Dear Campus Community,
We are writing to update you on all that we are doing to meet our budget target for fiscal year 2018-19, which seeks to reduce the campus budget deficit from $57 million to $20 million. Since our previous budget-related message in February, we have had the opportunity to meet with deans, faculty, vice chancellors and other campus leaders in order to understand their strategic priorities and collaborate on the setting of budget targets for each of the many units across campus. Budget targets in our current climate are a percentage reduction that may be met through cost savings and/or revenue generation. Here is the letter that was sent to unit heads in March outlining the budget development process.
This is mostly a good news story – we are continuing to meet our mission in innovative ways, are doing an excellent job containing expenses and generating new revenue, and we have great confidence in the resilience and creativity of our campus community. Importantly, we are supporting the growth of the data science program, which holds the potential to fuel and enliven numerous disciplines across our campus and engage students and faculty from engineering and computer science to the social sciences. We have doubled the central investment in TAS (instructional support) over the last five years and continue to support Berkeley Connect, a fund that provides $1 million annually to support graduate students and program services for undergraduates.
In the course of these conversations with division leaders, we have adhered to the following principles:
Protect academic instructional programs;
Prioritize the student academic experience;
Focus our efforts on revenue generation strategies to sustain and grow our academic programs while minimizing the need to cut services and staff;
Demonstrate transparency in our decision making and communication.
In addition, we will maintain our commitment to sexual violence/sexual harassment prevention and programming.
Cost-Saving and Revenue-Generation Strategies
Academic and administrative units have been developing a number of cost-saving and revenue generation strategies in an effort to build a strong and sustainable campus financial model.
Many academic units are considering or are in the process of adding new, joint or professional degrees and expanding online offerings, summer programs and executive programs.
Within the non-academic domain, the University purchased the CoGeneration plant located on campus in December 2017. By owning and operating the CoGen plant, the University has significantly lowered its energy costs which, in turn, will enable Facilities Services to maintain service, support, and staffing levels while the campus reduces energy usage and associated costs.
Other strategies include the following:
- Several units are moving from leased space to campus-owned buildings;
- Numerous process improvements in the area of philanthropy have netted significant cost savings while enhancing the donor experience;
- The campus is in the process of transitioning to an online process for travel and expense reimbursement;
- The campus has negotiated master leases with area landlords to alleviate the student housing crunch without needing to invest in new construction in the short term.
Success in Philanthropy
It’s clear we have support among our donor community and for that we are immensely grateful. We are well ahead of fundraising goals for the year and could well break fundraising records this year. While many gifts are designated for specific purposes, we are improving our ability to fundraise for core expenses such as scholarships and academic staffing.
Reduction in Staff Positions
It has become clear through this process that in order to reach our budget targets we must take the painful measure to reduce the number of staff positions in our organization. Those reductions, numbering just over 100 positions (in a staff workforce of more than 8,500), will occur across non-academic units and all job categories and include represented and non-represented employees. The reductions are being made through a combination of attrition (not filling vacant positions) and layoffs. This step is a last resort that comes only after investigating and exhausting all other options. We are committed to assisting staff who are laid off through the transition by providing outplacement services, which are a proven mechanism to finding another job. Where personnel policy permits, we will provide severance packages to employees and consider laid-off employees for open positions.
Reductions in Campus Services
Reductions in staffing levels will result in some reductions in campus service, typically in the form of reduced hours or longer wait times. Departments have been asked to detail specific service reductions in their area after which a comprehensive list of impacts will be shared with the campus community.
Berkeley is continuing its transition toward delivering HR, IT, and research administration support services via regions serving clusters of academic units. One region (called ERSO, representing the College of Engineering, the School of Information and the College of Environmental Design) is in operation, the Mathematical and Physical Sciences regional service organization will soon be operational and the remaining four will be set up in the coming year. The implementation will not be without temporary disruptions; we ask for your patience and understanding. We remain confident that delivering administrative support services through regions will improve service in a cost-effective manner.
Uncertainty About State Support and Tuition Revenue
We have been joined by a dedicated group of students in Sacramento over the past several weeks making the case for a state “buyout” of the proposed tuition increase through a commensurate increase in state funding. Front and center in their advocacy has been an explanation of how those funds would be used to support the student experience and our broader academic experience. That includes providing enhanced instructional support (which helps to ensure students get the classes they need so they can graduate on time), advising support, and other student support services. We have also presented compelling evidence about the extent to which Berkeley has trimmed its administrative costs to become one of the most efficient campuses in the country as compared to our peers.
We remain uncertain about the level of funding we will receive from the state of California (that will not be known until late June) and whether the Board of Regents will vote in May to authorize a modest tuition increase for students who are California residents – an increase that will not impact most students who receive financial aid. The Regents did approve an 3.5% tuition increase for out-of-state students at its March meeting.
Your advocacy for increased state funding on behalf of our campus with the Governor and state legislators is critical. Please visit the UC advocacy site for information about how you can effectively engage.
Keeping an Eye on 2020 and Beyond
While we still face a period of continued budget challenges, we are on track to zero out our budget deficit by 2020 and pivot to a period of growth and renewal. In its 150-year history, this campus has weathered numerous challenges and has always prevailed. We will do so again.
We expect to see a draft soon of the strategic plan, the goal of which is to provide a roadmap for the campus to guide our work and our investments over the next decade.
We look forward to continuing to engage with members of campus throughout the remainder of the budget process. For those wishing to learn more about the budget process and how decisions are made, the CFO website offers a wealth of information from a new “Budget Basics” page to a deep level of detail.
Thank you for all you do to contribute to the brilliance that is Berkeley.
Carol Christ, Chancellor
Paul Alivisatos, Executive Vice Chancellor and Provost
Rosemarie Rae, Vice Chancellor and Chief Financial Officer