To cope with insufficient state funding for enrollment growth and continuing budget cuts due to the state's financial crisis, UC President Mark G. Yudof will ask the Board of Regents on Jan. 14 to consider proposals to curtail undergraduate enrollment growth, freeze the salaries of top administrators and significantly restrict compensation for a large group of senior leadership.

The plan to curtail undergraduate enrollment would reduce enrollment of new California resident freshmen by 2,300 students systemwide for the 2009-10 academic year (from a total of around 37,600 new freshmen in 2008-09 to around 35,300 for 2009-10).

In view of large increases in applications from California community college students, however, transfer enrollments would be allowed to increase by 500 students (bringing new transfer enrollments to around 16,300 for 2009-10).

Graduate enrollment would remain at 2008-09 levels. Even with implementation of these enrollment limits, UC would still be overenrolled by approximately 9,000 students in 2009-10.

"I have always been reluctant to constrain freshman access to the university, but the absence of state funding for enrollment growth and continuing budget cuts have left us no choice if we are to protect the quality of the instructional program we offer," Yudof said.

"The enrollment reductions in the proposal are both modest and gradual and are intended to bring enrollment into closer alignment with our resources over a period of years. As much as possible, I want to limit the disruption for students who have worked hard to make themselves UC-eligible. Also, as families and students face uncertainty during this severe economic downturn, we need to keep open cost-effective paths to UC, such as the community college transfer route."

The full proposals going to the regents on enrollment and senior management pay are available on the Web.

Details of proposed enrollment plan

UC has seen large increases in freshman applicants in recent years, at the same time that state funding for enrollment growth has stagnated. Currently, UC enrolls approximately 11,000 students for whom it receives no state funding—a shortfall estimated at $121.8 million. Furthermore, the recently released 2009-10 governor's budget proposal provides no funding for enrollment growth.

To protect academic excellence and maintain the level of service students expect when they enroll at UC, the proposal calls on UC's president to bring enrollments closer to the university's budgeted levels by reducing new freshman enrollment at six UC campuses—Davis, Irvine, Riverside, San Diego, Santa Barbara and Santa Cruz. Freshman enrollments would remain constant at Berkeley and UCLA, and could grow at the Merced campus.

At the same time, the plan maintains UC's historic commitment to offer a place somewhere in the system for every UC-eligible California resident applicant.

It is expected that modest growth in freshman applications this year, estimated at approximately 3 percent, combined with lower admission targets at most campuses will result in students receiving fewer admission offers to UC campuses.

For example, a student who in the past was admitted to three campuses might be admitted to only one or two this year. Because UC applicants are very well qualified and have many opportunities, some who do not receive offers from their campus of first choice might choose to attend other institutions.

UC-eligible California residents who are not admitted to any of the campuses to which they apply will receive offers from campuses that do have capacity.

Details of proposed pay freeze plan

President Yudof recommends freezing the salaries of 285 top administrators and implementing significant restrictions to compensation for an expanded group of senior leadership. If approved, the proposal would take effect immediately, and remain in effect for the remainder of the 2008-09 and through the 2009-10 fiscal year.

Incumbents in the following senior-level executive positions, totaling approximately 85, would have their current compensation frozen, disallowing any consideration for merit, equity and retention increases:

• President
• Chancellors
• Vice chancellors, vice presidents and above
• Medical center chief executive officers
• Chief investment officer-vice president for investments
• Senior vice president-chief compliance and audit officer
• General counsel-vice president for legal affairs

Any existing stipends would be continued for the period approved by the regents. If an individual is offered a new position (in any of those listed above) resulting in a higher grade with different or expanded responsibilities, a promotional increase might be considered on a case-by-case basis.

If an individual temporarily assumes one of the positions listed above, a stipend, in addition to the base salary, might be considered on a case-by-case basis. Promotional increases and stipends would be subject to the president's review and regental approval. No further salary actions would be considered for this group of roughly 85 senior level executives.

For the roughly 200 remaining positions in the senior management group not specifically identified above, salaries would be frozen, disallowing any consideration for merit or equity increases. Consistent with the standards and guidance provided above, stipends or promotional increases might be considered on a case-by-case basis. If an individual in this group receives a bona fide offer of employment, a retention increase might be considered on a case-by-case basis, upon review of supporting documentation. Any recommendations for stipends, or promotion or retention increases for this group would be subject to review by the president and approval by the regents.

This action would follow the recent suspension of merit and equity increases for senior managers and senior professional staff, and would be the latest in a series of actions taken by the university to deal with a significant funding shortfall. Estimated savings due to the elimination of the merit/equity program for senior managers is approximately $1.3 million per year.

In addition to freezing salaries for senior managers, Yudof's proposal includes restrictions on the university's systemwide employee recognition and development program, and similar campus-based bonus programs. Pending payments for senior management group members and others with annual salaries in excess of $205,000 would be canceled. The proposal also significantly restricts any cash awards under this program for fiscal years 2008-09 and 2009-10, by limiting participation to nonsenior management staff whose annual salaries are less than $100,000, and limiting those awards to no more than $1,000 total in any year.

Only certain incentive plans, such as the regentally approved Clinical Enterprise Management Recognition Plan pertaining to key hospital and clinical leadership positions, would be continued. The Clinical Enterprise Management Recognition Plan is supported by hospital revenues and does not involve state funding. Yudof's proposal would implement limitations on payouts but recognize the value of these programs that reward staff for improvements in patient safety and satisfaction, quality of care and other hospital priorities. These incentive programs are also important competitive components of the participants' total compensation.

"These are extremely difficult times, and we must make difficult decisions," Yudof said. "Although I regret very much the impact of these actions on our very dedicated and valuable employees, I believe they are consistent with our obligation as a public institution, and are warranted given the historic economic crisis confronting us."

UC has already taken, or is considering, a range of actions to respond to the state's fiscal crisis, and the president and the chancellors are working diligently to reduce all unnecessary expenditures to conserve resources. At the Office of the President in Oakland, reductions have been taken to save approximately $30 million this year, and additional reductions will be taken in the coming months. All locations are limiting travel expenditures, equipment and other purchases. Also, severe restrictions are in place limiting the ability to fill vacant employee positions. All of these actions coupled with ongoing strategic reductions in budgets systemwide are critical to the university's ability to withstand these financial difficulties.

Yudof's proposal aligns with Gov. Schwarzenegger's recent orders to reduce and limit personnel-related costs for state employees, which request that UC and other entities enact similar measures.

— UC Office of the President

Dateline report on next week's special meeting of the Board of Regents.