The governor’s May budget revision, released Tuesday, remains largely unchanged from the January proposal. Patrick Lenz, the university’s vice president for budget and capital resources, said the university did not receive any additional increases in funding in the May revision.

The budget also calls for a four-year tuition freeze for all students except those in professional schools, a restructuring of debt and discontinuation of a proposed unit cap on state-subsidized courses, which could have affected 2,200 UC students in the next school year.

Student Regent Jonathan Stein and Regent Bonnie Reiss raised concerns about rising costs of professional student fees while undergraduate and other program costs have been held constant.

“Because Prop. 30 passed and because of new state revenues, we’ve been able to hold tuition constant,” Stein said. “In reality, we’ve been able to hold undergraduate and Ph.D tuition constant while professional schools continue to rise.”

The regents also discussed restructuring the university’s debt. The state of California currently takes out bonds on behalf of the university, but UC officials say shifting the responsibility of the debt to the UC system would help lower the debt.

“That debt is greater because the state of California’s credit rating is not as good as ours,” said Brooke Converse, spokesperson for the UC Office of the President. “What we’re asking is that the state of California let us take over and restructure that debt, because if we restructure it, we’ll be able to save $80 million a year.”

The university is also working with the governor to expand facilities at UC Merced, said Nathan Brostrom, the university’s executive vice president for business operations.

“The highest priority is a classroom and academic building at UC Merced,” Brostrom said. “They are now close to 6,000 students, and they do not have space for continued growth unless they get more classroom buildings.”

The regents also approved a plan to build a new aquatics center at UC Berkeley on the current site of the Tang Center parking lot.

Protesters from American Federation of State, County and Municipal Employees 3299, a union representing patient-care workers at UC medical centers, also interrupted early in the meeting for about 45 minutes to protest in favor of higher pay and increased staffing.

On Thursday, the regents will meet in closed sessions to discuss collective bargaining matters and lawsuits related to the UC system.

Staff writer Virgie Hoban contributed to this report. 

Mitchell Handler covers academics and administration. Contact him at mhandler@dailycal.org and follow him on Twitter @mitchellhandler.

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The revised budget, commonly known as the May revision, reflects new spending proposals from state legislators, changes in the state’s economic outlook and decreases in federal government funding since the governor’s first proposed budget in January.

The UC Board of Regents will discuss the revised budget at its meeting in Sacramento on Wednesday.

If approved by the Legislature, the governor’s budget will increase funding for each of the state’s higher education systems above the prior year’s funding. The university will receive an increase of up to 20 percent in General Fund appropriations — about $511 million — over the next four years.

According to the budget, these changes will represent an increase of about 10 percent in total operating funds, including tuition and fee revenues.

The budget includes about $25.4 billion in total funding for higher education in the coming fiscal year, $400 million less than was proposed in January.

In addition, a previously proposed unit cap has also been removed from the budget following rejection from the state Legislature. Faculty groups and lawmakers criticized the 150 percent unit cap on state-subsidized courses for its “one-size-fits-all” model and argued that the mandate would not be as effective as individual campus caps.

According to the UC Office of the President, the unit cap would have impacted 2,200 UC students in the 2013-14 academic year.

“UC will continue working with the governor and the Legislature to address critical funding needs,” said Patrick Lenz, the university’s vice president for budget and capital resources, in a statement.

According to the governor’s press release, the budget is expected to remain balanced in the coming years. Spending cuts enacted over the past two years and new temporary funds brought in by Proposition 30, which was passed by voters last November, are expected to allow the state budget to reduce the state’s debt to $4.7 billion by 2017 — a reduction of more than 86 percent.

“This budget builds a solid foundation for California’s future by investing in our schools, continuing to pay down our debts and establishing a prudent reserve,” Brown said in a press release. “But California’s fiscal stability will be short-lived unless we continue to exercise the discipline that got us out of the mess we inherited.”

Additional elements of the revised budget include changes to the state’s public school funding system, investment in job-creation programs and an additional $72 million for county probation departments to compensate for their increased responsibilities as legislatures try to reduce the state’s prison population.

Brown will now have to convince the state Legislature that his plans for higher education and the state merit passage. After discussion from state senators and assembly members, the budget will be finalized in June and take effect July 1, the start of the 2013-14 fiscal year.

Alex Berryhill covers higher education. Contact her at aberryhill@dailycal.org and follow her on Twitter @berryhill93.

