Campus divisions to draw on reserve funds

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As UC Berkeley administrators work to plan next year's campus budget, leaders of various campus divisions will be drawing on reserve funds and savings from department restructuring under Operational Excellence in order to bridge a gap of over $100 million.

According to a March 22 letter from Chancellor Robert Birgeneau, UC Berkeley will need to fund a deficit between $102 million and $112 million - $70 million to $80 million due to state budget cuts as well as $32 million that the campus must pay toward needs like faculty salaries, workers' salary increases and utility payments - for the 2011-12 academic year.

To find solutions, the campus plans to fill the gap with $40 million to $50 million from efforts already in place, such as Operational Excellence and student fee increases.

But because the budget hole will be so large in the next fiscal year, the campus will also commit to a one-time withdrawal of $30 million - or 50 percent - of central reserves currently set aside for self-insurance purposes. This leaves about $30 million that the campus still needs to recover to combat the deficit.

After Birgeneau's announcement that all campus units will be chipping in to help cover costs, each vice chancellor sent out a letter to campus units under their direction.

Executive Vice Chancellor and Provost George Breslauer, whose office has been asked to fund $19.5 million of the total $30 million the campus is seeking to recover, released a letter March 29 asking all units under his direction to assist in the funding process. They must each submit a proposed budget by April 22 that details how they will accommodate for the cuts.

While Breslauer's immediate office will take $2.5 million out of its budget next year, the remaining $17 million will have to come from campus units drawing on their reserves, according to Breslauer's letter.

"They have to use their reserves to meet the targets set for their units; that's not optional," Breslauer said in an email. "Second, they must protect the (undergraduate curriculum) budget. And third, they must raise or protect funds to assist in faculty recruitment and retention, and graduate student support."

In order to determine the reductions for each unit, the campus evaluated each unit based on five categories, including each unit's total expenditures in 2009-10 and any funds left over from the previous year as of July 2010.

The College of Engineering will be expected to absorb the largest budget reduction of the units under Breslauer's direction, at $2.28 million, while the Graduate School of Journalism will take a budget reduction of $60,000, the smallest reduction of the units.

The ability to meet the expected contribution requirements from past years may be difficult for campus units this time, however. In Breslauer's letter, he asks campus units, in addition to the five previous requirements, to try to incorporate student input on budget planning.

As unit leaders work to meet these requirements and decide whether to seek student input, they also must decide whether to draw on savings from the organizational simplification initiative of Operational Excellence in addition to their reserves to meet their budget reductions.

Under this initiative - which will result in 280 position eliminations by June - 28 campus units are in the process of restructuring departments in order to save the campus a projected $19.3 million annually. Of the amount of money each unit saves, 40 percent must be returned to the central campus and 60 percent will remain with the units in order to help facilitate research and teaching, to be used at the unit leader's discretion.

However, the initiative savings may be tapped into in order to meet the requirements of the budget call letter if much of a unit's reserve funds will be used to cover other costs, according to Associate Vice Chancellor for Public Affairs and University Communications Claire Holmes.

Holmes said she was unsure as of yet whether the unit leaders would choose to take this route, as the plans are not yet completed.

According to Richard Mathies, dean of the College of Chemistry - which faces a budget reduction of $660,000 - a portion of the budget reduction will use savings from organizational simplification and the remainder will be drawn from unrestricted reserves.

"A lot of our reserves are committed to future faculty hiring and the renovations of research space that are associated with these hires," he said in an email. "The draw down of these funds will impact our ability to hire the number of faculty needed to offer courses in the future."

But as the April 22 deadline draws near for units to submit their budget plans, departments are still scrambling to solidify exactly where cuts will be made.

"I am particularly committed to ensuring that research funds continue to be available for faculty, particularly those in fields where extramural funding is difficult to secure, and colleagues at the beginning of their careers," said Fiona Doyle, chair of the campus division of the Academic Senate. "Amazing research is done with very modest investment, research that has a direct impact on students, and it is crucial that this continues."


Katie Nelson and Alisha Azevedo cover academics and administration.

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