UC Berkeley is on track to reduce a nearly $150 million deficit by almost two-thirds by this summer, and to completely eliminate the shortfall by 2020, officials said this month.
Berkeleyside sat down with UC Berkeley leaders in early February to hear about how and where the reductions have been made.
The university accomplished more than its initial target in 2016-17, chopping down the deficit to $77 million, according to campus announcements this past fall, and expects to reach its goal of $57 million in July.
With a new chancellor, a different approach
When Chancellor Carol Christ took office in the fall, inheriting a campus in financial disarray, she said she would take a different approach to tackling the deficit than her predecessor, vowing to focus on raising revenue and avoiding academic cuts where she could. Former Chancellor Nicholas Dirks, who was criticized by some faculty and staff for leading an opaque, top-down budget process, had said he would consider closing or merging academic departments to make the fix.
In Christ’s budget plan for 2017-18, more than half of the reduction, from $110 million to $57 million, comes instead from increased revenue, though cuts are significant as well.
Both chancellors have operated within a context of limited support from the state. University of California officials say Governor Jerry Brown had agreed to increase their funding by 4% in 2018-19, as the state had in previous years, but ended up proposing a 3% increase instead, representing a difference of about $7 million for UC Berkeley.
“We’re coming through a long period where state legislators have fundamentally disinvested from higher education,” said Paul Alivisatos, executive vice chancellor and provost.
In light of the minimal state funding, campus officials have asked the UC Board of Regents to raise tuition by 2.5% for 2018-19.
Testifying in front of the Regents in January, Christ said the average cost of instructing a UC Berkeley student in the past few years has exceeded the amount of funding the campus receives for the student — from the state and the financial aid support that comes from tuition — by $10,000.
“Berkeley is doing its part with those financial levers we control,” Christ said. “Yet even the rosiest of those projections make clear that these efforts, on their own, will not be enough to meet the needs and expectations of the students — and the public — that we serve.” She explained that students receiving financial aid would not be affected by the tuition increase.
Some students and staff unions have protested the possible increase, arguing that no student should have to bear the burden of the university’s fiscal mess. The graduate student union is currently negotiating its contract with the UC system, advocating for higher wages and full fee remission for student-workers, who teach undergraduates and conduct research.
The Regents ultimately postponed the decision on the tuition and student-fee increase until May. At that point, new students will have already accepted their admissions offers. The Regents could raise the supplemental tuition for non-resident students by 3.5% in March. Rosemarie Rae, vice chancellor and chief financial officer, said the university’s ability to meet its financial projections, this year and in coming years, depends in large part on these decisions and others made by the Regents and the state.
Growth of self-supporting graduate programs adds revenues
In the meantime, the university has added new profitable academic programs and increased fundraising efforts — while also slashing hundreds of administrative positions, keeping the faculty number flat and making cuts to academic programs.
A chunk of the new revenue has come from new “self-supporting” graduate degree programs and other pre-professional academic programs that pay for themselves without using state funding. In 2015, the School of Public Policy received approval to offer a master’s of public administration program, and three additional self-supporting master’s degrees in other departments — in real estate development and design, information and cybersecurity, and molecular science and software engineering — were approved last year.
Among several other revenue-producing programs run by Cal are the Berkeley Boot Camp intensive training in web development, Summer Sessions and UC Berkeley Extension certificate and post-baccalaureate programs.
This year, these academic programs are projected to provide $18 million toward the deficit reduction. Though some independent programs have existed since the 1990s, critics fear a growing reliance on self-supporting degrees represents a larger trend toward the privatization of the public university.
“When we enter into one of these, we do a soul searching,” Alivisatos said. “Is this our academic mission? Is this what we should be doing or not? They’re serving more people who need education from us. They need that education in order to be able to function in the market, to go out and get work.”
He noted that UC Berkeley’s data science courses are the fastest-growing classes ever offered at the school, due in part to the enrollment of humanities students. People who didn’t have that opportunity as an undergraduate, and thus have been unable to “participate in the tech revolution,” can now access the new master’s programs, Alivisatos said.
Significant revenue from private donors
UC Berkeley also has also brought in significant revenue from private donors, breaking its private gift record in 2016-17, and so far outpacing that growth again this year. The extent of the outside support for the school is notable during two years when UC Berkeley has been in the public eye. The spring and fall semesters of 2017 were marked by clashes between the far-right and far-left on campus — as well as legal tussles between conservative student groups and the university administration. The campus has faced questions from both the right and left about, alternatively, the university’s commitment to free speech and diversity of opinion, and its desire to protect marginalized students from hostility and hate speech.
