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FOR IMMEDIATE RELEASE

Wednesday, July 2, 2003

- Brad Hayward (510) 987-9091
brad.hayward@ucop.edu

- Hanan Eisenman (510) 597-6194
Hanan.Eisenman@ucop.edu

CONTINUING BUDGET CUTS MEAN STEEPER FEE INCREASES, POSSIBILITY OF ENROLLMENT CONSTRAINTS AT UC

With deepening state budget cuts a likelihood this year and next, University of California President Richard C. Atkinson warned today (July 2) that the result may well be higher student fee increases this year and constraints on student enrollments beginning next year.

In a letter to the Board of Regents, Atkinson outlined a proposal for absorbing additional budget cuts in the 2003-04 fiscal year, which began yesterday without a state budget. The proposal involves both borrowing money and raising student fees in order to avoid further program cuts that would harm the quality of the student educational experience at UC.

For 2004-05, Atkinson warned, deeper budget cuts from the Legislature may well leave UC with no alternative but to begin cutting back on student enrollment growth. Such enrollment constraints are not possible this year because all new students have already been admitted for the year. But continuing budget cuts could mean that UC would be forced to scale back its enrollment growth plans by at least 5,000 students beginning in the 2004-05 year, he said.

Atkinson also noted that deep budget cuts of the kind being discussed by Assembly and Senate Republicans could lead to even higher fee increases and, next year, deeper enrollment cuts.

“The University of California has taken major budget cuts, and we now have cut as deep as we can without harming the quality of the student educational experience — the very thing for which students come to this University,” Atkinson said. “Unfortunately, the state continues to propose deeper and deeper budget cuts as it confronts its most serious fiscal crisis ever.

“Raising student fees and constraining new enrollments are very painful decisions to make, and I wish we did not have to consider them. But I am convinced that the alternative — allowing the educational quality of the University of California to deteriorate — would be even worse.”

By 2003-04, on a state-funded budget of about $3 billion, UC will have taken $360 million in base budget cuts to existing programs, based on the proposals in the Governor’s Budget. All non-instructional programs are taking significant cuts, including administration, libraries, research, outreach, student services, and Cooperative Extension, and employee layoffs are being planned or implemented in most of these areas.

In addition to absorbing state budget cuts, UC is contending with about $100 million in cost increases for which it is receiving no new funding. These include health benefits, energy, maintenance of new space, and a variety of other inflationary costs.

Now, despite the governor’s continued opposition to additional budget cuts for UC, both the Assembly and Senate versions of the budget are proposing an additional $80.5 million one-time reduction to UC’s budget. In addition, Assembly Democrats late last week issued new budget proposals that would cut UC by a further $45 million; Assembly Republicans this week issued a plan that would mean at least $400 million in cuts for UC; and Senate Republicans are considering significant additional cuts to the University that are unspecified at this time.

In light of the continuing budget cuts, Atkinson said he is proposing the following for 2003-04:

  • UC would borrow approximately $40-50 million to close part of the $80.5 million gap. This debt financing would be repaid over a multi-year period through a 6 percent increase in nonresident tuition, on top of the currently planned 4 percent increase.

  • To close the rest of the gap, mandatory systemwide student fees would be increased 25 percent above the current fee level, which reflects the $405 annualized increase that was adopted beginning with the spring 2003 term. For resident undergraduates, the additional 25 percent would raise fees $960, or $165 more than the $795 increase that was assumed in the Governor’s Budget. Mandatory systemwide fees for resident undergraduates would total $4,794 per year. Graduate and professional school fees also would be raised 25 percent.

  • The president would be given Regental authority to raise fees up to 30 percent if necessary, depending on the outcome of the state budget and the possibility of additional budget cuts. Such authority would include a requirement that the president consult with the chair of the board and the chair of its Finance Committee before implementing the higher fee level. A 30 percent increase would mean a resident undergraduate would pay an additional $1,150 in 2003-04, rather than the $960 under the 25 percent scenario, producing a total mandatory systemwide fee level of $4,984 per year for resident undergraduates.

The Regents will be asked to vote on the fee proposals at their July 16-17 meeting. Atkinson said he suggested the fee increases with the greatest regret, but out of a desire to avoid damaging the core quality of the UC educational program. He noted that mandatory systemwide student fees for resident undergraduates today ($3,834 per year) are just $35 per year more than they were in 1994-95, and that even a 30 percent increase would leave resident fees more than $1,200 below the average of UC’s comparison institutions.

Under any fee scenario, UC will continue its commitment to financial aid. In general, financially needy students with family incomes of $60,000 or less would have the fee increase fully covered by financial aid; in the case of financially needy students with family incomes of between $60,000 and $90,000, a UC fee grant would cover approximately half of the increase.

But for 2004-05, Atkinson warned, continuing budget cuts may well mean that UC will have to begin constraining enrollments of new students.

“If the $80.5 million reduction is not restored in the 2004-05 budget or if we take other additional budget cuts, we may have no alternative but to, no later than January 2004, institute enrollment constraints for the fall 2004 entering class,” Atkinson wrote the Regents.

“Reducing enrollments clearly would be distressing. UC has a proud tradition of guaranteeing access to a high-quality education for the state’s very best students. But continuing state budget cuts could very well leave us with no choice, and I believe it is important to communicate that message very clearly in Sacramento.”

Details on how a reduction of new enrollments would be implemented are not available at this time. But Atkinson said enrolling 5,000 fewer freshmen and transfer students in 2004-05 than the University has been planning would save $45 million in state funds, and deeper reductions could be required if deeper budget cuts are adopted by the Legislature.

Enrollment constraints are not possible in the 2003-04 year because UC has already admitted all new students for the year.

Atkinson’s letter is available at http://www.ucop.edu/news/budget/regentsletter.pdf.

A fact sheet on fees is available at http://www.ucop.edu/news/factsheets/2003/student_fees.pdf.


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