Academic Senate Budget Overview

Presented to The Regents May 17, 2007

Ups and Downs, but Long-term is Up

Standard Storyline:

Whats Wrong With That Picture?

It doesnt adjust for:

inflation enrollment growth costs of academic innovation

It doesnt explain faculty experience of campus erosion

Widening Funding & Quality Gap

State and UC General Funds and Student Fees Adjusted for Enrollment Growth

A Steady Decline in Public Investment in a High-Quality UC

State Funds for UC Operations as share of State Personal Income
0.400%

0.350%

0.300%

0.250%

0.200%
1985-86 1987-88 1989-90 1991-92 1993-94 1995-96 1997-98 1999-00 2001-02 2003-04 2005-06

State Funds for UC Operations as share of State Personal Income

The Senates Key Questions

I. What is the present and likely future of UCs core budget?
II. How can UC make up structural budgetary shortfalls?

Focus on Core Campus Funds Supporting UCs Core Educational Mission

State General Fund Student fees Endowment payout Some private support Indirect Cost Recovery on grants Miscellaneous

(Non-core; carry offsetting expenses)

Not Included

Sponsored projects

Federal Business Foundations

Hospitals National labs Auxiliary enterprises

Three potential budget scenarios

Extend the Compact? Return to 2001 Pathway?

Last time that UC was relatively healthy A recent benchmark of educational quality

Return to 1990 Pathway?

The Compact permanently reduces the fraction of core funds the State provides
State Funds / Core Funding 70.0%

60.0%

50.0%

40.0%
2001-2 2002-3 2003-4 2004-5 2005-6 2006-7 2007-8 2008-9 2009-10 2010-11

Actual Data & The Compact

2001-02 funding

So that even with large annual fee increases, UCs core budget is permanently cut by about 25%
State Funding: The Compact vs. 2001-level Funding (Millions) 6,000 5,000 4,000 3,000 2,000
2001-2 2002-3 2003-4 2004-5 2005-6 2006-7 2007-8 2008-9 2009-10 2010-11

Actual Data & The Compact

2001-02 funding

Increased Burden for Students and their Families

Core Funds 2001-02 5.1% 4.6% 8.7%
Core Funds 2004-05

3.9%
4.4% 11.1%

6.4%

4.3%

45.7%

16.7%

60.9%
28.1%

State Funds

Fees & NRT

ICR

Endowment

Private

Other

State Funds

Fees & NRT

ICR

Endowment

Private

Other

Futures Report Findings

1.
2.

3.

The Compact will not allow UCs state funding to recover to 2001 Pathway, but locks in decline The gap between returning to the 2001 Pathway and the 07-08 budget request is $1.1 billion A return to traditional UC quality (1990 Pathway) would require over $2 billion in additional funding

Re Key Question I: Does the Compact allow the core UC budget to recover to pre-cut levels? Answer: No, not by a long shot

Key Question II: How could UC make up for continued shortfalls in state funding?
To reach 2001 Pathway: Increases in federal and private research funding? Relatively small future increases, and research is costly Private fundraising? Need to raise $25 billion in three years, on top of current $7 billion endowment, with no decrease in state funding Fee increases? If state funding maintained but not increased, need to raise fees to $15,000-18,000 per year by 2010
Answer: Only huge fee increases could make up for lagging state funding

UC at the Crossroads
1. 2.

3.

Extended Compact: fees up ~8% per year, no recovery to 2001 Pathway 2001 Pathway: attainable, but at current level of state funding this requires raising fees to $15-18,000 in three years and large continuing increases thereafter 1990 Pathway: would restore full-quality core operations, but remains way over the horizon

Senate Conclusions
1.

UCs quality depends on getting back to 2001 Pathway Getting there with fee increases would change UCs character to preserve its quality Preserving UC as a great public university requires a greater investment of public funds

2.

3.