Thursday, January 10, 2002
University of California Office of the President

Media Contact:
Brad Hayward
(510) 987-9195

Governor's budget plan makes targeted cuts at UC but funds enrollment growth,
keeps student fees level

Gov. Gray Davis released a 2002-03 state budget proposal today (Jan. 10) that, while making targeted cuts at the University of California to help address the state's budget shortfall, would still fund an expected 7,100 new students, keep student fees level, provide merit increases for faculty and staff, and accelerate several facilities projects to spur economic growth.

The budget plan expresses the governor's support for a series of three education bond measures on the 2002, 2004 and 2006 ballots that would provide needed facilities funding for UC. The budget proposal also would accelerate funding for the UC-based California Institutes for Science and Innovation, providing the final two years of funding in the current year by using lease-revenue bonds.

The governor's budget was crafted amid an economic downturn that has left the state with an estimated $12 billion budget shortfall.

"We appreciate the governor's effort to maintain support for higher education during such difficult economic times," said UC President Richard C. Atkinson. "This budget plan would maintain access to UC for all qualified students, continue the state's investment in university research as a catalyst for economic growth, and allow us to provide a very modest salary boost to our hard-working faculty and staff."

Under the governor's proposal, UC's state-funded budget would total $3.4 billion in 2002-03, roughly the same as the original budget for the 2001-02 fiscal year. The governor's plan would make mid-year reductions totaling $41 million in the 2001-02 UC budget and then provide a $50 million increase for the 2002-03 fiscal year above the revised 2001-02 level.

While the budget proposal does not fully fund the Partnership Agreement between UC and the Davis administration - an agreement that sets out funding expectations for the state and performance expectations for the university - the administration indicated that it "expects to resume its commitment to the funding elements of the Partnership once the state's fiscal situation improves."

The governor proposed several mid-year cuts for 2001-02 that would be made permanent, including $25 million of the $75 million the state provided to UC this year to cover increased energy costs; $6 million of the $57 million provided for the UC-led California Professional Development Institutes for K-12 teachers; and $4.8 million of the $32 million provided to UC to help expand K-12 schools' access to the next-generation Internet2. In addition, the proposal calls for a reduction of $5 million in one-time funds for clinical teaching support for UC hospitals, neuropsychiatric institutes and dental clinics.

For the 2002-03 fiscal year that begins July 1, meanwhile, the governor proposed funding for enrollment growth of 7,100 full-time-equivalent students, a 4.3 percent increase over the budgeted amount for 2001-02. The budget also provides funding to implement state-supported summer instruction at UC Davis; the program is already in place at UC Berkeley, UCLA and UC Santa Barbara as a means of accommodating student enrollment growth.

The budget proposes that mandatory systemwide student fees stay level, making 2002-03 the eighth consecutive year without a systemwide fee increase at UC. However, unlike previous budgets, the plan does not provide state funding to cover the university's loss of the additional fee revenue it needs to maintain support for existing programs.

The proposal would provide funding for an average merit increase of approximately 1.5 percent for eligible faculty and staff; final salary increases are subject to collective bargaining requirements where applicable. UC did not, however, receive funding it sought for an additional 2 percent increase for faculty and staff and a further 2 percent increase for employees in positions where compensation levels lag the market.

"Our faculty and staff are the heart of the university, and competitive compensation for them remains a high priority for UC," Atkinson said. "We will continue to seek additional salary funds as the state's finances allow."

The governor's budget provides funds to cover a 6.7 percent increase in the university's costs of providing health insurance to its employees; UC had estimated that a 10 percent increase would be necessary. The budget also provides $4 million for faculty start-up funds at UC Merced, the new campus planned for the San Joaquin Valley.

Budget cuts the governor proposed in 2002-03 to help balance the state's budget include a $4 million reduction for the California Subject Matter Projects, which provide professional development for K-12 teachers; a $4.2 million reduction for the university's outreach programs to K-12 schools; and a $17 million elimination of "bonus" funding for financial aid that the state had allowed UC to keep when student fees were reduced in the late 1990s. (UC students still would receive more than $500 million per year in scholarships, grants and fellowships from all sources, however.)

The plan also does not provide increases the university had sought, consistent with the Partnership, for improvements in undergraduate education, building maintenance, instructional technology and library materials.

The governor's budget does, however, contain good news for the university's capital program. First, it proposes to accelerate seven construction projects at UC as part of the governor's statewide economic stimulus package. The projects, totaling $279 million, are for programs in engineering, the sciences and veterinary medicine at UC Davis, UC Irvine, UC Riverside, UC San Diego, UC Santa Barbara and UC Santa Cruz; the package also includes infrastructure development at UC Merced. The projects have been approved by the Legislature and were expected to be funded for construction in 2002-03; the governor's proposal moves them up to the current 2001-02 year using lease-revenue bonds.

In addition, the governor's capital budget accelerates funding for the four California Institutes for Science and Innovation, which will be located at UC campuses and will pursue cutting-edge scientific research in fields that are important to the future of the California economy. The final increment of $218.5 million in funding for the institutes was to be provided over the next two years, but the governor proposes to provide it in the current year - a move that would help address the state's General Fund shortfall by shifting the financing for the institutes from state General Funds to lease-revenue bonds that would be paid off over time.

Also, the governor is proposing $82.6 million for UC's regular capital improvement program, contingent on legislative and voter passage of a new general-obligation bond measure, along with $26.7 million in lease-revenue financing for construction of a classroom and office building at the new UC Merced campus.

The governor's budget proposal next will be considered by the Legislature. Final action on the state budget generally occurs by early summer.

The budget documents are available on the Web at Additional information on the UC budget can be found at

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