ASUC senators raised concerns over UC Berkeley’s rising expenses in the face of stagnant revenue at their weekly meeting Wednesday.
UC Berkeley is in the middle of a difficult situation where expenses are rising far higher than its revenue, according to Rosemarie Rae, vice chancellor and chief financial officer of UC Berkeley. In a presentation that displayed campus’s current financial situation, Rae highlighted problems that have been waiting to be solved for years. One of these issues was 20 years of underfunding retirement benefits, which is causing campus to play “catch-up” by increasing funds allocated toward pensions in fiscal year 2020, further straining Berkeley’s budget.
“Expenses are increasing at a much higher rate than our revenue,” Rae said at the meeting. “It’s a basic mathematical mismatch. More funding is needed.”
Highlighting an increase in state funding toward UC Berkeley, ASUC senator Jason Dones questioned why UC Berkeley plans to increase student fees to cover the $12 million needed for student technology and infrastructure.
Rae said although she is grateful the state is providing more funds, it will not be enough to cover increased expenditures.
“State support rolls in slowly, and even though the state says 5% … effectively we only get 3.7% of what the governor passes in the budget,” Rae said at the meeting.
In response to a question from ASUC senator Amy Chen regarding the state’s promise to increase funding, Rae alleged the state has been an “unreliable partner in the past,” noting UC Berkeley lost some state funding in 2020.
Rae added that UC Berkeley is projected to see $30 million of revenue growth compared to an increase of $50 million in expenses.
“It’s just a punch in the stomach at the time when we needed it the most,” Rae said.
Rae warned that UC Berkeley is going to “run very lean” for fiscal years 2023 and 2024, and noted campus’s reserve funds were depleted in part due to the COVID-19 pandemic.
In order to solve Berkeley’s budget deficit, Rae outlined three key actions to take. First among them was the university’s need to rebuild its reserve saving accounts. The second action was to continue to secure philanthropic gifts to fund important campus projects.
Rae gave high praise to Chancellor Carol Christ for having received enough philanthropic gifts to fund new construction, such as Anchor House and the new Gateway building.
“The chancellor has been phenomenal. She’s really redirecting philanthropic gifts toward student needs,” Rae said at the meeting. “Getting donors to point their gifts toward student need, our operating budget and our capital budget is something that we’ve made incredible progress on in the past few years.”
The third action that Rae promoted was the necessity of creating alternative revenue streams.
She pointed toward a new project to develop a campus on Moffett Field as one potential source. She estimated developing the 32 acres into commercial properties will raise $30-50 million in annual revenue.
“I’m trying to be realistic and optimistic about what we have in the pipeline if we can just move through these next few years,” Rae said at the meeting.