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After the UC system was hit with around $900 million in cuts over the last five years, Brown’s budget would allocate about $250 million in extra state money for the university. For the next four years, the governor intends to boost the university’s funding by 4 or 5 percent. While both proposals are welcome signals that Brown is prioritizing the state’s commitment to higher education, other aspects of his approach to the university’s budget are troubling.

The budget plan is fraught with restrictions at a time when the university needs the freedom to determine a strong path toward a more sustainable financial future. According to UC spokesperson Dianne Klein, there is a gap of about $150 million between Brown’s proposal and what the university needs for the next year, prompting concerns about how UC leadership will account for the difference. To that end, Brown has suggested further reducing inefficiencies — an easy target that fails to adequately meet the university’s structural problems.

UC officials have already focused on becoming more prudent with their resources. In a statement released shortly after Brown’s proposal was announced, Patrick Lenz, the university’s vice president for budget and capital resources, agreed with the governor’s “emphasis on fiscal discipline.” However, he also noted that the university has implemented hundreds of millions of dollars’ worth of efficiency measures and cuts and is aiming to reduce administrative expenses systemwide by half a billion dollars. The university can’t cut its way to sustainability.

Yes, Brown was able to guide Prop. 30 to victory, which has now allowed the university to receive more funding.  Yet that does not mean he has license to micromanage what the university does with that money, especially because state funds still account for a relatively small portion of the university budget.

Brown is also calling on the UC system to freeze its tuition levels, which the Legislative Analyst’s Office has already warned against in the long term. Students and administrators alike want to see tuition stabilize, but keeping the cost frozen could result in steeper increases later on.

This should be a time where the university, not the governor or the state Legislature, uses increased funding to figure out how to best serve its students’ needs. Doing so will require innovative approaches, not the misguided restrictions this budget seeks to impose.

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The board’s Committee on Grounds and Buildings approved the university’s 2013-14 Budget for State Capital Improvements, which requests $788.5 million from the state to fund 39 capital projects across the system.

If approved by the state legislature, approximately $432.7 million would go toward designing and constructing new academic facilities at various campuses while the other $355.8 million would be allocated to improving existing campus infrastructure and to projects addressing seismic-safety issues.

Since the economic crisis in 2008, state funding for university capital projects has slowed to a trickle, halting ongoing capital planning and causing a backup of incomplete construction projects. According to UC Vice President for Budget Patrick Lenz, campuses will have to find other sources of funding for their capital projects if state support remains insufficient.

“We’re at this crossroads where we have to figure out if the state is not willing; we have to seriously look at our ability to take on these external loans,” said Lenz.

Since 1990, the state’s contribution to the university per student has fallen by more than 60 percent. For the first time, in 2011-12, funds from student tuition and fees exceeded funds to the university from the state.

Lenz said the passage of Proposition 30 last week could put the state legislature in a better place to accept the university’s funding request.

Later in the meeting, the board also evaluated a proposal presented by representatives from UC Santa Barbara to develop more student housing on the campus.

UC Santa Barbara Executive Vice Chancellor Gene Lucas estimated that the campus would need to provide an additional 5,000 beds by 2025 to match projections of growing student enrollment. According to Lucas, the campus will eventually have to freeze enrollment unless more housing is developed to meet the growing demand.

“We’re really up against the wall with new housing,” Lucas said. “Since it takes time to build residence facilities, the time for us to be doing this is now.”

The board also approved a design for a new academic building to be constructed at the UCSF Mission Bay campus. With an estimated budget of $118.6 million, the new building would house faculty and staff offices and would save the campus approximately $331 million by consolidating expiring leases on commercial properties currently being used.

Protesters have planned a demonstration for Thursday’s meeting, when the board will discuss issues related to the UC budget and compensation for senior management officials.

Justin Abraham covers academics and administration. Contact him at jabraham@dailycal.org.

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Much of the debate at Wednesday’s meeting centered around the possibility of increasing tuition to increase the percentage of students supported by the UC Blue and Gold Opportunity Plan, which uses one-third of the revenue from undergraduate fee increases as a return-to-aid policy to pay for the tuition of low-income students.

UC Executive Vice President for Business Operations Nathan Brostrom said that by increasing tuition by $2,000, the plan could support families making $120,000 a year, up from the $80,000 annual income limit it currently supports.

“The problem with having the perception that low-income students are taken care of is a false impression,” said Cinthia Flores, the student regent-designate, in an interview. “As we’ve seen, Cal Grants are constantly on the chopping blocks. In reality, low-income students depend on the wish and want of the state Legislature.

