Issue 3 September 2002
The spending plan adopted by the legislature authorizes the governor to make up to $750 million in further reductions to State operations, at his discretion. The budgets of individual State agencies may be cut up to 5 percent in order to achieve this level of savings.
We expect the University of California to be affected by these further reductions, though we do not know in what way. We also do not know when an announcement about further cuts will be made; the budget gives the governor until January 2003 to make these spending reductions.
As a result, much uncertainty surrounds the budget at this time. We have a 2002-03 spending plan that allows us to continue normal operations for the most part, making targeted cuts in a few areas specified in the budget. But we also recognize the possibility of further budget cuts that could be implemented during the middle of the fiscal year.
Moreover, there are estimates of annual State budget deficits in the range of $10 billion to $12 billion for the next several years. As a result, the Department of Finance has asked all State agencies to consider scenarios for accommodating a possible budget cut of up to 20 percent in the 2003-04 fiscal year.
It's clear that the State is facing a very difficult budgetary period ahead. Historically, the governor and legislature have invested generously in California public higher education, recognizing our major impact on the vitality and economic health of our state. We know their commitment remains - but we also know that State dollars are increasingly scarce. We are working hard with State finance officials to preserve as much of the University's funding as possible.
will keep you informed of further developments as they occur. In the meantime,
thank you for your continued dedication to the University, and for the
excellent service you continue to provide the people of California. Your
high-quality work is the best argument that can be made for continued
strong State investment in the University of California.
The 2002-03 State budget signed by Gov. Gray Davis might best be considered a "temporary" spending plan until the governor decides how to make $750 million in additional reductions authorized in the Budget Act.
It is unclear when those further budget cuts will be made. The University expects to be impacted by the additional reductions, but their magnitude is unknown at this time. In addition, with major budget deficits projected for the years ahead, the State has asked its agencies to prepare plans for accommodating a possible budget cut of up to 20 percent in 2003-04.
UC is working hard to minimize any additional cuts, but it still appears that a great deal of uncertainty will continue to surround the budget for the next several months. Campuses are being encouraged to make very careful spending decisions, recognizing that UC's budget may be further reduced later in the year.
As passed by the legislature and signed by the governor, the Budget Act would provide UC with a $3.2 billion State-funded operating budget in 2002-03, 3 percent less than in 2001-02. The Budget Act includes the following reductions at the University of California:
In addition, nonresident tuition will increase 10 percent for undergraduates and 4 percent for graduate students in the fall, with an additional 6 percent increase for nonresident undergraduates in the spring. These increases are intended to help preserve funding for the University's K-12 outreach programs and to help cover the rising costs of providing health care benefits to UC employees. (For more information on nonresident tuition, see: http://www.ucop.edu/news/archives/2002/july18art1.htm.)
The budget also includes new funding in the following areas. However, the budget does not guarantee any particular level of funding to the University for the full 2002-03 year, nor is any program exempt from further reductions, because the governor is still authorized to make substantial additional cuts to State operations this year:
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This newsletter also is available on the web at www.ucop.edu/news/budget/.