1. The University Budget Debora Obley Associate Vice President
Budget and Capital Resources
Office of the President
November 2011

2. Today’s Discussion Systemwide Budget Process
Impact of the Current Budget Crisis
Key Budget Issues
Funding Streams Initiative 2

3. Budget Office Mission Budget Development Budget Negotiation
Budget Management 3

4. Budget Development Governor’s Budget Regents Approve Budget Request
January
Negotiations with Department of Finance
Year 1
UC Drafts Budget Request
July
Internal Consultation 4

5. Budget Negotiation Governor’s Budget
Legislative Analyst Recommendations
Regents Approve Budget Request
January
Subcommittee Hearings
President Meets with Department of Finance
Year 1
Conference Committee
UC Drafts Budget Request
July
Senate and Assembly Approve Budget Bill
Internal Consultation
Governor’s Vetoes and Signature 5

6. President’s Preliminary Allocations
Budget Management
January
Year 1
President’s Preliminary Allocations
July
Start of Fiscal Year 6

7. President’s Final Allocations
Budget Management
January
Year 2
Campuses Expend Funds
July
President’s Final Allocations
Fiscal Close 7

8. Accountability Reporting Development of New Budget
Budget Management
January
Accountability Reporting
Year 3
Development of New Budget
July
Fiscal Close 8

9. Internal Budget Consultation
Regents
Bimonthly meetings
Individual consultation
President
Vice Presidents
Faculty
Academic Council
UC Planning and Budget Committee
Committee on Faculty Welfare
Campus Leadership
Council of Chancellors
Campus EVCs/Provosts
Budget Vice Chancellors
Other Vice Chancellors
Students
UC Student Association
Meetings with President
Quarterly student meetings 9

10. The Budget Request
(MILLIONS OF DOLLARS)
Enrollment growth and instructional programs
Compensation and non-salary items
Post-employment benefits
Savings, alternative revenues, and restorations
Financial aid
Total increase in expenditures
$36.6
$197.2
$92.8
$85.0
TBD
$411.6 10

11. Sources of Funds - $22.5B
(MILLIONS OF DOLLARS) 11

12. Recent History 2005-06 through 2007-08: 2008-09 and beyond:
3% base budget increases during and and 4% during
Enrollment growth of ~5,000 students annually (2.5%)
Additional funding to avoid student fee increases in
and beyond:
State fiscal crisis results in unprecedented cuts for UC
ARRA funding provides temporary relief in some years 12

13. 2011-12 Budget (MILLIONS OF DOLLARS)
48.5% 13

14. Budget
(MILLIONS OF DOLLARS)
Budget Gap:
$1.5 billion 14

15. Change in Funding per Student
Per-student Average Expenditures for Education, Adjusted for Inflation 15

16. Key Budget Issues Competitiveness of faculty and staff salaries
Retirement contributions and retiree health
Enrollment growth and graduate enrollment
Student fees and student financial support
Capital outlay 16

17. Faculty Salaries Lag the Market
Faculty Salaries as a Percentage of Market
Variance among campuses. Some are at market.
Not hiring in order to pay salaries for those here.
Very difficult to rebuild. 17

18. Staff Salaries Also Lag the Market
Increases in Funding for Staff Salaries Compared to Market 18

19. Retirement Contributions
No contributions for 19 years
Funded status of plan has declined to 83%
No funding yet provided by the State *
Employer 4% 7%
10%
12%
Employee 2%
3.5% 5%
6.5%
* proposed 19

20. Retiree Health Benefits
Pay-as-you-go system
Rising numbers of retirees
Rising health care costs
Unfunded liability: $14.6 billion
State has contributed to support costs in recent years 20

21. State-supported Enrollment
Most recent campus estimates for put UC at 9,900 California residents for whom the State has never provided marginal cost funding. Total overenrollment is approximately 13,000; and including the cuts UC has faced over the last several years, the University estimates it is enrolling approximately 24,000 students not supported by the State. 21

22. Graduate Enrollment Proportion22

23. Fee Comparisons
University of California And Public Comparison Institution Fees 23

24. Gift Aid Reaching $2.35 Billion24

25. 2009-10 Undergraduate Pell Grant Recipients
UC Remains Accessible
Undergraduate Pell Grant Recipients 25

26. Capital Outlay Past priorities: Future priorities:
New facilities for enrollment growth
Seismic upgrades
Future priorities:
Facilities modernization
Program improvements
Continuing seismic upgrades 26

27. 2011-21 Capital Project Objectives
Growth-Related Projects 27

28. Funding Streams Initiative

29. Why did we implement the Funding Streams Initiative?
Promote transparency and simplicity
Incentivize campuses to maximize revenue
Address campus concerns about Educational Fee, Indirect Cost Recovery, and other fund source distribution

30. Distribution of Core Funds Revenue by Source Location
State General Funds
Tuition and Fee Revenue
Educational Fee
Registration Fee
Professional School Fees
Summer Session Fees
Nonresident Tuition*
Application Fees*
Research-related and Other Revenues
Indirect Cost Recovery*
Patent Revenue*
Interest Income on General Funds*
Net State funding calculated as follows:
Total Core Funds Budget
Estimated Tuition and Fee Revenue
Research-related and Other Revenue
Net State Funding

31. Distribution of Core Funds Revenue by Source Location
State General Funds
Tuition and Fee Revenue
Educational Fee
Registration Fee
Professional School Fees
Summer Session Fees
Nonresident Tuition*
Application Fees*
Research-related and Other Revenues
Indirect Cost Recovery*
Patent Revenue*
Interest Income on General Funds*
Net State funding calculated as follows:
Total Core Funds Budget
Estimated Tuition and Fee Revenue
Research-related and Other Revenue
Net State Funding

32. General Campus Core Funds Budgets per Student
Estimate based on CPEC methodology:
General Campus Instruction and Research
General Campus Academic Support
General Campus shares of support activities
Student Services prorated based on General Campus enrollment
Other activities prorated based on General Campus I&R and Academic Support budgets
Excludes financial aid
Variation across campuses is the result of:
Changes in State funding over time
Historical allocation methods
Graduate student proportions
Other factors

33. Re-distribution of Educational Fee Increase Revenue
Note: No new funding was provided to systemwide activities during All revenue was returned to campuses. In other years, the share returned to campuses has been lower.

34. Funding Streams Principles
All funds generated on a campus stay on a campus
The only exception is undergraduate financial aid
Funds previously supporting UCOP returned to campuses
UCOP is now funded on a flat tax

35. UCOP Assessment – 1.6% for 2011-12
Assessment supports $277.7 million for:
General Administration
Central Services
Central Academic Programs
Systemwide Initiatives