1. Jerry Kissler UCOP Budget Office BUDGET AND PLANNING A Universitywide Perspective April 2005

2. Jerry Kissler UCOP Budget Office Today’s Agenda  Large Trends  The Impact of California’s Fiscal Crisis  The Regents’ Benchmarks

3. Jerry Kissler UCOP Budget Office The University’s Context  Large Trends  A Changing Economy with More Professional and Managerial Jobs

4. Jerry Kissler UCOP Budget Office California Is Losing Its Comparative Advantage

5. Jerry Kissler UCOP Budget Office California Needs More Well –Paying Jobs

6. Jerry Kissler UCOP Budget Office Well –Paying Jobs Are Linked to Higher Levels of Education

7. Jerry Kissler UCOP Budget Office California Needs Companies Creating Well-Paying Jobs  UC helps create fast-growing companies.  R&D-intensive industries rely upon universities because they under-invest in basic research.  Thousands of new professional and managerial jobs will be created over the next decade.

8. Jerry Kissler UCOP Budget Office California Firms Will Create More Jobs for Knowledge Workers

9. Jerry Kissler UCOP Budget Office The University’s Context  Large Trends  A Changing Economy with More Professional and Managerial Jobs  Changing Demographics: More Californians Will Want a University Education

10. Jerry Kissler UCOP Budget Office California’s Population in 1980

11. Jerry Kissler UCOP Budget Office California’s Population in 2000

12. Jerry Kissler UCOP Budget Office California’s Population in 2020

13. Jerry Kissler UCOP Budget Office California’s Population in 2040

14. Jerry Kissler UCOP Budget Office Hispanics & Asians Increase as % of Population

15. Jerry Kissler UCOP Budget Office Tidal Wave II

16. Jerry Kissler UCOP Budget Office UC Faces a Period of Exceptional Growth Can We Maintain Quality?

17. Jerry Kissler UCOP Budget Office Today’s Agenda  Large Trends  The Impact of California’s Fiscal Crisis

18. Jerry Kissler UCOP Budget Office State Dollars, Student Fees, and UC General Funds Are the Foundation Core UC Support State Funds Student Fees UC General Funds Private Fund Raising Research Auxiliaries D.O.E. Committed by Policy Restricted by Source Restricted by Source Restricted by Source

19. Jerry Kissler UCOP Budget Office State Dollars, Student Fees, and UC General Funds Are the Foundation Core UC Support State Funds Student Fees UC General Funds State Provides 60% of UC Core Support State Provides 60% of UC Core Support

20. Jerry Kissler UCOP Budget Office Internet Boom Produced Capital Gains and Stock Options Revenue

21. Jerry Kissler UCOP Budget Office Tax Revenue Fell Sharply When Bubble Burst $12.4 Billion

22. Jerry Kissler UCOP Budget Office The Structural Problem

23. Jerry Kissler UCOP Budget Office California’s Fiscal Crisis Has Impacted the UC Budget UC Enrollment Has Grown by 19% While Our Budget Has Been Cut by 15%.

24. Jerry Kissler UCOP Budget Office State Budget Cuts Create Gap of $2,650 per UC Student Funding Gap = $2,650

25. Jerry Kissler UCOP Budget Office Today’s Agenda  Large Trends  The Impact of California’s Fiscal Crisis  The Regents’ Benchmarks

26. Jerry Kissler UCOP Budget Office UC Benchmarks Indicators of Quality Quality Quality Undergraduate Education Leading Graduate Programs Excellent Research Slow Moving Indicators

27. Jerry Kissler UCOP Budget Office UC Benchmarks Early Warning Indicators EnablingFactors Quality EarlyWarningIndicators StaffStudents Facilities Faculty Academic/ Support Services Quality Undergraduate Education Leading Graduate Programs Excellent Research Slow Moving Indicators

28. Jerry Kissler UCOP Budget Office UC Has High Persistence and Graduation Rates

29. Jerry Kissler UCOP Budget Office Increase in Competitive Awards to UC Faculty

30. Jerry Kissler UCOP Budget Office Many Indicators of Strong Graduate Programs  Of the 261 doctoral-granting universities in the U.S., only 62 are members of the prestigious American Association of Universities (AAU).  6 of the 8 UC campuses eligible for the AAU are members.  In spite of being small and young, UCR and UCSC are in top 15 on Graham/Diamond ratings.  Of the top 12 universities on the NRC rankings, 3 are UC campuses.  Of the 229 rated UC programs, more than half were in the top 20.

