Staff Assembly digests chancellor’s stark campus update

Chancellor Robert Birgeneau sought solace in relativity Tuesday as he strained to strike an upbeat note during his state-of-the-campus address to the Berkeley Staff Assembly.

The roughly 50 staff members who attended the annual address heard Birgeneau pitch a plea for realism and solidarity in an “unusually challenging time for the university,” as he reminded his audience that, under the circumstances, the campus is weathering the fiscal storm with remarkable resilience.

Chancellor Birgeneau

Chancellor Birgeneau addresses BSA members.

Of the “handful of truly outstanding universities in the United States and internationally,” Birgeneau marked UC Berkeley out as “the only public university left in that top list.”

“Funding is at the margins, basically,” said Birgeneau. “Assuming that we do not get an all-cuts budget, the money the state gives us to pay your salaries will be 12 percent of our total budget.”

He went on to recount a recent campus visit by top administrator from Tsinghua University—one of top three universities in China—who asked, “Why is it that you haven’t collapsed under all this pressure? How is Berkeley managing to do it, even now?”

Expressing pride at the manner in which staff have held up during a period of unprecedented pressures, Birgeneau held out hope that an end to the turbulent times may be in sight.

“Our budget model, whether we like it or not, is in transition, but we’re working very hard to maintain equilibrium because we don’t want any more furloughs,” Birgeneau said. “We’re hopeful we will be able to have salary increases this year.”

However, some question remains as to whether the UC Board of Regents will approve a pay hike for unrepresented staff.

“If the regents, do not agree then we’ll have to figure out a strategy that’s campus-specific, whether we have to do that person by person,” Birgeneau said. “But we strongly prefer some combination of across-the-board and merit-based increase to our staff.”

The BSA-hosted event unfolded in a low-key atmosphere save for one terse exchange with several audience members who pressed Birgeneau on the living-wage issue during the brief Q&A session that traditionally rounds out the event.

Get more on the budget at Budget Central

UC Berkeley is facing a total shortfall of $110 million for the fiscal year 2011-12, comprising the campus’ portion of the state’s $500 million systemwide cut, which equates to about $70 million, plus about $40 million in increased expenses, including salaries, pensions and utilities.

The administration’s effort to bridge the shortfall focuses on a combination of resident tuition increases of 8 percent and increased revenue from nonresident tuition, plus savings generated from Operational Excellence.

“That takes care of the first $50 million of the $110 million, but we still have a real hole of $60 million next year,” Birgeneau said.

The second part of shortfall-bridging strategy involves raiding the Emergency Reserve Fund for $30 million and forcing a number of units to spend carried-forward funds, which equates to an additional $30 million.

“That’s a little bit dangerous because it means our reserves are going to be severely depleted, but we want to be able to manage the budget in a controlled way,” Birgeneau said. He anticipates utilizing such strategies for two years as the campus transitions to a new financial model.

For Birgeneau, Operational Excellence is critical to that strategy.

In January, the administration will roll out eProcurement, the next stage of Operational Excellence, which is projected to yield about $30 million in annual savings, in addition to the $20 million yearly savings generated by Organizational Simplification.

“What happens if OE fails? That’s disaster, if you look at the extended budget models,” he said. “OE must succeed. Otherwise, our longterm financial plan doesn’t work and there will be a lot more people out of jobs.”

Similarly, all bets are off in the event of the “not impossible” scenario of an all-cuts budget.

“If the governor came to us and says we’re taking another $500 million out of UC… well, we don’t have a simple answer to that, and we’re going to need everybody’s input with creative ideas,” Birgeneau said.

On the other hand, as Mary Sue Coleman, University of Michigan president, told Birgeneau, “The only good thing about where you’re headed is that once the state funding is small enough, a big cut in a small number is an even smaller number.”

Next year, the largest source of funding will be the federal government at $500 million. Lagging behind other sources in fourth place, next year state funding is projected to total about $260 million next year, compared to 2004, when state funding totaled $450 million and was the primary source of support for UC Berkeley.

“This is actually scandalous that the state has gone from No. 1 to No. 4 in a period of seven years,” Birgeneau said.

Had the annual state funding increases promised to the UC system in 2004 held true, then state funding to UC Berkeley would be $600 million next year, Birgeneau said.

“That really illustrates what we’ve all had to deal with, especially over the last three years and going into next year as well,” he said.

Student tuition is projected to generate about $400 million next year, with private philanthropy bringing in about $300 million.

In 2004, federal funding totaled about $300 million, student tuition and private fundraising each brought in $150 million, while the endowment generated income of some $100 million.

“Although I knew it, somehow just writing it down was quite shocking,” Birgeneau said.

Citing polling data that indicates more and more Californians view higher education as a private good, Birgeneau urged staff to join him in “educating people that education at any level is a public good.”

Noting that the campus fundraising campaign passed the $2 billion mark in February—edging ever-closer to its $3 billion target—the chancellor lauded the donors who still “believe in Berkeley and are willing to step up,” in a climate of dwindling state support.

“The Chinese are investing like mad in their universities in a way our governments are no longer investing, and that’s a huge challenge for our whole country,” he said.

Expressing his delight at the reinstatement of all five intercollegiate athletic teams, he thanked Pac-12 Commissioner Larry Scott for his work in negotiating a broadcast-rights deal that will bring in about $3 billion over 12 years.

“It’s enough money that it will enable our collegiate athletics to be on a clear guide path to sustainability, and those resources will be available for other purposes.” Birgeneau said.

Looking further ahead, the university is working to create a novel Pac 12 network that will feature superstar lecturers from the academic world alongside coverage of Olympic sports.

“So that should be quite interesting over the next couple of years,” he said.