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Chancellor Larry Vanderhoef's brown bag chat on the Davis campus last week turned into a blackout.

Not because of a power failure. But because he had someone turn off the lights, all of them, in MU II at the Memorial Union.

"And this is just one little thing," he said. "But if we're all doing it, we could truly make a difference" — for a lower energy bill and improved sustainability.

Turning off the lights might not work in everyone's office or lab. But the west wall of MU II is all glass, which during this noon hour let in a huge amount of sunlight. "We could get used to this, right?" the chancellor asked his audience of about 50.

Earlier in the week, he held a brown bag chat with about 30 people on the Sacramento campus.

Fiscal matters, such as the university's dramatically rising energy costs, took up a good part of his comments at both chats.

Vanderhoef noted Gov. Schwarzenegger's proposal, in his May 14 budget revision, to allocate an additional $98.5 million to the UC system. If the governor's plan makes it through the Legislature, a process expected to take months, the university's funding would be about the same as last year: $3.26 billion.

"That still leaves us with a lot of problems," he told his Davis audience. For example, there would be nothing extra to cover price increases for the same amount of goods and services purchased this year.

Also, there would be nothing extra for enrollment growth. The university had a choice early on this budget season to limit enrollment, but decided to fulfill its obligation to admit the top 12.5 percent of California high school students — in a year that saw a record number of high school graduates in the state.

"We couldn't pull the rug out from under them," Vanderhoef said.

The chancellor also noted commitments to graduate student support, and faculty and staff salaries. Increased spending in these categories will be impossible if the campus's budget is the same as the prior year's — unless cuts are made elsewhere.

In fact, ºÙºÙÊÓƵ is already preparing for $17.7 million in permanent funding reductions, and additional one-time cuts — for a total budget cutback of $40 million to $42 million for 2008-09.

"Initially, most everybody will be hurt in one way or another," the chancellor said.

That includes students, who starting this summer will see a 7.4 percent increase in fees. "They hurt. There's no doubt about it," Vanderhoef told his Sacramento audience. "We've already received a lot of letters from people who are being hurt by this."

Employees are feeling the budget pain, too. The Office of the President already is laying people off.

Someone asked if ºÙºÙÊÓƵ was helping to absorb the workers who have lost their jobs or who might lose their jobs at UCOP. Yes, said Irene Horgan-Thompson, director of compensation, benefits and employment at ºÙºÙÊÓƵ.

She noted that ºÙºÙÊÓƵ, UC Berkeley and UCSF had presented workshops for UCOP employees, to review job openings and requirements along with application processes on the each of the campuses.

"We'll continue to help them out in any way we can," Horgan-Thompson said.

Vanderhoef noted that layoffs are coming to ºÙºÙÊÓƵ, too. Rules are in place, he said, to ensure that people who lose their jobs have priority for other jobs that may become available.

Human Resources officials confirmed a rolling layoff process for 43.4 full-time equivalent jobs held by permanent and contract employees that will take place over the next six months. The layoffs affect all parts of campus, and none involve faculty positions.Also, 92 vacant positions will not be filled.

Other discussion points from the chancellor's Davis and Sacramento chats:

• Food service workers — Vanderhoef said the Davis campus is moving forward on its recent decision to convert Sodexo's nonmanagement staff from Sodexo employment to university employment.

"All that is being worked out right now," Vanderhoef said.

• No tuition for medical school? — The Cleveland Clinic Lerner College of Medicine of Case Western Reserve University recently announced that it will no longer charge tuition, and Claire Pomeroy, dean of the ºÙºÙÊÓƵ School of Medicine, asked the chancellor if ºÙºÙÊÓƵ should be striving to do the same.

Vanderhoef said private universities and a small number of public universities, including UC Berkeley, UCLA, Michigan and Virginia, are more likely to have sufficient endowment funds to support tuition-free medical education.

"We just don't have the capacity to do this," Vanderhoef said. "We're doing well for where we are (in endowment funding), but we're not at the same level as those other universities."

• Stem cell money — Vanderhoef said a $20 million grant from the California Institute of Regenerative Medicine to the ºÙºÙÊÓƵ Stem Cell Program is further evidence of the program's importance. The money will help build a specialized research facility on the Sacramento campus.

"It will be a great facility and will serve both the state and the nation very well," Vanderhoef said. "It's very important because it's still true that the NIH (National Institutes of Health) can't support these kinds of activities."

• Incoming UC President Mark Yudof — "One of the things he cannot quite understand is why the Office of the President is so big," Vanderhoef said.

Indeed, downsizing has already begun, even before Yudof takes over officially on June 16. Also, Vanderhoef said, the university is asking for proposals from the private sector to take over the administration of benefits.

"It turns out we're one of the few universities in the country that actually do benefits ourselves," Vanderhoef said.

The chancellor said Yudof generally places a great deal of importance on accountability and measuring performance in a systematic way.

Vanderhoef said the ºÙºÙÊÓƵ Health System is ahead of the Davis campus in measuring performance. "When it comes to accountability, this (Sacramento) campus is much better than we are," Vanderhoef said. "Performance is measured here in a way that we do not at Davis."

• Robert Mondavi, who died May 16 at the age of 94 — Vanderhoef described him as a "change maker" in the wine industry and higher education, particularly at ºÙºÙÊÓƵ where he and his wife, Margrit, gave $25 million toward the Robert Mondavi Institute for Wine and Food Science, and $10 million to the Robert and Margrit Mondavi Center for the Performing Arts.

"They have made a big difference on this campus," Vanderhoef said. "We are grateful."

David Ong, a senior public information officer for the ºÙºÙÊÓƵ Health System, contributed to this report.