1. Academic Senate Budget Overview Presented to The Regents May 17, 2007

2. Standard Storyline: Ups and Downs, but Long-term is Up Standard Storyline: Ups and Downs, but Long-term is Up

3. What’s Wrong With That Picture?  It doesn’t adjust for:  inflation  enrollment growth  costs of academic innovation  It doesn’t explain faculty experience of campus erosion

4. Widening Funding & Quality Gap State and UC General Funds and Student Fees Adjusted for Enrollment Growth

5. A Steady Decline in Public Investment in a High-Quality UC

6. The Senate’s Key Questions I. What is the present and likely future of UC’s core budget? II. How can UC make up structural budgetary shortfalls?

7. Focus on “Core Campus Funds” Supporting UC’s Core Educational Mission  State General Fund  Student fees  Endowment payout  Some private support  Indirect Cost Recovery on grants  Miscellaneous

8. Not Included (Non-core; carry offsetting expenses)  Sponsored projects  Federal  Business  Foundations  Hospitals  National labs  Auxiliary enterprises

9. Three potential budget scenarios  Extend the Compact?  Return to 2001 Pathway?  Last time that UC was relatively healthy  Return to 1990 Pathway?  A recent benchmark of educational quality

10. The Compact permanently reduces the fraction of core funds the State provides

11. So that even with large annual fee increases, UC’s core budget is permanently cut by about 25%

12. Increased Burden for Students and their Families Increased Burden for Students and their Families

13. “Futures Report” Findings 1. The Compact will not allow UC’s state funding to recover to “2001 Pathway,” but locks in decline 2. The gap between returning to the 2001 Pathway and the 07-08 budget request is $1.1 billion 3. A return to traditional UC quality (1990 Pathway) would require over $2 billion in additional funding Re Key Question I: Does the Compact allow the core UC budget to recover to pre-cut levels? Answer: No, not by a long shot

14. Key Question II: How could UC make up for continued shortfalls in state funding? To reach 2001 Pathway:  Increases in federal and private research funding?  Relatively small future increases, and research is costly  Private fundraising?  Need to raise $25 billion in three years, on top of current $7 billion endowment, with no decrease in state funding  Fee increases?  If state funding maintained but not increased, need to raise fees to $15,000-18,000 per year by 2010 Answer: Only huge fee increases could make up for lagging state funding

15. UC at the Crossroads 1. Extended Compact: fees up ~8% per year, no recovery to 2001 Pathway 2. 2001 Pathway: attainable, but at current level of state funding this requires raising fees to $15-18,000 in three years and large continuing increases thereafter 3. 1990 Pathway: would restore full-quality core operations, but remains way over the horizon

16. Senate Conclusions 1. UC’s quality depends on getting back to 2001 Pathway 2. Getting there with fee increases would change UC’s character to preserve its quality 3. Preserving UC as a great public university requires a greater investment of public funds