Budget message from Vice Chancellor Steve Olsen

To the campus community:

As you know, the state of California faces a budget deficit of approximately $15 billion. The Legislature and the governor have been unable to agree on a spending plan for the fiscal year that began more than two months ago, on July 1. Many of you have asked your supervisors questions about the potential effects of the stalemate on your work and UCLA’s mission. I am writing to share what we know thus far. 

Even if the state budget is late, as it has been in the past, our early planning has allowed us to make reasonably informed budget decisions. Our academic units and administrative departments have been provided operating budgets, and every effort has been made to minimize the impact of the state budget shortfall. While across-the-board reductions in state funding have been avoided, all of our operating units are being asked to assume financial responsibility for certain unfunded utilities, building maintenance and benefits costs. These costs are significant and will affect the resources available to spend on some programs. 

Unlike many health and social services providers in California, the University of California is currently receiving state funds, and UCLA has adequate cash flow to meet payroll and other essential expenses. However, until a final state budget is enacted, it is difficult to predict whether UC will be subject to 11th-hour decisions by the Legislature and the governor and how those decisions might affect UCLA’s current budget planning. 

Most of the questions have fallen into four broad categories, so I will address them here.

1. Departments are continuing to assess their staffing needs within available resources. To provide temporary salary savings and thus minimize the potential for layoffs, many UCLA departments are participating in UC’s Staff and Academic Reduction in Time (START) program. The program allows employees to volunteer to reduce their time while retaining full retirement service and paid-leave credits. 
   
   
2. We do not expect that funding will be available for cost-of-living salary increases for faculty or staff this fiscal year, or for merit pay increases for staff or management. Merit reviews for ladder-rank faculty will proceed this year as in the past, and individual faculty members eligible for merit or promotional advancement this year will receive approved increases. Any salary actions for exclusively represented employees are subject to the collective bargaining process.
   
   
3. While the governor has proposed that the salaries of some state employees be reduced to minimum wage, UC is not planning any actions related to the governor’s executive order.
   
   
4. At their September 2008 meeting, the UC Regents are scheduled to continue discussions of policies related to the likelihood that contributions to the UC Retirement Plan will need to be restarted in the future. The amount and timing of employer and employee contributions has not been determined. No contribution is planned for the current 2008–09 fiscal year, which started July 1. For the past two decades, there has been no need for either UC or its employees to contribute to the UC Retirement Plan.

State funding makes up 13 percent of UCLA’s total revenues; the remaining 87 percent consists of medical center patient revenue, research grants, student housing payments, student fees and gifts. While these items typically are not affected directly by the state budget, UCLA’s core academic and administrative programs remain highly dependent on the state and are most affected by the funding uncertainty. We continue to carefully monitor developments in Sacramento. We are concerned about the erosion of state support, which requires an ongoing balance of the trade-offs between academic quality, access and affordability, which are at the core of UCLA’s mission.

I understand that the uncertainty over the state budget creates challenging circumstances for many in the campus community. Thank you for your continued commitment to UCLA during this difficult time.

I anticipate communicating directly with you again when the state budget stalemate is resolved. In the meantime, I encourage you to visit this site for campus and UC budget news: www.ucla.edu/about/budget.

Sincerely,

Steven A. Olsen, Vice Chancellor
Finance, Budget & Capital Programs