Dear campus community,
We are writing with an update on efforts underway to address the campus’s budget deficit and to provide the University with a strong, stable and sustainable financial foundation.
Three years into our efforts to achieve a balanced budget by 2020, we are pleased to inform you that there is cause for cautious optimism. We are on track to reduce the budget from $149 million to $57 million by July 2018 and to eliminate the deficit altogether by 2020.
Much of this progress is the result of hard work by so many of you to increase revenue — a key part of an overall financial strategy that will help us remain true to our public mission. New professional and self-supporting degree programs developed by schools and colleges are contributing to this headway. So are the executive education, Summer Sessions and UC Berkeley Extension programs that continue to expand. Together, these academic programs will contribute more than $18 million in new revenue to the campus.
In addition, Berkeley’s fiscal year-to-date figures show that our fundraising colleagues already have raised $272.4 million in gifts and pledges, exceeding last year’s totals for the same time period by 6.7 percent. Notable gifts during this time period include $10 million in discretionary support for the libraries, School of Social Welfare, Haas School of Business and the Chancellor's Impact Fund.The campus also received two eight-figure gifts in January that, at the donors’ request, will support faculty and serve underrepresented and undocumented students. The generosity of our donors is truly inspiring.
Of course, our progress is also the result of difficult and often painful reductions. While great effort has been made to protect the University’s academic core and the student experience, we are acutely aware of the budgetary burdens that broad cost reductions have created across campus, and their impact on students, staff and faculty. We will continue to monitor how service reductions are affecting our core educational and research missions and make necessary adjustments whenever possible. In that context, we are committed to communication and full transparency through data and information provided on the CFO’s regularly updated website.
In this 2017-2018 fiscal year, our goal is to reduce the deficit to $57 million. It is encouraging that $24 million of this reduction target is projected to be met through new revenue. Early philanthropy projections are also favorable.
These are but two of the factors enabling us to make investments in key growth areas, and we anticipate that our recently launched strategic planning process will identify others and illuminate new opportunities for revenue generation.
Yet, even as our efforts are having the desired results, external forces outside our control add an element of uncertainty to our financial future. Most pressing, the governor’s proposed budget appropriation for the University of California is less than what was originally promised, and Berkeley’s share is reduced by up to $7 million. Due in part to this unexpected development, we advocated last week, despite our reluctance, for a 2.5 percent increase in tuition to make up for this shortfall. The vote on this tuition increase has been delayed until May. All told, the impact of reduced state funding and a failure to implement a moderate increase in tuition would result in a gap in our already-stressed finances in the range of $30 million (depending upon enrollment).
Without this moderate tuition increase, which we need in the short term, given the funding decisions pending in Sacramento, students will have less access to professors, less ability to enroll in the classes they need and less potential to graduate in four years. We also must emphasize a key point often lost in media coverage of tuition issues: our low-income students at Berkeley — those receiving financial aid — will not be impacted by this increase because any hike in tuition is covered by their financial aid packages. You can read more about the tuition raise here.
The time has come for the campus and our alumni to engage in a strong and sustained advocacy effort to urge our elected representatives to honor obligations previously made, to acknowledge all we have done to put our financial house in order. To maintain our excellence, ensure access to Californians regardless of their means and origins and advance discoveries that benefit our state and its economy, we need the full support of our partners in the legislature. We will be in touch with you again soon with suggestions on how we can advance this effort together.
We ask you — our entire campus community — for continued patience as we join in this important work. Like you, we look forward to the time – just a few short years away – when we will have a balanced budget and the ability to expand our investments in areas that will benefit the campus and the public we serve.
Thank you for being part of the effort to ensure a bright future for Berkeley.
Executive Vice Chancellor and Provost
P.S. For those interested in exploring the finer details of the budget, please visit this data-rich site known as Our Berkeley.