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Employee furloughs and pay cuts are among the budget measures that UC is considering in the coming months as it attempts to grapple with a growing fiscal shortfall.

The state budget adopted in February includes $115 million in new permanent cuts for the UC system, widening the university’s total budget gap to approximately $450 million over two years. That comes on top of the 40 percent reduction in state funding for per-student education at UC that has occurred since 1990, adjusting for inflation and enrollment growth.

Unfunded cost increases in enrollment, health benefits, utilities and similar inflationary costs have contributed to the budget problem, according to a March 19 news release from the UC Office of the President. UC also noted that last week’s report by the Legislative Analyst's Office anticipates that state revenues are now projected to fall short by $8 billion, possibly ballooning the state's operating gap to $26 billion in the next five years.

UCOP this week told the UC Board of Regents that it has outlined a number of cost-saving measures, including:

Campus budget cuts: Campuses are curtailing faculty recruitment, in many cases by 50 percent or more; reducing staff hiring; severely limiting spending on non-essential costs such as travel; consolidating or eliminating programs; and looking for efficiencies across their administrative organizations as they cope with reduced funding. Details are at

Staff furloughs, pay cuts: UC President Mark G. Yudof is asking UC staff to begin developing a framework of policies and procedures that would be required to implement employee furloughs and/or temporary or permanent salary reductions should they become necessary in the coming months.

"While I have not decided to implement any such measures at this moment, they may become necessary, and I believe we need to have a policy and planning framework in place to implement such actions should they become necessary," Yudof said. "At the same time, I also am concerned about maintaining our ability to attract and retain the caliber of people we need to continue to serve the growing needs of the state."

UCOP stated that “no decisions have been made about whether or when furloughs or salary reductions would be implemented, or to whom they would apply.” Yudof said his only immediate goal is to ensure that a policy and planning framework is in place to address those questions if the budget situation requires it in the near future. He said he will report back to the regents at their May meeting.

UCOP pointed out that California government employees have been subject to furlough days in recent months as one means of saving the state money. UC has not implemented similar furlough measures (though some campuses and the Office of the President have instituted layoffs in some cases).

Student fee increases, financial aid: The regents are not expected to set 2009-10 student fee levels until their May meeting. The state budget adopted last month assumed a 9.3 percent increase in mandatory systemwide fees, but the Board of Regents has the final responsibility for setting fees.

UCOP said it will continue to administer an aggressive financial aid program, including the new Blue and Gold Opportunity Plan, which provides gift assistance to fully cover systemwide fees for California residents who qualify for need-based aid, and whose household incomes fall under the state's median of $60,000 per year. UC also will continue to ensure that grant assistance covers at least half of a possible increase in systemwide fees for other financially needy undergraduates with household incomes between $60,000 and $100,000.

UC currently provides grant and scholarship assistance averaging $10,300 per student to 54 percent of undergraduates. About half the students in the $60,000 to $100,000 income range receive gift aid averaging $5,800 a year.

In addition, under the federal economy recovery package, the maximum value of federal Pell Grants will increase by $619, which will provide an estimated $33 million in new grant funding for UC students. The recovery package also expanded federal higher education tax credits, which will provide up to $88 million in additional tax credit eligibility to middle-income UC families. Higher education tax credits benefit students whose fees and other educationally valid expenses are not already fully covered by grants or scholarships.

Restricting management bonuses: The regents this week approved more restrictions on the payout of bonuses and incentive pay, on top of the senior-level salary freeze and bonus restrictions adopted in January. With the expanded controls adopted this week, 2008-09 bonuses for senior managers and non-senior managers making more than $100,000 are canceled; pending bonuses from 2007-08 for senior managers and non-senior managers making more than $205,000 are canceled; and payouts of incentive compensation that may be pending from 2007-08 and may be earned in 2008-09 are deferred to the end of 2009-10. These actions do not affect clinical incentive plans or the incentive plan for personnel in the Treasurer's Office. Full details are at

Office of the President budget cuts: Yudof has proposed a 2009-10 budget for the Office of the President in Oakland that achieves another $12 million expenditure reduction since the last UCOP budget update four months ago. This reduction will bring the total expenditure reduction at UCOP to $67 million, and the total full-time-equivalent staff reduction to 628, since the beginning of the UCOP restructuring in 2007-08. In addition, the new budget reduces charges to unrestricted funds at UCOP by $25 million, part of an ongoing strategy to identify administrative dollars that can be passed on to the campuses for teaching and research purposes. Regents will vote on the proposed UCOP budget at their May meeting.

In other news: The regents this week endorsed Proposition 1A on the May 19 ballot, part of a package of ballot propositions introduced as part of the state budget resolution adopted last month. Details are at

More information: to read the UCOP budget news release, see