To UCLA Faculty:
The sudden economic downturn, coupled with the long-term problems of the state budget, has been a cause of considerable anxiety for everyone. Many of you have asked how California's budget crisis will affect UCLA. Although the legislature has finally passed a budget, it will be a bit longer before we know the full impact of the measures on UCLA. Nevertheless, I can report to you how we are dealing with the budget issues on campus.
We do know that UCLA will face further reductions. The state budget calls for nominal cuts to UC of $65 million, which was in the governor's budget, and another $50 million, added by the legislature. (In addition, the legislature deleted $20 million that the governor had added for resumption of employer contributions to the retirement fund.) The $115 million in direct cuts represents about 3 percent of the UC budget and would amount to a cut of about $20 million to UCLA.
These cuts come on top of unfunded cost increases that the UC system and UCLA face in the areas of utilities, benefits, operations and faculty salaries. For UCLA, this budget shortfall comes to $31 million and may go up as the costs of benefits and utilities continue to rise. Altogether, therefore, UCLA is facing a cut of $50 million or more.
Some uncertainty surrounds the highly complex budget settlement. Some of the funding California will receive from the federal stimulus program could be applied against the $50 million cut, though it would only be for a year. Meanwhile, California's economic condition continues to weaken, and if revenues do not meet expected levels, further budget cuts are possible. We will learn more about state revenues in April. In order to fully implement the budget, California voters will have to pass a set of initiatives in May. In addition, the Regents will not determine the level of student fees until May. Going forward, therefore, we can definitely anticipate budget cuts, though their exact magnitude is not fully known.
To meet the anticipated reductions, the UC system and UCLA have been engaged in several planning efforts. The Office of the President and the Regents are considering a variety of measures, including increases in student fees, greater administrative efficiencies, and further reorganization and reductions in the Office of the President, as means of mitigating the budget reductions systemwide.
Here at UCLA, we have asked deans to prepare scenarios for cuts of 3, 5 or 8 percent, and we have urged them to work closely with their FECs in developing their plans. Because of the budget shortfalls that have already been absorbed by units, however, the actual impact on units will be greater. Under these circumstances, we must keep faculty and staff hiring to an absolute minimum for the foreseeable future, and we must focus our resources to make sure that we can sustain the teaching and research missions of the university.
For the long-term, I have established three task forces, composed of faculty and administrators, charged with developing recommendations for increasing administrative efficiency and cutting costs; raising revenues from non-state sources; and reducing the cost of our academic programs. The task forces will submit their reports to me in April, after which we will discuss the recommendations more broadly across the campus.
At the same time, we are examining a wide range of business and academic practices at UCLA, with a view toward creating efficiencies, reducing costs and providing better service. Examples include reimbursement processes, foreign language teaching, interdisciplinary teaching and research, and information technology. An ambitious review of research administration will soon be completed, and we will turn to implementing its recommendations.
It is apparent, from everything we now know, that the economic and budgetary problems of the state will have an impact on our academic programs. The chancellor and I are determined to keep the cuts away from academic units as much as possible, but because such a large percentage of our state funding is tied up in faculty salaries and benefits, it is difficult to find non-academic areas in which to absorb the reductions. In assessing how to apportion the reductions, we will be guided by the principles of quality, centrality to the mission of the university, and contributions to diversity, workload and cost effectiveness.
We cannot allow our present difficulties to divert us from our primary goals of academic excellence, diversity and community engagement. Thus, we continue to look beyond our immediate problems to plan for UCLA's long-term future. The cornerstone of these efforts is the development of a campuswide academic plan that will identify key priorities and strategies for achieving them. The academic plan will inform the direction of our long-range development plan and our next fundraising campaign. As new resources become available, the plan will guide decisions about allocations to new and ongoing academic initiatives. In the near future, we will post a draft of the plan to my Web site and invite your comments.
I welcome your suggestions for helping UCLA weather the budget downturn. Please submit your ideas to www.ucla.edu/about/budget for review by the relevant task force(s). The same Web site also offers information about the state, UC and UCLA budgets.
I will continue to keep you informed as more information becomes available. I greatly appreciate your spirit of cooperation during this time.
Scott L. Waugh
Executive Vice Chancellor and Provost