With state funding reduced by 27 percent since the 2008-09 fiscal year and individual campuses still absorbing a portion of $750 million in budget cuts from last year, administrators cautioned against the notion that the board will not have to consider tuition increases at all. If voters fail to pass Proposition 30, Gov. Jerry Brown’s tax initiative, at the statewide elections on Nov. 6, the board will likely approve midyear tuition increases at their meeting later that month to partly make up for $250 million in midyear “trigger” cuts.

“We learned of the budget situation at the end of June,” Brostrom said in an interview. “It’s a lot of revenue to make up in a short time.”

Since the board approved Brown’s UC budget proposal at their meeting July, hinging the short-term financial stability of university on the proposition, the university has explored financial options to raise revenue without increasing student fees. The university will begin restructuring its revenue, investments and endowment accounts, which could generate $20 million in one-time funds, Brostrom said at the meeting. Restructuring the university’s debt could generate an additional $80 million to $100 million in savings, according to Brostrom.

UC administrators said that if the tax initiative fails to pass at the polls, restructuring financial assets would help prevent the full 20.3 percent tuition increase that would be necessary to make up for trigger cuts.

“We want to know what our options are should the initiative pass and, God forbid, if it doesn’t,” said board chair Sherry Lansing. “We’d like to know we’ve done anything humanly possible (before voting) for tuition increases.”

Should the proposition pass, students will be off the hook for a tuition increase this school year but will likely face a 6 percent tuition increase for the 2013-14 academic year, according to UC Vice President for Budget and Capital Resources Patrick Lenz.

Earlier in the meeting, the board debated raising the percentage of the nonresidents in undergraduate student body, which is currently capped at 10 percent systemwide. Some regents, including William De La Pena, supported the idea, saying increasing nonresident enrollment is necessary for the university to remain economically viable.

Yet, others worried that raising the cap would further decrease the representation of underrepresented minorities at the university, a large portion of whom are California residents.

“We are changing fundamentally our mission, which is to provide education to Californians,” said Regent Eddie Island at the meeting. “Now, we are selling it to the highest bidder.”

Staff writer Sara Khan contributed to this report.

Contact Sara, Amruta and Aliyah at newdesk@dailycal.org.

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The Committee on Grounds and Buildings met after a brief closed session to discuss and ultimately approve the design for the UC Irvine Medical Center Henry H. Chao Comprehensive Digestive Disease Center. The center will be located in Orange, California, and provide outpatient diagnostic services and treatment to patients with digestive disorders.

The regents then voted to approve the budget and the external financing for the proposed Meyer And Renee Luskin Conference and Guest Center in the heart of UCLA’s campus. The Luskin Center will occupy 294,000 gross square feet, and include a conference center, a parking garage with 125 spaces, a catering kitchen to replace an older facility and improvements to nearby traffic infrastructure.

The center will be funded by both a $40 million donation from Meyer and Renee Luskin and $112 million in external financing.

While discussing an update to the university’s capital program, Vice President of Budget and Capital Resources Patrick Lenz said the decline in state funding in recent years has led to a backlog in capital projects the university needs to address, including several buildings in need of seismic renovation.

One of the buildings mentioned is Tolman Hall at UC Berkeley. According to the related agenda item, the building is in need of a seismic replacement, a project that totals $186.8 million. Part of the building was closed off to students and faculty last year due to its poor seismic rating.

During the Committee on Compliance and Audit, the regents approved the UC’s Internal Audit Plan for 2012-13 and the Ethics and Compliance Program Plan for 2012-13.

Wednesday’s agenda items and committee meetings are expected to see considerably more debate, as the regents discuss the endorsement of Gov. Jerry Brown’s tax initiative on the November ballot that, if passed, would help the UC stave off a 20 percent mid-year tuition increase.

UC students and workers are planning on protesting budget cuts to several programs and the possible tuition increase by staging a zombie takeover during the 8:30 a.m. public comment period.

Staff writers Sophie Mattson, Karishma Mehrotra and Dylan Tokar contributed to this report.

Adelyn Baxter is the news editor.

Staff writers Sophie Mattson, Karishma Mehrotra and Dylan Tokar contributed to this report.

Adelyn Baxter is the news editor.

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With declining state funding driving University of California tuition higher and higher in recent years, a group of students at UC Riverside is proposing an alternative student contribution plan that would allow students to pay for their education once they have a steady, post-graduation income.

The plan, called the UC Student Investment Proposal, would have students cease payments to the university and instead have them pay a percentage of their income after graduating and entering a career for the next 20 years, interest-free. The group behind the proposal, called Fix UC, is composed of members from the editorial board of UC Riverside’s student newspaper, The Highlander, and other student leaders at the Riverside campus.

