University of California, Riverside

UCR Budget News & Information

Chancellor's Budget Update — 2/25/09

February 25, 2009

TO: Faculty, Staff, and Students
University of California, Riverside

Last week the state budget was approved by the special session of the legislature and signed by Governor Schwarzenegger.  President Yudof issued a press release describing the overall impact on the University of California system.  It may be found at:

The bottom line is that the University of California system faces an approximate $450 million shortfall in state general funds, consisting of $115 million in permanent reductions for the rest of this fiscal year (2008-09) and next (FY09-10), $122 million in unfunded enrollments of California resident undergraduate students, and $213 million in unfunded but mandatory cost increases (for utilities, employee health benefits, obligatory salary adjustments, and other inflationary costs).

This is the state general fund budget as we know it today, but there are still several "moving parts" that might influence the final budget, the most important being:

  1. $50 million of the $115 million permanent reduction may be rescinded later this spring if the state receives sufficient funds from the federal economic recovery package.
  2. Student fees for academic year 09-10 are yet to be set, and depending on Regental action this spring, the budget shortfall may increase or decrease.
  3. In May or June, following the receipt of personal and corporate taxes as well as the public's vote on aspects of the budget in the May 19 special election, the state will likely revise the budget, leading to the potential for change in either direction.
  4. The UC Retirement Program needs revenue to regain its long-term viability, yet no decisions are yet forthcoming as to how to accomplish this.  Those decisions will impact overall revenues available to UC. Indeed, we are deeply concerned that the state eliminated a $20 million provision for re-starting the employer contribution in spring 2010.
  5. The state's economic challenges are expected to continue through at least FY10-11.  Although the situation remains ambiguous, we are positioning ourselves now with our budget planning activities to respond appropriately in years ahead, while maintaining the integrity of our research, teaching, and outreach programs.

So how do the state-wide and systemwide numbers translate to the specific general fund budget at the University of California, Riverside?

First, and as you know, the campus has already implemented a one-time reduction of $8 million for the current fiscal year of 2008-09.  At one time we thought this number may go as high as $13 million, but we believe this is no longer the case.

Secondly, we estimate that the recently signed state budget will result in permanent cuts at UCR of no more than $10 million for FY09-10.  Like the UC system as a whole, however, the actual impact on the campus is greater than this.  UCR also has a number of unfunded costs, including approximately $11 million in unfunded enrollment for California residential undergraduate students, $2.5 million in faculty merit increases, as well as increased costs related to employee health benefits, salary increases for union employees, and other inflationary costs.  Although the precise numbers are as yet unknown, we anticipate that the overall impact of the budget reductions and unfunded expenditures will approximate $28 million, or slightly less than 10 percent of UCR's state general fund budget.

It is worth repeating that the fiscal challenge facing the state and campus will be multi-year.  The UCR Budget Advisory Committee has initiated a process to review options and make recommendations to meet budget shortfalls over this extended period.  The planning targets we have established-scenarios for budget cuts of 6.5 percent, 10 percent, and 15 percent-are consistent with the projected shortfalls for the campus and should also position us to deal with reductions in FY09-10 and beyond. While all units are participating in this planning-and I acknowledge that this is very difficult work-at the end of the process we will have the insights necessary to make informed differential reductions in keeping with our core mission, vision, and strategic priorities.

On the capital budget side, most of our construction projects with significant state funding remain on hold at this time and for the foreseeable future, as I have explained in earlier communications and town hall discussions.  The exception is our Student Services building, which will continue forward.

Finally, the recently signed budget contains no funding for the UCR School of Medicine.  However, in his recent budget letter to the Regents, President Yudof indicated, "We will continue to press the Governor and legislature. to obtain $10 million in start-up funds for the UC Riverside Medical School." We remain hopeful that the School will be funded in FY09-10.

As we receive additional information, I will share it with our campus community.  In the meantime, please be assured that your senior leadership team is doing everything it can to be fiscally prudent, to protect the core academic enterprise and student experience, and to remain sensitive to deleterious impacts on our students, faculty, and staff.


Timothy P. White

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University of California, Riverside
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