The Associated Press March 17, 2011, 8:44AM ET

UC prepares plans for big loss in state funding

The University of California could be forced to further raise tuition, lay off staff and reduce enrollment if the state cuts UC funding more than the $500 million in Gov. Jerry Brown's budget plan, school officials said Wednesday.

The governor wants to close the state's nearly $27 billion budget shortfall by cutting $12.5 billion in spending and asking voters to approve a five-year extension of sales, income and vehicle taxes set to expire this year.

Under Brown's proposal, the UC and California State University systems would each lose $500 million in funding, while California Community Colleges would lose $400 million.

Those proposed cuts depend on voters approving the tax extensions in a special election in June, but so far Brown does not appear to have enough Republican support to place the tax question on the ballot.

University officials say UC could lose up to $1 billion in state funding if the tax extensions are not approved and the governor is forced to close the deficit by cutting spending alone. The 10-campus system currently receives about $3 billion in state support.

If UC sustains cuts of that magnitude, "all bets are off. Everything's at risk," UC President Mark Yudof told reporters Wednesday at the UC Board of Regents. "There would be a lot pressure to raise tuition. There would be some pressure to reduce enrollment ... You'd see layoffs."

Over the past three years, the university has drastically increased tuition, furloughed employees, accepted fewer freshmen and laid off more than 4,400 employees as the financially troubled state slashed spending on education.

In November, the regents approved an 8 percent tuition hike for fall 2011, when California residents will pay $11,124, which doesn't include individual campus fees or room and board.

During Wednesday's regents meeting in San Francisco, university administrators and board members discussed strategies to deal with UC's long-term financial problems.

UC administrators said the university faces a budget deficit that is estimated to swell to $2.4 billion in five years because of rising costs associated with student enrollment, employee pensions, faculty pay and building maintenance. The shortfall could be even larger if the system loses even more state funding.

Possible strategies to address the budget deficit include increasing the student-faculty ratio, relying more on non-tenure track faculty, reducing California resident enrollment, boosting nonresident enrollment, raising tuition and cutting financial aid.

On Wednesday, Yudof proposed downsizing the UC Office of the President to save $50 million and give individual campuses more control over money and decision-making.

"We're at a critical stage at the university," said board chairman Russell Gould. "There's just no easy way out."

The chancellors of the Berkeley, Irvine and Santa Cruz campuses told regents that three years of budget-cutting are hurting their ability to educate undergraduates and conduct research.

"We've already cut and streamlined and coordinated and optimized," said UC Santa Cruz Chancellor George Blumenthal. "These reductions will cut right to the heart of our educational and research mission."


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