. To make this a reality, we must be willing to change, take risks and trust others; such an approach, in my view, will make us stronger in the long run.
• New research and fund-raising initiatives. We have every ability to generate innovative research initiatives that bring new resources to the campus, and we must generate and support those activities. Even in the absence of budget reductions, we must enhance our fund-raising efforts because our private support will play an increasing role in our ability to excel as a university.
• Increased student access. We can accommodate some student growth by enhancing our summer quarter, offering more courses to more students and ensuring a quality experience. Even though our campus won't receive additional funding for summer instruction that was provided to three other UC campuses last year, we must be willing to experiment in strengthening our summer program. To do so will bring long-term benefit to our university (and it seems very likely that support for summer instruction will be available in the future).

Q: Do you have advice for the campus community as we begin discussions about how best to navigate these financial tides?

A: Keep in mind that we will get through this downturn in the economy. A number of economists anticipate that this downturn will reverse itself in the near future, but we all know that no one has a crystal ball on that timing.

It is important to recognize that this is a national situation for higher education; many institutions are facing similar, and even more severe, challenges. It is true that California faces two challenges, the energy and Sept. 11 crises; however, California is a powerful player in the nation's economy and will recover.

As we begin our discussions, think positively about our future. Our enterprise is vital to society, yet we are not excluded from the same challenges facing everyone at this time.