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BUDGET AND PLANNING : BUDGET AND PLANNING A Universitywide Perspective August 2005

Today’s Agenda : Today’s Agenda Large Trends The Impact of California’s Fiscal Crisis The Regents’ Benchmarks Role of the Budget Office

Today’s Agenda : Today’s Agenda Large Trends A Changing Economy with More Professional and Managerial Jobs

California Is Losing Its Comparative Advantage : California Is Losing Its Comparative Advantage

The Only Way to Raise Average Income Is Through Education : The Only Way to Raise Average Income Is Through Education

California Needs Companies Creating Well-Paying Jobs : California Needs Companies Creating Well-Paying Jobs UC helps create fast-growing companies. R&D-intensive industries rely upon universities because they under-invest in basic research. Thousands of new professional and managerial jobs will be created over the next decade.

Fastest Growing OccupationsProfessionals and Managers : Fastest Growing Occupations Professionals and Managers

More Californians Will Want and Need a University Education : More Californians Will Want and Need a University Education Can We Maintain Quality?

Today’s Agenda : Today’s Agenda Large Trends A Changing Economy with More Professional and Managerial Jobs The Demography of California Is also Changing

California’sPopulation in 1980 : California’s Population in 1980

California’sPopulation in 2000 : California’s Population in 2000

California’sPopulation in 2020 : California’s Population in 2020

California’sPopulation in 2040 : California’s Population in 2040

Hispanics & AsiansIncrease as % of Population : Hispanics & Asians Increase as % of Population

California’sPopulation in 1960 : California’s Population in 1960 Baby Boom

California’sPopulation in 1980 : California’s Population in 1980 Baby Boom

California’sPopulation in 2000 : California’s Population in 2000 Baby Boom

California’sPopulation in 2020 : California’s Population in 2020 Baby Boom

Today’s Agenda : Today’s Agenda Large Trends The Impact of California’s Fiscal Crisis

However, California Faces a Fiscal Crisis : However, California Faces a Fiscal Crisis Capital gains and stock options bubble

Internet Boom Produced Capital Gains and Stock Options Revenue : Internet Boom Produced Capital Gains and Stock Options Revenue

Tax Revenue Fell Sharply When Bubble Burst : Tax Revenue Fell Sharply When Bubble Burst

The Structural Problem : The Structural Problem

California’s Fiscal Crisis HasImpacted the UC Budget : California’s Fiscal Crisis Has Impacted the UC Budget

State Budget Cuts Create Gap of $2,470 per UC Student : State Budget Cuts Create Gap of $2,470 per UC Student

Short Term Versus Long Term : Short Term Versus Long Term Cycles: California Had Financial Problems in Early 1980s and 1990s

Costs to Universities Have Risen Steadily : Costs to Universities Have Risen Steadily

UC Spending LaggedThen Caught Up : UC Spending Lagged Then Caught Up

Short Term Versus Long Term : Short Term Versus Long Term Cycles: California Had Financial Problems in Early 1980s and 1990s Better Funding When Economy Improves Fundamentals of California’s Economy Are Strong; Funding Should Improve Again

Short Term Versus Long Term : Short Term Versus Long Term Cycles: California Had Financial Problems in Early 1980s and 1990s Better Funding When Economy Improves Fundamentals of California’s Economy Are Strong; Funding Should Improve Again Lags: Faculty Hiring and New Buildings Lag behind Student Increases and Then We Catch Up at Enrollment Plateau

State Dollars, Student Fees, and UC General Funds Are the Foundation : State Dollars, Student Fees, and UC General Funds Are the Foundation Committed by Policy

State Dollars, Student Fees, and UC General Funds Are the Foundation : State Dollars, Student Fees, and UC General Funds Are the Foundation State Provides 60% of UC Core Support

Today’s Agenda : Today’s Agenda Large Trends The Impact of California’s Fiscal Crisis The Regents’ Benchmarks

Maintaining Excellence : Maintaining Excellence Enabling Factors Quality Excellent Research

Maintaining Excellence Benchmarks of Quality : Maintaining Excellence Benchmarks of Quality Enabling Factors Quality Excellent Research Slow Moving Indicators

Maintaining Excellence Early Warning Indicators : Maintaining Excellence Early Warning Indicators Enabling Factors Quality Early Warning Indicators Excellent Research Slow Moving Indicators

UC Has High Persistence and Graduation Rates : UC Has High Persistence and Graduation Rates

Higher Four-Year Graduation Rates Mean Shorter Time to Degree : Higher Four-Year Graduation Rates Mean Shorter Time to Degree

