Chancellor-designate Carol Christ, executive vice chancellor and provost, sent this message to the UC Berkeley community yesterday:
Dear Campus Colleagues:
I have just completed making the budget decisions for our 2017-2018 budget. Divisions (schools, colleges, administrative units) have received their letters and we will post the decisions online at cfo.berkeley.edu, along with an FAQ that we hope will answer any questions.
As many of you know, we must reduce our budget deficit from $110 million to $57 million this year. It the largest and most challenging of the targets in the four-year plan to eliminate the deficit that the Office of the President has stipulated. I had hoped to meet half of that target with increased revenues; we have exceeded that goal with 52 percent of the target coming from increased revenues including private gifts. This is the good news. We will continue to seek ways to increase revenues to offset the need to make cuts.
The reductions are nonetheless painful. I very much appreciate the hard work and difficult choices that division leaders have applied to their goals. Throughout this process, we have prioritized our instructional mission, and invested in revenue-generating activities and facilities maintenance. We have been careful when it comes to administrative service reductions that would have an impact on our core teaching and research mission, and intend to monitor impacts over the next year, making adjustments where possible.
Our decision-making process began in Fall 2016 and has been deeply consultative. Our first step was to engage with campus, Senate and divisional finance leaders as to what exactly should be subject to budget targets. We excluded the following from the base: contracts and grants, including research funding from non-governmental sources; all scholarships and fellowships; programs funded with student fees; all instructional salaries; and utilities. We determined we would set a target $10 million above our required deficit reduction target of $54 million in order to have latitude to adjust for areas where compromises to the campus would be too great. We then calculated the percent that $64 million represented of the adjusted base.
We next engaged in an iterative budget process, meeting with groups of division heads, asking each to provide an overview of his or her strategic plan as well as a plan for reductions and for increased revenues for fiscal year 2017-18. We learned a great deal from these discussions about the impacts of the targets and about revenue plans (and divisions got ideas from each other). We also convened vice chancellors, vice provosts, deans and Academic Senate leadership to collectively work through campus policy and service level considerations. In mid-May we held individual budget meetings with all divisions. Our final budget decisions include adjustments to the original targets.
The targets that divisions have been assigned are highly differentiated because of the way in which we have calculated the base. Targets for instructional divisions are about 1 percent; those for administrative, research, and service divisions are between 4 percent and 5 percent. I am pleased that many instructional divisions will meet their targets almost entirely from increased revenues.
Non-academic units are meeting their targets primarily through staff and service level reductions. Our overall staff workforce has shrunk by approximately 450 FTE within the last fiscal year. Total salary growth has slowed substantially over the past two years. We experienced a high of 6 percent growth in FY 2014-15 and expect it to remain flat in FY 2017-18 compared to this fiscal year. For the coming year, with the approval of the Office of the President, the senior leadership of the campus has agreed to forgo any salary increases.
I realize that the process to develop not only a balanced budget but also a sustainable financial model for the campus is a challenging one that requires hard choices. I have been heartened by the creative thinking and energetic engagement in this year’s work. As I have said often, this is our problem to solve, and we are solving it. In the process, we will become an even stronger university that will serve as a model for other public universities facing similar challenges.
Thank you for all of your help.
Interim Executive Vice Chancellor and Provost