1. Display 1 1 NCSCBHEP – 37 th Annual National Conference Concurrent Session – California: Our Future? CSU and UC UNIVERSITY OF CALIFORNIA Patrick J. Lenz Vice President for Budget and Capital Resources April 12, 2010

2. Display 2 2 UC’s Fiscal Past, Present, and Future Overwhelming State Budget Deficit, Challenging Budget Resolutions UC Budget Issues Historical Failure to Invest in Higher Education Crossroads: State Investment vs. Student Fees UC’s Fiscal Future Investing in UC, What’s at Stake

3. Display 3 3 2010-11 Governor’s Budget State General Fund Budget Gap$19.9 B 2009-10 Fiscal Year Shortfall $6.6 B 2010-11 Fiscal Year Shortfall $12.3 B State General Fund Reserve $1.0 B What Contributed to the State Budget Gap? Revenue Decline $3.4 B Federal & State Court Litigation $4.9 B Erosion of Budget Solutions $2.3 B Population and Caseload Growth $1.4 B

4. Display 4 4 2010-11 Governor’s Budget Closing the Budget Gap Expenditure Reductions (43%)$ 8.5 B Federal Funds (35%)$ 6.9 B Alternative Funding (20%)$ 3.9 B Fund Shifts/Other Rev. (3%)$ 0.6 B Closing the Budget Gap (100 %) $19.9 B

5. Display 5 5 2010-11 UC Potential Budget Reductions and Funding Issues

6. Display 6 6 UC Regents 2010-11 State Funding Request Restoration of One-Time Cuts$305.0 M State Obligation to UCRP and Annuitant Health Benefits $109.8 M Unfunded Enrollment (14,000 FTE)$155.8 M Reinvestment, Academic Excellence$332.1 M Health Sciences Initiatives*$10.4 M Total$913.1 M * UC Riverside Medical School, UC Davis Nursing.

7. Display 7 7 UC Administrative Efficiencies and Other Actions Furloughs/Salary Reductions (2009-10)$184.0 M Debt Restructuring (2009-10 and 2010-11)$150.0 M Strategic Sourcing$154.0 M UCOP Restructuring$62.2 M Energy Savings Program $18.0 M Other Actions: –Senior management salary freeze –5% senior administrator pay reductions as of July 1, 2009 –Cancellation or deferral of bonus and many incentive programs –Suspension of staff merit awards –Restrictions on hiring, travel, and purchasing

8. Display 8 8 State-Funded Enrollment

9. Display 9 9 Growth in State Funding Over Time

10. Display 10 10 Historical Investment in UC State support has already declined 54% over 19 years. State General Funds Student Fees $ 16,430 $ 7,570 Per-Student Average Expenditures for Education from Student Fees and General Funds (2009-10 dollars) Student fee amounts are net of financial aid.

11. Display 11 11 Crossroads: State Investment vs. Student Fees Dollars in billions. Governor’s Proposal

12. Display 12 12 Cost Drivers & Revenue Options: Total Increases in 2019-20 * Net of return to aid Dollars in billions.

13. Display 13 13 Budget Challenges: Modest Revenue Scenario Dollars in billions.

14. Display 14 14 What’s At Stake Access: UC enrolls and graduates a significantly higher proportion of needy students (more than 30%) than most other research universities. Student Success: 83% of UC freshmen graduate within 6 years, compared to 56% nationwide. Instruction: 45% of each year’s engineering bachelor’s degrees come from UC. UC educates 60% of California medical students. Economic Impact: UC faculty attract more than $4 billion in research funding annually, providing a training ground for new knowledge workers and generating spinoff companies and industrial growth. Reputation: 6 of UC’s 9 undergraduate campuses placed in the top 25 in last year’s Washington Monthly college rankings based on contribution to the public good.