‘Matters of life-or-death’: UC Berkeley works to close $340M budget deficit

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Faced with a projected $340 million budget deficit, UC Berkeley is primarily turning to its employment base for cost-saving measures.

Through a hiring freeze, voluntary reductions in time, early retirements and various other actions, UC Berkeley reduced about $140 million of the deficit. According to Rosemarie Rae, campus vice chancellor of finance and chief financial officer, the campus is still seeking measures to amend the remaining $200 million deficit.

“Every alternative is being assessed through an equity lens,” said UC Berkeley Chancellor Carol Christ in a campuswide message. “Every effort is being made to save jobs and maximize employment.”

The Campus Salary and Time Reduction Program is one of the additional budget reduction measures that were announced earlier this month, and it is projected to save about $27 million and 250 jobs, according to Christ. The yearlong program will create a tiered system of furloughs and time reductions beginning in February 2021.

Under the program, a nonrepresented employee making between $59,001 and $89,000 will be furloughed for two days and receive a salary cut of 0.76%. The program is structured to progressively work its way up to a maximum of 10 furlough days and a salary cut of 3.83% for those making $234,001 and above. Once the program is implemented, represented staff will be subjected to reductions in time, as opposed to furloughs.

The UC system has between $30 to $40 billion in reserves, more than $10 billion of which is composed of unrestricted reserves that could be deployed for the use of plugging budget deficits, said Todd Stenhouse, spokesperson for the American Federation of State, County and Municipal Employees, or AFSCME, Local 3299 union.

“The notion that there is a cuts-only approach when you’re dealing with a temporary downturn with substantial reserves is a false choice,” Stenhouse said. “These are people that devote their careers and livelihoods to UC, putting themselves in harm’s way on the frontline both inside the hospitals and on campus to make sure students are taken care of.”

Cutting wages would not only disproportionately impact low-wage workers but also achieve little savings for the UC campuses, said Anke Schennink, president of the Union of Postdocs and Academic Researchers, or UAW Local 5810.

Schennink added that UAW 5180 members have played a vital role in time-sensitive projects related to COVID-19, securing grants for the UC system and providing economic support for surrounding communities.

While pay cuts and furloughs have served as a flashpoint for budgetary discussions, UC Berkeley has additionally sought other nonlabor-related remedies.

UC Berkeley obtained $72 million after participating in a recent bond offering and wanted to take advantage of the “historic low” blended bond interest rate of 2.2%, according to Rae.

The $72 million went to various auxiliary parts of campus that have their own revenue streams and, in principle, were self-sustaining before the COVID-19 pandemic. Housing and dining received the majority of the funds, and Cal Performances, athletics and other programs received the remaining share. These auxiliaries, not campus, will be responsible for paying the debt services on bonds going into the future, according to Rae.

In a more long-term budgetary strategy, UC Berkeley administration will continue advocating for a cohort tuition model, in which tuition hikes are reserved for incoming UC students and remain fixed throughout a student’s time on their campus.

UC Berkeley spokesperson Dan Mogulof noted that cohort tuition hikes seek to solve the untimely tuition increases of the past. During the economic downfall of the Great Recession, for example, the UC system had nowhere else to go but to students, increasing tuition after the California state budget cut funding for public education.

“How can you operate any institution or company if you’re freezing your primary source, or one of your primary sources of revenue, but nobody is freezing the cost that we pay?” Mogulof said.

Cohort tuition can provide the much-needed increases in campus funding to keep up with cost increases while also giving students and families a level of “predictability” they do not have under the current system, according to Christ.

In a statement from UC Berkeley members of the UC’s Cops Off Campus coalition, members emphasized the impact of financial decisions made by UC Berkeley on the campus community.

“For many of our staff, students, researchers and instructors, the coming budgetary decisions are matters of life-or-death,” the statement reads. “Yet, also as in any crisis, the pandemic presents us with a valuable opportunity to challenge our business as usual.”

Contact Kaleo Mark at [email protected] and follow him on Twitter at @kaleomark_dc.