Focus Placed on Research and Innovation Critical to State
MERCED, CA— The 2007-08 state budget
proposal issued today (Jan. 10) by Gov. Arnold Schwarzenegger
supports the University of California’s service to California by
funding growth in student enrollments, proposing a major research
and innovation initiative, supporting faculty and staff salary
increases, and proposing an infrastructure plan for facilities,
among other things.
The governor’s research and innovation initiative, one of the
highlights of his overall budget plan, invests state funding in a
number of UC research projects supporting the state’s economic and
environmental objectives. The initiative would support two “green
technology” initiatives, support UC’s bid to build a new
supercomputer with uses in a wide range of fields, and provide
operating funds for the California Institutes for Science and Innovation.
The governor’s budget proposal fulfills his 2004 “compact,” an
agreement that spells out anticipated state funding levels and UC
accountability measures over a multi-year period. However, the
governor’s budget again this year proposes to remove state funding
for UC academic preparation and labor research programs.
Also, with the state still facing a $4 billion structural budget
deficit and the governor’s budget proposing tight or reduced
spending in many areas of state government to eliminate that
deficit, the budget does not propose a student fee “buyout” in the
2007-08 year, as occurred in 2006-07.
As a result, increases of roughly 7 percent in mandatory
systemwide student fees and 10 percent in select professional
school fees would be necessary to balance the 2007-08 UC budget
proposal adopted by the Board of Regents in November. The Regents
will not be asked to set actual fee levels until their March
meeting in order to allow time for consideration and input. Any fee
increase proposal will be accompanied by a proposed increase in
financial aid for needy low- and middle-income students to preserve
the affordability of the University.
The governor’s budget also does not include state funding the
University had requested for reinstated employer contributions to
the UC Retirement Plan.
“With the state still facing a major fiscal challenge, we are
grateful for the support the governor has provided in his budget
for some of our key priorities at the University of California
— student enrollments, improved salaries for our hard-working
faculty and staff, and research to keep California on the leading
edge of global innovation,” said UC President Robert C. Dynes.
“This budget does not include everything we might wish for. We will
certainly pursue continuation of state funds for our academic
preparation and labor research programs, and we will need to give
very careful consideration to the issues of student fees and
retirement contributions. But overall, in a tight fiscal
environment, I believe this budget represents a strong vote of
confidence in the work that the University of California is doing
Under the governor’s budget, UC’s state-funded operating budget
would increase $192 million, or 6.2 percent, to $3.27 billion in
the fiscal year beginning July 1, 2007. The Legislature will
consider the governor’s budget and make proposals of its own during
the spring. The governor and Legislature typically adopt a final
state budget in the summer.
Key Features of the Budget for UC
Student enrollments: The budget includes funding
for an increase of 5,000 students (2.4 percent) at the University
of California in 2007-08, consistent with the compact. This
increase will allow UC to meet its commitments to undergraduate
access under the Master Plan for Higher Education and continue to
increase graduate enrollments as well.
Research and innovation
initiative:The governor’s budget proposes a research
and innovation initiative to help keep California on the leading
edge of global competitiveness. It includes: $30 million in lease
revenue bonds for the Helios Project, an initiative by the Lawrence
Berkeley National Laboratory to create sustainable, carbon-neutral
sources of energy; $40 million in lease revenue bonds for UC
Berkeley or UC San Diego in the event that either wins a global
competition for the British Petroleum (BP) Energy Biosciences
Institute, which will focus on the development of alternative
fuels; $20 million in general funds for operations of the
California Institutes for Science and Innovation, four
cross-disciplinary, public-private research institutes located at
UC campuses and focused on scientific fields with great potential
for economic development in California; and $5 million in state
matching funds in the event that Lawrence Livermore National
Laboratory, Lawrence Berkeley National Laboratory, and UC San Diego
win a National Science Foundation competition to build a
“petascale” computer that will be the most powerful computer in the
world and that, if sited in California, would give an enormous
competitive advantage to California universities and businesses.
Faculty and staff compensation: The governor’s
budget combined with other University revenues would provide a 5
percent pool for employee compensation increases, including
merit-based and equity-based salary increases, health and welfare
benefit cost increases, and related cost increases. (Distribution
of salary funding is subject to collective bargaining requirements
where applicable.) This increase is intended to begin closing the
market pay gap affecting many UC faculty and staff.
UC Merced:The budget continues $14 million in
one-time funding for start-up costs.