UC Executive Vice President Nathan Brostrom and UC Vice President for Budget and Capital Resources Patrick Lenz will meet with students when they are at the Riverside campus for next week’s UC Board of Regents meeting to discuss the proposal, according to UC spokesperson Steve Montiel.

“We’re open to hearing and exploring all ideas,” Montiel said in an email.

Montiel added that the discussion is not on the agenda for the meeting.

Fix UC President and Highlander Editor-in-Chief Chris LoCascio said the idea came about last spring during the state’s budget crisis.

“As a member of editorial board for the Highlander we ultimately called for new ideas — an out-of-the box solution that attempted to address some of the root problems with funding for the UC,” he said. “We were just kind of dissatisfied with a lack of ideas and lack of action with everyone involved in the UC.”

UC Berkeley professor Robert Reich presented a similar idea in remarks to the UC Commission on the Future in 2010, according to Montiel.

LoCascio said the proposal encourages a lifelong relationship with the university.

“Having the UC backing you in the search for your career is really something you can’t put a price on,” he said.

The proposal also suggests that the UC change the current Blue and Gold Opportunity Plan to implement Fix UC’s plan. Under the proposal, the university’s financial aid program would also cease to exist entirely, and its funds would be dedicated elsewhere.

Although it is unclear whether the group will present its ideas at the upcoming board meeting, LoCascio said Fix UC’s role there is “still in development.”

“Whether or not this is something the regents decide to explore or implement I can’t say,” he said. “But regardless, I feel like this is extremely important and will get people to start to think about education in new ways.”

Damian Ortellado is the lead higher education reporter.

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Brown anticipates that California will face a $9.2 billion deficit through June 2013 in the state’s general fund. In order to help mitigate the deficit, he hopes to raise the sales tax and certain income taxes through putting a nearly $7 billion ballot initiative before voters.

Should the November ballot initiative fail, the plan’s $200 million cut to the UC would follow a year in which the system saw its budget hammered by $750 million in state budget cuts. But the plan provides an ongoing $90 million General Fund increase to the UC for base operating costs — funding which the plan states could be used for retirement program contributions.

Patrick Lenz, the university’s vice president for budget and capital resources, lauded the operating cost increase in a statement Thursday.

“We applaud the governor’s willingness to grant UC leadership maximum flexibility in navigating these fiscal times,” Lenz said in the statement. “The administration’s focus on protecting higher education from further budget reductions is a welcome relief, and the governor’s stated desire for a long-term state investment is encouraging.”

Lenz said in the statement that the university will continue to use administrative efficiencies to cut down on costs and is currently seeking alternate sources of revenue to bolster its income. He added that the university intends to work with Brown and the state legislature on developing a long-term plan “that would give the university much-needed financial stability.”

Have a question for Gov. Brown or Lenz? Ask anyone a question via Your Direct Line.

In the past, the university has relied on large tuition increases to offset the impact of cuts from the state.

But UC spokesperson Steve Montiel said in an email that it is “too early to speculate” whether the university would see tuition increases should the cuts occur.

Though Brown’s office had originally intended to release the budget Jan. 10, he held a press conference Thursday after the budget was erroneously published on the Department of Finance’s website, according to major media outlets.

“I’m not saying (the budget plan) is perfect, I’m just saying this is the best that our finance department and myself could come up with,” Brown said at the press conference.

The plan also proposes that both the UC and California State University — which would also be cut $200 million under the plan if voters do not approve the ballot initiative to raise taxes — begin budgeting for capital improvement projects as part of their overall fiscal plans. State appropriations for such projects were formerly budgeted and adjusted for separately.

Additionally, various budgetary set-asides for specific UC programs and purposes such as AIDS research and the Summer School for Mathematics and Sciences are removed in Brown’s budget plan.

The plan calls for $4.2 billion in base-level state cuts, including reductions in welfare and child care services. If voters reject the tax increases, state K-12 schools and community colleges would be cut $4.8 billion.

“I can tell you that the best thinking from the executive branch is this budget is a good road map to get us through a solid fiscal program we can live with,” Brown said. “If there’s a better way to do it, I’m totally open to it.”

Alisha Azevedo of The Daily Californian contributed to this report.

J.D. Morris is the university news editor.

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A public works board meeting Thursday will determine the fate of the majority of the funding for the demolition and reconstruction of UC Berkeley’s Campbell Hall.

