Informed by Governor Schwarzenegger's proposed budget and advised by several campus groups, Provost and Executive Vice Chancellor Virginia Hinshaw has assigned 6 percent budget-reduction targets to deans, vice chancellors and vice provosts. Excluded from the cuts are outreach, graduate student support and ladder-rank faculty salaries.

Plans for implementing these 2004-05 reductions -- to be achieved strategically and not across the board within units -- are due April 22.

"We cannot wait for final decisions from the state or from the university to inform our budget process," Hinshaw said.

"I have asked that units strategize now on how best to accommodate cuts of up to 6 percent in next year's budget. Then we'll need to see the effects of those proposed cuts on the campus as a whole and strategize how best to invest and to reduce."

Hinshaw noted that, despite the challenging state budget, the campus will continue to make strategic investments "to best position the campus for the future." Of particularly high priority, she said, are increasing graduate student support and launching a comprehensive fund-raising campaign to increase non-state sources of funding for the campus.

The campus's budget planning assumes a general cut of $15 million, based on the governor's proposed budget; organized research reductions of up to 5 percent; significant student fee increases as well as reductions in financial aid; cuts in state-funded outreach programs; and a 10 percent decrease in freshmen.

Also presumed are no state funding for operation and maintenance of new facilities and for critical deferred maintenance; continuing shortfalls in the purchased utilities budget; and no funding for cost increases negotiated in labor agreements. Normal merit funding would be provided for faculty reviewed on a three-year cycle.

A few programs have been exempted from the 6 percent reduction:

• Graduate student support.
• Operation and maintenance of plant facilities. Vice Chancellor for Administration Stan Nosek will submit a plan for serving all new state supportable facilities approved in 2003-04 and 2004-05 without new resources -- the equivalent of a 6 percent budget reduction if workload funding is not increased.
• Funding for electricity and natural gas. Nosek will submit a plan to reduce staff or operating costs by 6 percent. The campus will continue to provide one-time funds to cover the shortfall in the electricity and natural gas budget.
• Outreach programs. The governor's proposed budget calls for elimination of all state funding for UC's K-12 outreach programs. Vice Chancellor for Student Affairs Judy Sakaki will submit an investment plan that maintains essential outreach services.
• Categorical research reductions. The Office of the President indicates that the governor's proposed 5 percent research reduction will be targeted to programs that received large increases in the 1990s or do not have large numbers of graduate students. Programs with targeted research reductions of 6 percent or more will be exempt from the general campus budget reduction.

The cuts will be permanently assigned as of July 1 but can be achieved over three years. A combination of one-time and permanent funds can be used the first two years.

The budget plans will be discussed at a June 4 meeting with the Council of Deans and Vice Chancellors and their chief financial officers. Additionally, various campus groups will be briefed by budget work group members and by campus budget staff, and a campuswide brownbag with the chancellor and provost is planned for the spring.

Steven Sheffrin, dean of the Division of Social Sciences and a member of the campus budget workgroup, said that "student enrollment (and workload), has grown radically in the last several years and I recommended that this factor should be taken into account as we designed the final budget process."

To provide some financial flexibility, Hinshaw indicated she will provide modest annual budget allocations -- $1 million for academic support and $1 million for vice chancellor block grants. She advised that these funds be used "to address the most significant staff workload issues in your units."

She also indicated that she would advise deans later this spring about faculty recruitment planning but that open positions currently held by deans should generally provide sufficient flexibility for recruitments this year and next.

Additional graduate student support will be provided, and decisions about one-time investments in strategic plan proposals will be announced in April.

"I appreciate your efforts to guide the campus through this challenging financial time," Hinshaw recently wrote to deans, vice chancellors and vice provosts. "I continue to be confident in our ability to survive and thrive by working together."

For more budget information, see http://www.news.ucdavis.edu/budget/.