UC Regents discuss funding stability without additional state support at meeting

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SAN FRANCISCO — Finances were paramount at the UC Board of Regents meeting Wednesday as the university’s top officials considered the possibility that reinvestment in the UC system may not be possible without additional state revenue.

The discussion comes in the wake of the $1.1 trillion spending bill passed in Congress last week and Gov. Jerry Brown’s proposed 2014-15 state budget announced earlier this month. Although future funding cuts resulting from the federal sequester have been mitigated, the university was not granted additional state funding its leaders say it needs to reinvest in its programs.

In November, the regents passed a budget that asked the governor for $120.9 million in additional state funds to support enrollment growth, the university’s retirement program and programs to reinvest in academic quality. Earlier this month, Brown announced a preliminary state budget that did not meet the university’s request.

Now, the university is facing the reality that although it will receive its $142.2 million promised base budget increase, in addition to a Brown-proposed $50 million awards program for California public institutions of higher education to increase the number of Californians who get bachelor’s degrees, it may not receive any other additional funding from the state, which could jeopardize the university’s plans to expand.

According to a report by the Legislative Analyst’s Office, the state Legislature could take an approach different from the governor’s in building the state budget, one that would help the university fund its pension plan liabilities but would increase state costs for the university by more than $230 million annually.

“As we look at long-term tuition plans for the state and stabilized funding for the university, I think we can only do it if we have a stable partner,” said Regent Russell Gould. “We need to watch very carefully how this initiative takes shape and what the governor’s direction is for it.”

While Congress’ spending bill prevented an even worse financial picture for the university, the possibility of further federal funding cuts looms for the university, as sequestration could go back into effect in 2016.

“Long term, we still have a long road to go,” said Gary Falle, UC associate vice president for federal governmental relations. “One of the most important things would be to try to get sequestration repealed, get us back on regular order, so that we can work with those congressional committees to show how effective we are in research and education and so forth.”

Student Regent Cinthia Flores also cautioned against pursuing enrollment of more out-of-state students as an alternative to compensating for ever-fluctuating levels of federal and state funding.

“Before we are aggressively pursuing that strategy, we should have a more educated conversation about other alternatives to the alternatives,” Flores said.

As fiscal constraints were prominent in the regents’ budget discussion, Napolitano also proposed a series of cuts in her office’s spending at the meeting, presenting a plan to boost efficiency at the university’s headquarters.

The cuts include capping the UC Office of the President’s staff at its current number and reducing the office’s travel spending by 10 percent. Napolitano hopes to “lead by example,” according to a statement from her office released Wednesday, and UCOP’s budget will remain flat for fiscal year 2015.

During the afternoon session of the meeting, the UC Regents followed up on the university’s accomplishments in online education. In November, the university launched a pilot program to establish an efficient system of cross-campus enrollment in 21 online courses.

The UC Board of Regents will reconvene Thursday morning for the second and final day of its January meeting.

Chase Schweitzer covers higher education. Contact him at [email protected] and follow him on Twitter @ChaseSchweitz.

Correction(s):
Due to an editing error, a previous version of this article incorrectly paraphrased an analysis by the Legislative Analyst’s Office, saying that not funding the university’s pension plan liabilities would increase state costs for the UC system by more than $230 million annually. In fact, state costs would increase by that amount if the Legislature provides the full amount requested by the university to fund its pension liabilities.