31. Jerry Kissler UCOP Budget Office First UC Benchmarks  Slow Moving Indicators  Graduation rates for undergraduates  Research funding  Rankings of departments and programs  Early Warning Indicators  Undergraduate enrollment  Graduate enrollment  Faculty salaries  Staff salaries  Academic/Support services  Financial aid  Graduate student support  Facilities 2002

32. Jerry Kissler UCOP Budget Office Are We Still on Track?  Slow Moving Indicators  Graduation rates for undergraduates  Research funding  Rankings of departments and programs  Early Warning Indicators  Undergraduate enrollment  Graduate enrollment  Faculty salaries  Staff salaries  Academic/Support services  Financial aid  Graduate student support  Facilities 20052002

33. Jerry Kissler UCOP Budget Office Undergraduate Enrollment Is Returning to the 1999 Plan Levels

34. Jerry Kissler UCOP Budget Office UC Continues to Be Accessible to Low-Income Students

35. Jerry Kissler UCOP Budget Office Graduate Enrollment Is on Plan but …

36. Jerry Kissler UCOP Budget Office UC Enrollment Is Out of Balance

37. Jerry Kissler UCOP Budget Office Serious Impacts of the Fiscal Crisis on the University  Salaries

38. Jerry Kissler UCOP Budget Office Faculty Salaries Will Be 8 to 10% Below Market

39. Jerry Kissler UCOP Budget Office State Funding for UC Staff Salary Increases

40. Jerry Kissler UCOP Budget Office Funding for Staff Salaries Has Fallen Below Market

41. Jerry Kissler UCOP Budget Office UC Staff Turnover Has Been Lower Than Other Large Employers

42. Jerry Kissler UCOP Budget Office Serious Impacts of the Fiscal Crisis on the University  Salaries  Academic/Support Services  Student/Faculty Ratio

43. Jerry Kissler UCOP Budget Office Inadequate Resources: Deterioration of Student/Faculty

44. Jerry Kissler UCOP Budget Office Serious Impacts of the Fiscal Crisis on the University  Salaries  Academic/Support Services  Student/Faculty Ratio  Libraries and Other Academic Support

45. Jerry Kissler UCOP Budget Office Inadequate Resources: Less Funding for Academic/Support Services

46. Jerry Kissler UCOP Budget Office However, UC Has Leveraged the Power of the Multi-Campus System

47. Jerry Kissler UCOP Budget Office Serious Impacts of the Fiscal Crisis on the University  Salaries  Academic/Support Services  Student/Faculty Ratio  Libraries and Other Academic Support  Maintenance of New Space

48. Jerry Kissler UCOP Budget Office The Compact Provides Needed Capital Funding, but …

49. Jerry Kissler UCOP Budget Office The University Has Not Received Funds to Maintain New Space  Over 2 million ft 2 of New State-Supportable Space but No OMP Funding  More Than $10 - $15 Million in Unfunded Costs

50. Jerry Kissler UCOP Budget Office Serious Impacts of the Fiscal Crisis on the University  Salaries  Academic/Support Services  Student/Faculty Ratio  Libraries and Other Academic Support  Maintenance of New Space  Graduate Student Support

51. Jerry Kissler UCOP Budget Office Inadequate Resources: Grad. Fee Increases w/o More Support  In 2001 the Commission on Growth and Support for Graduate Education identified additional financial support as a high priority.  Since then, graduate academic and professional student fees have increased sharply.

52. Jerry Kissler UCOP Budget Office Summary Plan against Current Status  Slow Moving Indicators  Graduation rates for undergrads  Research funding  Rankings of grad/prof programs  Early Warning Indicators  Undergraduate enrollment  Graduate enrollment  Faculty salaries  Staff salaries  Academic/Support services  Financial aid  Graduate student support  Facilities 2005 Goal Current Status Actual near plan Competitive Increase core $ Affordability Competitive offers 90 – 100% Maintain or improve Increase by 7% Returning to plan Near plan Below Market Large budget cuts Increased aid Not keeping up 92% by 2012 Slightly higher Above goal but … Maintaining

53. Jerry Kissler UCOP Budget Office The New Compact with Governor Schwarzenegger  Ends Four Years of Budget Cuts and Provides a Floor for Future Budget Increases  Provides Operating Funds for Enrollment Growth and Continues the Current Level of Capital Funds for Our Facilities  Contains a Schedule of Fee Increases So That Students and Parents Can Plan  Includes Accountability Elements for Student Enrollment, Timely Graduation, Faculty Workload, etc.

54. Jerry Kissler UCOP Budget Office Budget Development UC Drafts Budget Request January July Year 1 President Meets with Dept. of Finance Regents Approve Budget Request Governor’s Budget Leg. Analyst Recommendations Subcommittee Hearings

55. Jerry Kissler UCOP Budget Office The Political Process UC Drafts Budget Request January July Year 1 President Meets with Dept. of Finance Regents Approve Budget Request Governor’s Budget Leg. Analyst Recommendations Subcommittee Hearings Conference Committee Senate and Assembly Approve Budget Bill Line Item Veto and Gov. Signature

56. Jerry Kissler UCOP Budget Office Summary  The economy and demographics of California are changing. Higher education is more important than ever.  More Californians will want and need a university education for tomorrow’s jobs.  Must protect quality if this valuable public asset is to be an engine of economic growth.  Resources are essential for quality but early warning signs are pointing in the wrong direction.  The new Compact with the Governor offers hope for future increases beginning in 2005-06.