Increase in Competitive Awards to UC Faculty : Increase in Competitive Awards to UC Faculty

Increase in Funding per General Campus Faculty Member : Increase in Funding per General Campus Faculty Member

Growth Is Due to More UC Faculty and More Federal $ Available : Growth Is Due to More UC Faculty and More Federal $ Available

Many Indicators of Strong Graduate Programs : Many Indicators of Strong Graduate Programs Of the 261 doctoral-granting universities in the U.S., only 61 are members of the prestigious American Association of Universities (AAU). 6 of the 8 UC campuses eligible for the AAU are members. In spite of being small and young, UCR and UCSC are in top 15 on Graham/Diamond ratings. Of the top 12 universities on the NRC rankings, 3 are UC campuses. Of the 229 rated UC programs, more than half were in the top 20.

First UC Benchmarks : First UC Benchmarks Slow Moving Indicators Graduation rates for undergraduates Research funding Rankings of departments and programs Early Warning Indicators Undergraduate enrollment Graduate enrollment Faculty salaries Staff salaries Academic/Support services Financial aid Graduate student support Facilities 2002

Are We Still on Track? : Are We Still on Track? Slow Moving Indicators Graduation rates for undergraduates Research funding Rankings of departments and programs Early Warning Indicators Undergraduate enrollment Graduate enrollment Faculty salaries Staff salaries Academic/Support services Financial aid Graduate student support Facilities 2005 2002

Faculty Salaries Are 10% Below the Comp 8 Average : Faculty Salaries Are 10% Below the Comp 8 Average

We May Not Be Able to Catch Up in the Near Future : We May Not Be Able to Catch Up in the Near Future

Funding for Staff Salaries Has Fallen Below Market : Funding for Staff Salaries Has Fallen Below Market

Funding for Staff Salaries Has Fallen Below Market : Funding for Staff Salaries Has Fallen Below Market

Inadequate Resources: Less Funding for Academic/Support Services : Inadequate Resources: Less Funding for Academic/Support Services

However, UC Has Leveraged the Power of the Multi-Campus System : However, UC Has Leveraged the Power of the Multi-Campus System

The New Compactwith Governor Schwarzenegger : The New Compact with Governor Schwarzenegger Ends Four Years of Budget Cuts and Provides a Floor for Future Budget Increases Provides Operating Funds for Enrollment Growth and Salary Increases. Continues the Current Level of Capital Funds for Our Facilities Contains a Schedule of Fee Increases So That Students and Parents Can Plan. Raises Financial Aid to Insure Access for Low-Income Students Includes Accountability Elements for Student Enrollment, Timely Graduation, Faculty Workload, etc.

Today’s Agenda : Today’s Agenda Large Trends The Impact of California’s Fiscal Crisis The Regents’ Benchmarks Role of the Budget Office

UCOP Budget Office Responsibilities : UCOP Budget Office Responsibilities

Internal Budget Consultation : Campus Academic Senate Groups Campus Student Body Campus Community Chancellors/ Campuses Internal Budget Consultation

The Regents’ Budget : 2006/2007 Budget for Current Operations University of California Office of the President November 2000 The Regents’ Budget

Annual Capital Outlay Funding Needs : Annual Capital Outlay Funding Needs Growth-Related Projects Existing Facilities UC Needs More Than $600 Million per Year through 2010

Negotiating the Budget : Negotiating the Budget President Office of the President

Budget Development : Budget Development UC Drafts Budget Request January July Year 1 President Meets with Dept. of Finance Regents Approve Budget Request Governor’s Budget Leg. Analyst Recommendations Subcommittee Hearings

Budget Negotiation : Budget Negotiation UC Drafts Budget Request January July Year 1 President Meets with Dept. of Finance Regents Approve Budget Request Governor’s Budget Leg. Analyst Recommendations Subcommittee Hearings Conference Committee Senate and Assembly Approve Budget Bill Line Item Veto and Gov. Signature

Budget Management : Budget Management January July Year 2 UC Expends Funds UC Expends Funds Fiscal Closing

Allocations to Chancellors : Allocations to Chancellors 1996-97 UC Budget Initiative Changed Internal Budget Allocations

Budget Management : Budget Management January July Year 3 Reporting / Accountability for Results Fiscal Closing

Summary : Summary UC is more important to California than ever before. UC faces a decade of exceptional growth. Quality must be protected if this valuable public asset is to be an engine of economic growth. Resources are essential for quality but early warning signs are pointing in the wrong direction. The new Compact ends four years of budget cuts and provides a floor for future budget increases. California is well positioned for economic competitiveness later in the decade.