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UC Regents Approve Fiscal Plan, Furloughs

July 16, 2009

The University of California Board of Regents today (July 16)
endorsed a plan proposed by UC President Mark G. Yudof to enact
systemwide furloughs as one of a set of actions to offset an
anticipated $813 million reduction in support from the state
general fund. The board approved the plan with a 20-to-1 vote, with
ex-officio Regent Lt. John Garamendi voting against it.

More than 108,000 full-time-equivalent positions out of a total
of 135,000 are affected. Under the plan, UC faculty and staff will
be required to take from 11 to 26 furlough days – amounting to a
salary reduction of 4 to 10 percent – with higher earners being
forced to take more furlough days and steeper pay cuts. The
specific number of furlough days each employee will take is based
on a sliding scale across seven pay bands, ranging from those who
make under $40,000 to those who earn more than $240,000.

Reduced work days for members of UC’s senior management group
will be restricted to a maximum of 10 furlough days per year, even
though their actual pay cuts will be among the highest.
Additionally, senior managers who agreed to a voluntary five
percent pay cut in May will have their salaries cut an additional
five percent under the furlough program.

Yudof said the plan was guided by a principle of shared sacrifice.

“There is no doubt that these reductions will be painful for our
faculty and staff,” Yudof said. “Unfortunately, the university is
facing a financial crisis unprecedented in the past quarter
century, and everyone is going to be called on to be part of the
solution. No plan is perfect, but we have worked hard to make it as
fair as possible while preserving, to the extent possible,
excellence and access to opportunity for students, researchers and patients.”

The overall goal of the plan is to achieve an estimated $184.1
million in payroll savings from general funds for the 12 months
beginning Sept. 1, 2009.

The furlough plan will help UC fill approximately a quarter of
the $813 million budget shortfall for fiscal years 2008-09 and
2009-10. The cuts represent a 20 percent decline in state funding
for the university in 2009-10 when compared with the 2007-08 levels.

On top of actual state budget reductions, UC faces an additional
gap of $335 million over the two-year period by virtue of
increasing costs that have not been funded by the state, including
increases in student enrollments, and health benefit and utility
costs, among others.

Implementation of the plan for union-represented employees – 35
to 40 percent of the UC workforce – will be subject to collective
bargaining agreements and all applicable laws.

In addition to the furlough savings, the overall budget gap will
be filled as follows:

* A quarter of the $813 million gap will be filled in the form
of a previously approved student fee increase.

* Through the refinancing of debt and further administrative
cost controls, the university will gain another $100 million offset
against the $813 million shortfall.

* The remainder of the gap to be closed – $300 million in
all – will come from cuts spread across the university’s 10
campuses. The specifics of those cuts will be left to individual chancellors.

Across the system, campuses already have implemented
cost-cutting efforts and have more in the works. They will result
in fewer faculty, lecturers and staff, elimination of some courses
and programs, larger class sizes and cuts to student services.

Specifically, most campuses are deferring at least 50 percent of
planned faculty hires. UC Berkeley, for example, expects to reduce
faculty recruitment from a typical 100 positions a year to 10.
Already, 724 campus staff members have been laid off systemwide,
with more expected. In advance of these cuts, the UC Office of the
President already had cut annual costs by $67 million and reduced
payroll by one-third.

UC Board of Regents Chairman Russell S. Gould said the furlough
plan will help UC weather the immediate financial crisis it is
facing, which has been severe not only in terms of the size of the
cuts but the speed with which the university has had to absorb
them. Looking to the long term, he announced plans to create the
Commission on the Future of UC to reexamine everything from future
funding to delivery of educational services and the size and shape
of the institution.

“We will gather the best minds available inside and outside our
system and ask that they use this moment of crisis to reexamine,
reset and take a hard, critical look at how we face the future,”
Gould said.

“The charge will be to develop a vision for the future of the
University that will reaffirm our role in ensuring the excellence
of the educational experience in the system, to help sustain
California’s economy and cultural life while recognizing that our
limited state resources require us to be creative and strategic in
meeting our mission.”

Although the furlough plan will affect the majority of faculty
and staff in the UC system, the retirement benefits of all
employees will be protected by using pre-furlough salaries to
calculate pension benefits.

It will also provide wide flexibility for the campuses to manage
the schedules of public safety employees such as police, fire and
security personnel and clinical care workers at the medical centers
and hospitals.

Because of UC’s organizational diversity, special consideration
was required for certain employee groups:

* Faculty furlough days will vary depending on academic or
12-month calendars.

* Berkeley Lab employees are exempted under UC’s contract
with the U.S. Department of Energy.

* Most student employees, such as graduate students, also are
exempted, as well as personnel whose funding comes entirely from
contracts and grants.

* To ensure essential patient services are not disrupted,
alternate plans for achieving the required savings for some or all
of the medical centers may be considered.

* Employees working reduced hours under the START program
also may be exempt, if their reduced pay under START is already
equal to or greater than the proposed cuts.

* Implementation of the plan for represented employees will
be subject to collective bargaining agreements and all applicable laws.

The full proposal is at

www.universityofcalifornia.edu/regents/regmeet/jul09/j2.pdf
.

MEDIA CONTACT:

University of California Office of the President

(510) 987-9200