UC Berkeley Vice Chancellor and Chief Financial Officer Rosemarie Rae briefed an audience of largely campus staff on how the $2.7 billion campus budget is structured and the plan to balance the multimillion dollar structural deficit by 2020.
The session was the first in a new series of talks with campus administrators and aimed to improve transparency of the budget-setting process. A lower–than-anticipated funding allocation in Gov. Jerry Brown’s January state budget proposal and the tabling of the UC Board of Regents vote on tuition hikes last week both profoundly affect UC Berkeley’s financial planning, Rae said at the talk.
The gap between what the campus initially expected from state support and what Brown currently plans to give is about $7 million, according to Rae. A tuition hike would provide funding in the range of $20 million.
Tuition hikes would be “a big driver in our budget,” and it’s a challenge to plan around a delayed decision, Rae said. “I feel like Captain Obvious in that statement.”
In total, state funding is about $375 million or 14 percent of the campus budget, while $700 million comes from tuition and fees. $225 million of that $700 million is from out-of-state tuition.
The campus exceeded its cost-cutting target of a $110 million deficit for the 2016-17 year, reducing the deficit to about $77 million instead. Administrators are planning for a reduction to $57 million for the 2017-18 year, and the campus is on track so far, Rae said.
“I’d say professionally I’ve never been proud of (the deficit), but we’re making some progress,” Rae said at the event.
As student enrollment increases systemwide in the UC, the campus hopes to expand housing availability, but according to Rae, the funding mechanism for constructing new buildings is an impediment.
The campus only houses 22 percent of undergraduates and 6 percent of graduate students, according to Rae, and it’s difficult to find liquid funds other than debt to pay for more buildings.
“We’re unable to go out to the debt market now because of our financial position,” Rae said at the talk.
UC Berkeley has been operating with a structural deficit for about a decade. After former chancellor Nicholas Dirks announced an annual $150 million deficit in February 2016, staff and faculty voiced discontent with having been kept in the dark about the severity of the deficit and plans to reduce costs.
Rae’s acknowledgement of staff concerns was a good step toward rebuilding trust, according to Sharon Gillars, financial services director of Biosciences Divisional Services, who attended the talk.
It’s important as a staff member to understand the campus’s financials, because “staff is third — we are the last rung and often are an important base, yet we don’t get representation or salary we deserve,” compared to administrators and faculty, Gillars said.