University of California Plans to Slash Spending

By CARI TUNA

The University of California was set to unveil plans for a sweeping financial and administrative overhaul that could reduce annual operating expenses by more than $500 million, as the much-scrutinized public university system moves to deal with a widening budget shortfall.

Under the efficiency plan, which will be presented at a UC Board of Regents meeting Wednesday, the system intends to streamline, consolidate and standardize operations across its 10 campuses. Among other things, UC plans to roll out common supply-procurement and human-resources systems to replace individual campus systems.

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Steve McConnell/UC Berkeley NewsCenter

Students at U.C. Berkeley's 2010 commencement. The university system is dealing with a budget shortfall.

Other measures include accelerating energy-efficiency projects, consolidating information-technology operations and loaning campuses money for equipment leases in lieu of more-costly third-party loans.

The overhaul followed steps taken by universities nationwide to cut administrative fat amid falling state funding and withering endowments.

In total, UC's plan was expected to save more than $500 million from its $20 billion annual budget within five years of implementation, including at least $100 million from supply procurement, UC officials said.

The plan will also result in administrative job cuts, though officials declined to say how many jobs would be eliminated, citing the early state of the restructuring.

"We're forced to make some fundamental changes in the way this place operates," said Peter Taylor, UC's finance chief. "We don't have a choice."

Robin Garrell, a chemistry professor at the University of California, Los Angeles and chair of its faculty body, welcomed an operational overhaul. "This is an area where there certainly are opportunities to save money with little impact on academic programs," Prof. Garrell said. But, she added, "I would be wary of a one-size-fits all model," especially for cutting administrative jobs, because "each campus has its own needs and character."

Nationwide, in fiscal 2009, which began July 1, 2008, for most states, state funding for higher education fell $2.8 billion to $77.9 billion, though the drop was largely offset by $2.3 billion in stimulus funds, the State Higher Education Executive Officers, a nonprofit policy association, reported.

The UC system is closely watched as the nation's largest university system by budget, and it has been hit particularly hard by California's fiscal troubles.

Over the past two fiscal years, California has cut funding per student by 22% to $7,570, UC officials said. Adjusted for inflation, state funding per UC student has fallen 54% since the 1990-91 fiscal year, they said.

According to the State Higher Education group, excluding federal stimulus, total state and local funding for higher education in California fell 24% per student between the 1990-91 and 2008-09 fiscal years, compared with an 11% drop nationwide.

The budget shortfall for UC, which has around 230,000 students, has grown as a result. The budget gap is projected to rise to $1.2 billion for 2010-11 from $1 billion for the 2009-10 year, according to UC officials.

In response, UC has cut $232 million in operating costs over the past two years by laying off 1,900 workers, furloughing employees and cutting academic programs, among other measures. Some of the moves, including raising undergraduate fees 32%, have sparked student protests across the state that at times have turned violent.

Even with higher fees and a possible $305 million restoration in state funding, UC remained $237 million in the red for the coming 2010-11 fiscal year, officials said.

UC officials are considering other proposals to shore up its finances. One is to offer online courses for university credit, which drew sharp criticism from a group of UC Berkeley faculty last week.

Some fear such online courses could undermine faculty control over curricula and degrade instruction quality, said Wendy Brown, a political-science professor and co-chair of the Berkeley Faculty Association.