The State Public Works Board will vote on whether to authorize the sale of $65.2 million in state bonds for the building, which will cover most of the project’s total budget of $73.2 million.

Demolition and reconstruction of the seismically “poor” building was approved in the 2010-11 state budget, but the project was delayed because bond sales were not held as a result of an unappealing market. After approval, the project was turned over to the state Department of Finance to determine if construction could begin immediately, which then recommended that the authorization of bonds be on the board’s agenda for its Thursday meeting.

UC Vice President for Budget and Capital Resources Patrick Lenz said the state prefers to release bonds when construction can begin immediately after a project gets funding. The projects should be “shovel-ready” at the time of bond approval,  meaning all necessary planning has been completed and all issues have been resolved.  If approved, Campbell Hall will begin construction in spring 2012.

Campbell Hall will rely on lease-revenue bonds, which require the campus to give the title of the building to the state until the bonds are paid off, as opposed to general obligation bonds, which go before the voters for approval and allow the campus to own a building as soon as the bonds are approved.

According to Lenz, lease-revenue bonds have become more common for the university because general obligation bonds are harder to obtain. However, he added that lease-revenue bonds are a less predictable source of funding for capital projects, whereas general obligation bonds allow the UC more security in paying for projects. A general obligation bond that included money for university projects was last approved by California voters in 2006. Of the $15 million approved, only $3 million of the bond was used for UC and CSU capital projects, while the remaining $12 million went to K-12 projects.

“Lease-revenue bonds kind of give us the roller coaster ride of never knowing how much we might get in a given year,” he said. “There is a lot more predictability when we get a general obligation bond of what you’re going to get in that period of time.”

If approved, the board would authorize around $270 million in bonds, including funding to retrofit the South Tower at UCLA and to build a science and engineering building at UC Merced. After the bond sale Thursday, the university will still have around $160 million in capital projects that have been approved by the budget and need to go to bond sale.

The $8 million difference between the budget cost and the expected bond funding is being provided for by gifts and campus equity, according to campus spokesperson Dan Mogulof. Additionally, a federal grant of $11 million separate from the project cost will fund the development of a new facility for integrated precision and quantum measurement in the basement of the new Campbell Hall.

Project costs differ based upon square footage and the services a building provides. For example, Stanley Hall, which was demolished and completed in 2007, cost $162.3 million, $88 million of which was paid for by private philanthropic support.

Lenz said that he is fairly confident that the bonds will be approved on Thursday because any issues in the project have already been worked through with the department.

“I don’t want to be too presumptuous to say this is just a rubber stamping, but we have covered all the issues,” he said. “If there were any issues or concerns, the (board) would have notified the Department of Finance, and the Department of Finance would have notified us.”

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The proposal, which the UC Board of Regents is scheduled to discuss and vote on in November, is an increase from the current state contribution of $2.37 billion but is still well below the ideal $3.2 billion level for state support, Yudof said.

The request for $2.8 billion is a $411 million increase from last year’s base budget.

In the budget proposal, the university requested $36.6 milli0n from state funding to increase the university’s enrollment by 2,100 students. According to Yudof, the university would enroll an additional 20,000 to 25,000 students if not for the lack of state funding.

The last time the UC received its proposed funding was in 2002, said Patrick Lenz, vice president of budget and capital resources at the UC Office of the President.

It is very hard to assess whether the university will receive the requested amount, Yudof said.

“It’s too early to determine how much UC will receive, and in fact, UC may still be faced with another $100 million reduction in the 2011-12 fiscal year,” Lenz said in an email.

In addition to a $650 million reduction in 2011-12, the university could face an additional $100 million in cuts, if state revenue collection does not meet targets stipulated by the state budget.

The university has seen a considerable decline in state funding over the past years.

In the 2010-11 fiscal year, the university requested an increase of $902.7 million but only received $355.3 million, according to Lenz. State funding to the university dropped from $3.25 billion in 2007-08 fiscal year to $2.37 billion in 2011-12.

“My prediction is that they’re going to pull the trigger, but I hope it’s one-time only,” Yudof said at the briefing.

Historically, the state portion of funds has provided core support for the university, but that is no longer the case, according to a press release from the UC Office of the President outlining the proposed budget request.

The university’s core funds — composed of the state, UC general funds and tuition and fees — only account for 27 percent, or $6.1 billion, of the UC systemwide budget of $22.5 billion. Because the state has decreased its contribution, the university has had to rely more heavily on student tuition and fees for revenue.

This year, students contributed $600 million more to the UC funds through tuition and fees than the state.

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