FOR IMMEDIATE RELEASE
Monday, October 14, 1996
Mike Lassiter (510) 987-9200
michael.lassiter@ucop.edu

BACKGROUND INFORMATION
Subject: 1997-98 UC budget recommendation

The 1997-98 University of California budget recommendation will be presented to the UC Board of Regents for discussion at a meeting Thursday, Oct. 17, in San Francisco. Material describing the proposed budget in detail was mailed to the news media last week. This is a summary of the operating and capital budget plans.

The budget recommendation is based on Gov. Wilson's four-year compact with higher education which has been supported by the legislature for the first two years. The compact calls for annual state funding increases averaging 4 percent for UC and annual student fee increases averaging 10 percent. In keeping with the compact, the budget anticipates a 4 percent increase in state funding and a total student fee increase of just under 10 percent.

In the first two years of the compact, the governor and the legislature provided funding above and beyond the compact to "buy out" the need for an increase in the general student fees and extra funds for other high priorities. If sufficient state funding is available again next year, buying out the fee increase for a third straight year will be among the university's top priorities.

The Regents are scheduled to act on the adoption of a proposed budget at their November business meeting. Any action on general fees would take place after the governor presents his state budget proposal in January.

Elements of the budget plan

Under the budget recommendation, UC would receive a $136 million or a 4.8 percent funding increase for UC in 1997-98, with $80.5 million coming from a 4 percent increase in state general fund support. The remainder would come from fee increases, less a third of the fee increase set aside for financial aid. The recommendation would bring state support, excluding debt service on bonds, to $2.04 billion, slightly less than the university received from the state in 1989-90.

Here are key elements of the budget plan:

Quality and access

The increased spending reflects the university's minimum needs if it is to maintain quality and provide continued access to all qualified California high school graduates who wish to attend UC and provide the classes they need to graduate in a timely fashion. It anticipates a 1 percent or 1,500 student increase in enrollment and recognizes the impact of 2.5 percent inflation on fixed costs. Freshmen applications for enrollment and community college transfers are at an all-time high. Graduation rates have never been higher in the history of the university. The average time to degree is 4.3 years, with 35 percent of the students graduating in four years and 70 percent in five years or less. A recent national study found that 53 percent of college students nationwide graduate in five years. In addition, all eight UC general campuses have implemented finish-in-four" plans that enable students to complete their degrees in four years.

Competitive faculty salaries

The budget implements the second year of a three-year plan to restore competitive faculty salaries. In addition to funding equivalent to an average 2 percent cost-of-living increase for university employees and normal merit increases, faculty would receive 3 percent parity increase. This would bring faculty salaries within 3 percent of the average of comparison institutions. Since 1990-91, faculty teaching loads have increased by almost 7 percent.

New instructional technology initiative

The budget request recognizes the increasing importance of instructional technology by building upon the approximately $55 million the university already spends annually on instructional technology. Recommended is a $40 general student fee for instructional technology that would directly benefit students. After setting aside a third of the revenue for financial aid, $4 million would be generated from the fee to provide students with better access to state of the art technology, improvements to the university's electronic network and expanding the use of technology in classrooms. A matching $4 million from the state above and beyond the compact would be sought, as would in-kind contributions from industry. Over several years, it is anticipated the fee would be increased to $200 with matching money requested from the state. A growing number of universities are adopting such fees.

UC is already a leader in technology. An informal survey last year showed 46 percent of faculty provide e-mail office hours and 31 percent use the Internet to prepare course materials. The university already has more Internet than telephone hookups, but UC needs greater investment in electronic infrastructure and intercampus networks to keep up with advances in telecommunications and technology. Access to state-of-the-art technology is important to attracting top students and faculty.

Student fees

General student fees have not increased in two years. In addition to the instructional technology fee of $40, a general fee increase of $330 is recommended. The recommended fee increase would generate about $49.5 million in new revenue, with a third or approximately $16.5 million set aside for financial aid. The remainder would cover fixed cost increases in student programs and help fund the general operating budget.

With the proposed general fee increase and the instructional technology fee, total mandatory universitywide fees would be $4,169 in 1997-98. Students also pay miscellaneous campus fees averaging $367 for undergraduates and $868 for graduate students. With the addition of miscellaneous campus fees, total mandatory fees for resident students would average $4,536 for undergraduates and $5,037 for graduate students in 1997-98. Under the recommendation, resident students would pay about 30 percent of the average cost of instruction with the state subsidizing most of the remainder. With the increase, UC fees would be about $500 less than the average of the four most comparable public universities.

An accompanying increase in financial aid, together with anticipated increases in state Cal Grant funding, should provide funds to cover the recommended fee increases for the 50 percent of UC students that demonstrate financial need.

A $590 increase is also recommended in out-of-state tuition. This would bring the out-of-state tuition to $8,984. Out-of-state tuition was set at $7,699 from 1991-92 through 1995-96 and was increased by $695 this year. In addition to tuition, out-of-state students pay the general fees, thus their total fees would be about $13,500 a year.

The plan also calls for a continuation of the differential fee structure for students in selected professional schools, consistent with the plans previously presented to the Regents.

Priorities for additional state funding

If state funding beyond the compact becomes available, the university is hopeful that funding for some, if not all of the following priorities can be provided:

• Funds to bring faculty salaries immediately to the average of comparison institutions. ($16.9 million)
  
• State matching funds to augment the university's educational technology initiative for infrastructure and access to instructional technology. ( $4 million)
  
• State funds to buy out general student fee increase. ( $33 million)
  
• Additional state support for outreach. The programs have been successful in increasing the number of students eligible for admission to college. The university is involved in more than 1,000 such programs funded by a combination of state, university and private resources. The additional money would be used to expand efforts consistent with an Outreach Task Force of business and educational leaders which is in the process of developing recommendations for expanding current programs and creating new ones. ($2 million)
  
• Additional state support for the Industry-University Cooperative Research Program to speed the transfer of research from the laboratory to the marketplace. The university committed $3 million this year and the state $5 million. Industry has responded by pledging $7.7 million of its own money to the initiative in the area of biotechnology. ( $5 million)
  
• Additional state support to address under funding in building maintenance. ($7.5 million)
  

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