Early in the chain of events, alumni contacted the administration “very confused and uncertain about what was right and where the university stood,” said Dan Mogulof, campus spokesman and assistant vice chancellor. “That swung dramatically toward a great deal of support and understanding for the chancellor’s position,” perhaps reflected in the boost in donations.
Those political events, which often prompted Cal to stack the campus with police and other major security measures, cost millions of dollars, a price tag split by the UC system and UC Berkeley.
Plans to continue administrative cuts
The rest of the improvement in the deficit has been made up by administrative revenue generation, reserve investments and cuts. The budget for 2017-18 included $13 million in administrative reductions, and $7.3 million in academic and research expense reductions.
The university has eliminated around 400 of its 9,000 staff positions in the past year. Many of those were contract positions that were not renewed this year. Alivisatos said those administrative cuts, which the campus plans to continue next year, mean the loss of precious employees.
“I think it’s important to know just how dedicated the staff are who work here,” Alivisatos said. “They are incredible people who believe in the mission of the public university and who really believe in this vision of social mobility that comes from offering access. They take great pride in their work. It is true that the administrative side needs to probably come down even a bit more, but the people there are really amazing people.”
Students can feel the impact of the staffing changes when they go to access services, the campus leaders said. The administrative cuts along with waning state support for capital improvement projects also exacerbate issues with the upkeep and repair of campus buildings, Rae said.
“Berkeley has a significant deferred-maintenance backlog that we’re making our way through,” she said. “I think there’s general agreement that we should be doing more.”
While the faculty has not weathered the same kind of cuts the staff has, the positions have not grown either. Student enrollment has increased by nearly 5,000 in the past few years while the faculty numbers have remained stagnant, according to the chancellor. The student-faculty ratio has consequently grown from 23-to-1 to 26-to-1.
Alivisatos said it is frustrating for him that the top level of research and intellectualism that continues to define UC Berkeley is often lost in the conversation about the budget squeeze.
“It’s complicated because there’s an amazing number of great things happening everywhere you turn,” he said. “To hold that faculty steady, we had to hire approximately 50 new people last year,” because others retired or left. “And if you meet that class of early-career faculty, they are breathtakingly awesome. You feel like this place is going to be great in 20, 30 years,” said Alivisatos, who is also a chemistry professor and was previously director of the Lawrence Berkeley National Laboratory.
Senior administrators at UC Berkeley made the decision last year to forgo pay raises, and possibly could do so again. Elsewhere in the UC system, most chancellors, many of whom make several hundred thousand dollars a year, were approved by the Regents for salary increases this year. A recent state audit also found that the UC Office of the President paid its top executives and administrators excessive salaries.
Memorial Stadium a thorn in UC Berkeley’s side
Adding to the pressure on the campus budget, UC Berkeley could take on millions of dollars of debt from its athletics department’s renovation and seismic retrofit of Memorial Stadium. The state-of-the-art football stadium on Piedmont Avenue, completed in 2012, is $314 million in the hole, and the new sports complex next to it is in debt as well. The athletics department must pay only the interest on the debt, or $18 million annually, for the next several years, Rae said. The proposal under consideration has the campus assuming the debt on the seismic portion of the project, which could be 30-50% of the $18 million, Rae said.
Alivisatos noted that it is typical for the university to cover seismic improvements on the campus, but some faculty have criticized the potential decision to cover such a costly and non-academic project during a period of cost-cutting.
When Christ proposed that the campus assume the seismic debt, she suggested the athletics department could, in return, allow the university to develop housing on another sports complex, Edwards Stadium on Fulton Street.
“The chancellor’s interested in exploring how we might otherwise utilize that site,” said Rae, but she said it is hardly a done deal. “We don’t have any legs underneath it at this point. There haven’t been any site assessments done.”
While tackling the deficit over the next few years, the campus is also looking further ahead, undertaking an effort to draw up a 10-year strategic plan this spring.
The plan will incorporate fiscal lessons learned during the past few years dealing with the deficit, Alivisatos said. If projections are accurate, the plan will be implemented right when the campus has fully crawled out of its deficit.
“Just as that thing is landing is when we’ll be taking off,” Alivisatos said.