Chancellor

Budget Update from UCOP

Read the most updated information regarding the budget situation via the UCOP website here

President Yudof's Letter Regarding Budget

October 13, 2008

To: CHANCELLORS
Dear Colleagues:

We discussed last week the potential for mid-year cuts to our State budget and the need to take immediate steps to constrain spending. The attached letter we received Friday from high level staff in the Governor's Office indicates their expectation that, while savings of $200 million are expected to occur because of actions they have taken to reduce State costs, further reductions are necessary. Further, they expect all State agencies to share in an effort to reduce expenditures by another $190 million. The Department of Finance has informed us that the University's share of this cut is $33.1 million.

These cuts are in addition to other actions on the budget that were already anticipated. We will be transmitting final allocations to the campuses in the next couple of weeks, following The Regents' approval of a final 2008-09 budget plan at a special meeting of the Board (still being scheduled); each campus' share of the mid-year reduction will be included in that communication, along with information on the funding shortfalls and/or cuts already planned. It is my intention to allocate the cut proportionally, based on adjusted General Fund budgets. You will have flexibility in determining how to address this cut. I ask, however, that reductions in instructional programs be avoided whenever possible and that we continue to protect the funding for Student Academic Preparation and Education Programs. Below is a list of the kinds of actions you should consider:

• Hiring freeze - where possible, leave unfilled non-faculty positions open and do not create new positions;

• Travel - curtail non-essential travel; use video conferencing, conference calls for essential meetings;

• Leased facilities - reduce amount of space leases;

• Consulting contracts - limit consulting contracts to only those required for essential services;

• Equipment - defer purchasing equipment not critical to academic programs;
• Energy - many efforts are already underway, but more can be done to save energy costs;

• START - encourage employees to take advantage of programs to reduce their compensated time to less than 100%, where feasible;

• Efficiencies - evaluate business practices to eliminate non-essential activities (for example, scanning documents and sending by e-mail rather than by hard copy, reducing the number of University-paid cell phones, etc.)

These measures will obviously be helpful in addressing the $33.1 million reduction in the short term for the foreseeable future; however, it is evident that the turmoil in the international and national equity, housing, and credit markets will cause continuing erosion in the State's economy. As such, we must view this recent action by the Department of Finance as just the beginning of potential further reductions this year and/or next year. It is essential that we take a systemic, long-range approach that seeks permanent cost cutting measures, thereby placing UC in the best possible position to weather the next several years. Campuses should be looking at all options for deferring costly new programs and for consolidating or eliminating existing programs that are high cost yet undersubscribed.

I am directing Executive Vice President Lapp and Vice President Lenz to work with each campus to develop a plan for addressing its share of the $33.1 million mid-year reduction and to outline general actions each campus is considering to address the longer, multi-year fiscal constraints with which we are likely to be contending. Plans for the short-term reduction should be developed two weeks following receipt of your final allocation letter; outlines for further actions each campus believes may be anticipated to address the longer term problem should be completed by November 13, 2008. In addition, Executive Vice President Lapp and I plan to have in-depth conversations with each campus over the next several months to understand the budget priorities and trade-offs under consideration as part of this cost-saving effort.

The University of California is a great university that has endured many difficult times in the past. We will do so again. I urge you to consider these actions as a way of preserving the quality of this institution for future generations.

Sincerely yours,

Mark G. Yudof
President