Financial Updates: UC and the State Budget

On August 24, 2007, Gov. Arnold Schwarzenegger signed a 2007-08 state budget that includes funding for student enrollments, faculty and staff compensation, academic preparation programs, and key research initiatives at the University of California.

Key elements of the 2007-08 budget include:

• Enrollment growth: The budget funds growth of 5,000 students (2.4 percent), consistent with the compact between UC and the governor. 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.
• Faculty and staff compensation: The state budget combined with other university revenues will provide a 5 percent pool for employee compensation increases, including merit-based and equity-based salary increases, new salary scales for faculty, health and welfare benefit cost increases, and related cost increases. This funding level compares to a 4 percent pool last year; the increase is critical to begin closing the market pay gaps affecting many UC faculty and staff. It should be noted that compensation programs vary across the university and distribution of funding is subject to collective bargaining requirements where applicable, so individual salary increases will vary.
• Student academic preparation: The governor preserved $19.3 million in state funding restored to the budget by the Legislature for student academic preparation programs, which work to improve the academic achievement and college preparation of students in many of California's disadvantaged public schools. This action continues the 2006-07 state funding level for these programs.
• Research programs: The final budget includes two research initiatives from the governor's January budget proposal—lease revenue bond funding of $30 million for the Helios Project, an initiative by the Lawrence Berkeley National Laboratory to create sustainable, carbon-neutral sources of energy; and $40 million for the Energy Biosciences Institute at UC Berkeley, which focuses on the development of alternative fuels.
• The governor also sustained the Legislature's action to continue $6 million in state funding for UC labor research programs.
• The budget passed by the Legislature did not, however, include a proposed funding increase of $15 million for operations of the four UC-based California Institutes for Science and Innovation. This item will continue to be a high priority for UC, given the importance of the Institutes to California's innovation in leadership and economic success.
• UC Merced: The budget continues $14 million in one-time funding for start-up costs.
• COSMOS: The governor sustained a legislative augmentation of $500,000 for the California State Summer School for Mathematics and Science, a UC residential summer academic experience for top high school students in mathematics and science.
• Mexico City facility: The governor vetoed $500,000 in state funding for UC Mexico research which was allocated for Casa de California, a facility intended to become the home for many UC education and research activities in Mexico City. In recent years this funding principally has been put toward financing of UC's purchase and renovation of the facility. UC will need to explore financing options for the facility in light of the veto.
• Student fees: As noted above, 2007-08 student fee levels were set by the Regents in March. Mandatory systemwide fees will be $6,636 per year for resident undergraduates and $7,440 for resident graduate academic students (these fees do not include campus-based fees, housing, books, and other costs). Professional school fees vary by school.
• UC will return 33 percent of the revenue generated by the undergraduate fee increase to financial aid. This means that the university will be able to provide an additional grant covering 100 percent of the fee increase to eligible on-time financial aid applicants whose family incomes are lower than approximately $60,000 per year, and a grant covering 50 percent of the fee increase to other eligible on-time financial aid applicants whose family incomes are below approximately $100,000 per year. The "return to aid" will be 45 percent at the graduate level and 33 percent for professional school students. Full details on student fees and financial aid are available at www.universityofcalifornia.edu/news/budget/studentfees2007.html.
• Capital budget: The budget includes $520 million in capital improvements funding at UC. This figure includes the $70 million in lease revenue bond funding mentioned above for the Helios Project and Energy Biosciences Institute, and $450 million in general obligation bond funding approved by California voters for UC's regular capital improvements program. The capital program funds facilities construction and improvements to address enrollment growth, life safety, and infrastructure renewal needs on UC's campuses. Of the $450 million, $130 million is designated 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.

Full details of the governor's budget are available at www.ebudget.ca.gov.