Academic preparation:The governor’s budget
proposes removal of $19.3 million in state funding for UC’s
academic preparation programs, which help improve the academic
performance of educationally disadvantaged students in K-12 schools
across the state. This action would leave the $12 million in
internal resources that UC currently provides for these programs.
“These programs are critical to providing the pathways to college
that a state like California depends upon for its economic and
social vitality, and we will aggressively seek continuation of
state funding for them,” Dynes said.
Labor research: The governor’s budget likewise
proposes removing $6 million in state funding for UC’s labor
research program. UC will seek continuation of the funding.
Retirement contributions: In their November budget
proposal, the Regents requested $60 million in state funding for
the first phase of reinstating employer contributions to the UC
Retirement Plan. Employer and employee contributions to the pension
plan have not been required since the early 1990s due to the
performance of its investments. However, it has been determined
that the plan will become underfunded within the next several years
unless contributions are resumed. The Regents have voted to resume
employer and employee contributions beginning in July 2007, subject
to the budget process, availability of funding, and collective bargaining.
The governor’s budget does not provide the requested $60 million
for employer contributions to the plan. The University’s next steps
regarding the resumption of contributions, and the timing of those
next steps, will be considered by the Board of Regents at future
meetings. The president will recommend that employee contributions
not be restarted until employer contributions are resumed as well.
To fund the University’s priorities in 2007-08, the budget
proposal adopted by Regents included an option for either a student
fee increase or equivalent state funding. The governor’s budget
does not include the equivalent funding, recognizing the state’s
As a result, balancing the UC budget proposal would require
increases of roughly 7 percent in mandatory systemwide student fees
and 10 percent in fees at selected law and business schools.
However, the Regents will not be asked to set actual fee levels
until their March meeting in order to allow time for consideration
Currently, mandatory systemwide fees are $6,141 for resident
undergraduates and $6,897 for resident graduate academic students.
With the inclusion of campus-based miscellaneous fees, the total
annual fee average is $6,852 for resident undergraduates and $8,938
for resident graduate academic students. Professional school fees
vary by campus and discipline.
The governor’s budget proposes an increase in the Cal Grant
budget to help offset fee increases for eligible students.
In addition, any proposed increase in mandatory systemwide
student fees will be accompanied by a proposed increase in UC grant
assistance for needy low- and middle-income students. The president
intends to recommend, as described in the Regents’ budget, that the
University return 33 percent of the income from any undergraduate
fee increase to financial aid. Generally, this means that the
University would be able to provide an additional UC grant,
covering 100 percent of the fee increase, to on-time financial aid
applicants who are considered needy under federal eligibility
standards and whose family incomes are lower than approximately
$60,000 per year. In addition, the University would provide a grant
covering 50 percent of the fee increase to other needy on-time
financial aid applicants whose family incomes are below $100,000
There also would be provisions for UC financial aid at the
graduate and professional levels, with a 45 percent return-to-aid
for graduate academic students, recognizing the need to provide
competitive graduate student support and to cover collective
bargaining agreements for teaching assistants; and a 33 percent
return-to-aid for professional school students.
The governor’s budget assumes the nonresident tuition proposals
contained in the Regents’ budget: a 5 percent ($900) increase in
nonresident tuition for undergraduates, and a freeze on nonresident
tuition for graduate academic students for the third year in a row,
as part of the University’s effort to remain attractive to the most
talented graduate students nationally and internationally.
Out-of-state students must also pay mandatory systemwide student
fees, and any increases in those fees, in addition to nonresident tuition.
The governor’s budget includes a capital budget of $574 million
for UC facilities. This figure includes $305 million in general
obligation bond funds for UC construction and renovation projects
intended to address enrollment growth, earthquake and life safety,
and infrastructure renewal, as authorized by voter-approved
Proposition 1D. It also includes $199 million in general obligation
bond funds, also contained in Proposition 1D, for facilities and
equipment to expand UC medical school enrollments and improve
health care for currently underserved populations and communities
in California, through expanded use of tools such as telemedicine.
The balance of the 2007-08 funding is $70 million in
lease-revenue bonds for two projects that are part of the
governor’s research and innovation initiative described above.
The governor also proposed a state infrastructure package that
would include $2.7 billion in general obligation bond funds for UC
over an eight-year period, with bond measures coming before the
voters in 2008 and 2010. “Safe, modern facilities are critical to
the work of a university, and our construction and renovation needs
at UC are substantial,” Dynes said. “We applaud the governor’s
vision in laying out this plan.”