State budget issues were among the top items discussed Jan. 16 and 17 as UC Regents mulled the $3.4 billion Gov. Gray Davis proposes to allot to the university system in 2002-03.

Under the governor’s proposal, which must be approved by the Legislature, UC would receive about $250 million less than the regents requested. The cuts to UC are part of a $5-billion reduction in state spending for 2001-02 and 2002-03.

Coming together for a regular board meeting at UCLA, several regents expressed concern over cuts to raises for staff and faculty. The budget provides for a 1.5 percent merit increase, no cost-of-living adjustment and less money to pay for increased health benefit costs.

"We’re going to be attacked right and left with these very low salaries," said Chairman S. Sue Johnson, adding that raising student fees might be required to help compensate.

UC President Richard Atkinson called staff and faculty "the heart of the university’s enterprise." He also said that UC is working hard to restore what he called "the biggest disappointment in the budget."

Salaries are the university’s "highest priority," said Larry Hershman, UC vice president for budget. If UC can obtain compensation from the state to keep student fees level, then those funds could be put toward salaries, Hershman proposed.

Many have criticized the governor’s budget, which assumes California will receive more than $1 billion in additional federal funding and includes loans, accelerations and strategies such as borrowing $2.4 billion from the state’s settlement with tobacco manufacturers.

"The problem with all of this, of course, is that he’s pushing some of these cuts … into the future, hoping that revenue picks up significantly," Hershman said. "One of the things the regents need to focus on is: What does that mean for future budgets?"

On the other hand, Hershman added, if the governor’s budget strategy fails, the alternative may be larger cuts to UC’s budget. If the governor’s budget does fall through, asked Regent William Bagley, "Do we have a contingency plan? I just don’t see it coming together like this. What do we do when $100 million of this falls apart?"

Steve Olsen, UCLA’s vice chancellor of finance and budget, said: "The governor’s budget is as good an outcome as the university might have hoped for, given the circumstances. The real issue here is not what is in the governor’s budget, but whether or not it’s sustainable under the current financial situation."

The regents tabled discussion of retirement equity, saying they needed more time to study the matter.