Yudof disapproves of all-cuts budget

UC President Mark Yudof had a simple message to deliver Friday morning when he testified before the state senate’s budget committee: If the legislature opts for an all-cuts budget to fill its remaining $15.4 billion deficit, “all bets are off” at the University of California.

If the $500 million cut already made to the university earlier this spring were to double to $1 billion under an all-cuts budget, Yudof said the 10-campus system would be put on a path that could lead to a midyear tuition increase next January, employee layoffs, program closures throughout the university and – ultimately – a doubling of tuition to $20,000 a year.

Yudof’s testimony Friday marked the first time he has publicly detailed what a $1 billion cut to the UC could look like. Gov. Jerry Brown had predicted in April that tuition could rise to $20,000 or $25,000 under an all-cuts plan, and Yudof told the committee that he had looked at tuition projections until he was “blue in the face” and agreed that Brown’s prediction is “not far off.”

“The thing we fear the most is an all-cuts budget,” Yudof told the Committee on Budget and Fiscal Review, which brought its hearing to the offices of Microsoft in Mountain View to hear the testimony of education officials and Silicon Valley business leaders.

During his testimony, Yudof – who opened his remarks by characterizing the UC system’s relationship with the state as a “bad romance,” in reference to the hit by pop star Lady Gaga – said the system is prepared to handle the initial $500 million cut. At UC Berkeley, Executive Vice Chancellor and Provost George Breslauer has ordered $17.5 million to be cut from campus academic units and will tap into half of the campus’s $60 million central reserves to absorb its share of the $500 million systemwide cut. In total, UC Berkeley is expected to bear between $70 and $80 million worth of cuts while UCLA will absorb around $96 million.

But Yudof told the committee that if additional cuts come once the new fiscal year begins on July 1, the university will have little time to plan to absorb them and will most likely resort to “geometrical” increases in tuition and more program cuts.

“We are not flexible in the middle of the academic year … all things are not possible because we have made commitments to our students, our staff, our faculty,” he said, speaking in a sober tone. “It took over a hundred years to build these great institutions, but they can be destroyed.”

Yudof was joined at the hearing by several Silicon Valley business leaders, who all gave credit to the state’s public universities for producing the human capital that tech startups rely on for success, a rare pairing of public and private interests.

“We are at a point of no return,” said Kim Polese, a tech entrepreneur and member of Tech Net, a Silicon Valley lobby group. “Your choices will carry enormous impacts for years to come, and as you weigh those choices, I urge you not to make further cuts to UC and higher education. The impact of further cuts would be devastating to California’s economic vitality and to current and future generations.”

Polese, a UC Berkeley graduate, told the committee that large corporations like Genentech, Qualcomm and Amyris were all founded by UC graduates, and without California’s universities, the state’s economic future is at great risk.

The often dramatic concerns of the education and business leaders were somewhat mitigated by recent news from the state Department of Finance projecting a larger-than-expected influx of tax revenue this spring. In a report released Thursday, the Legislative Analyst’s Office estimated the new revenue will trim the state’s $15.4 billion deficit by $2.54 billion, though finance department officials cautioned that until new costs are factored in, the state’s budget is still in flux.

Changes in population-driven services like schools, health care and correction facilities have to be factored in against new revenues, according to a statement issued by Ana Matosantos, director of the department. Those revenues will not be weighed until Brown releases his spring revision of the state budget on May 16. Until then, Brown’s plan to fill the state’s deficit remains unclear.

Though his original budget released in January proposed cutting $12.5 billion from state expenditures and levying $14 billion in voter-dependent tax extensions, Brown failed to garner the two-thirds majority vote required to place the tax extensions on the June ballot and only ended up signing $11.2 billion in cuts in March.

What remains to be seen is if Brown’s May revision of the budget resorts to an all-cuts approach to bridge the deficit. A profile of Brown in The New York Times published online Sunday cites sources who attended a private meeting of Democratic legislators where Brown defended his budget plan by saying he believes in the “Hernando Cortes approach … when you hit the shore, burn the ships. There is no Plan B.”

But for the University of California, the difference between $500 million and $1 billion in cuts could be devastating, considering that the cuts will come out of the $2.9 billion the university received in state general funding in 2010-11.

For now, the UC will have to wait for Brown’s May 16 revision of the budget to come out to see if its prospects have changed. And though the new $2.54 billion in revenue offers a small reprieve, it is not enough to fill the daunting deficit.

“(The new revenue) in no way lessens the necessity of continuing to close the rest of the budget,” said H.D. Palmer, a spokesperson for the state finance department. “There are a number of other factors that determine what the (deficit) will be on the 16th.”

Contact Javier Panzar at [email protected]