Yudof warns of drastic turn with all-cuts budget

UC President tells state senate tuition could double with $1 billion cut

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UC President Mark Yudof had a simple message to deliver Friday morning when he testified before the state senate's budget committee: If the legislature opts for an all-cuts budget to fill its remaining $15.4 billion deficit, "all bets are off" at the University of California.

If the $500 million cut already made to the university earlier this spring were to double to $1 billion under an all-cuts budget, Yudof said the 10 campus system would be put on a path that could lead to a mid-year tuition increase next January, employee layoffs, program closures throughout the university and - ultimately - a doubling of tuition to $20,000 a year.

"The thing we fear the most is an all-cuts budget," Yudof told the Committee on Budget and Fiscal Review, which brought its hearing to the offices of Microsoft in Mountain View to hear the testimony of education officials and Silicon Valley business leaders.

Friday's committee meeting marked the first time Yudof has publicly acknowledged what the consequences of a $1 billion cut could look like, though Gov. Jerry Brown had predicted in April that tuition could rise to $20,000 or $25,000 under an all-cuts plan. Yudof agreed, saying to the committee that he had looked at the numbers until he was "blue in the face" and that "the governor is not far off in his prediction."

The senate budget committee also heard testimony from several Silicon Valley business leaders who all credited the state's public universities for producing the human capital that tech start-ups rely on for success, a rare pairing of public and private interests before the committee.

"We are at a point of no return," said Kim Polese, a tech entrepreneur and member of Tech Net, a Sillicon Valley lobby group. "Your choices will carry enormous impacts for years to come, and as you weigh those choices, I urge you not to make further cuts to UC and higher education. The impact of further cuts would be devastating to California's economic vitality and to current and future generations."

Polese, a UC Berkeley graduate, told the committee that that large corporations like Genentech, Qualcomm and Amyris were all founded by UC graduates. Without the universities, she said, the state's economic future is at great risk.

The often dramatic concerns of the education and business leaders were somewhat mitigated by recent news from the state Department of Finance projecting a larger than expected influx of tax revenue this spring. In a report released Thursday, the Legislative Analyst's Office estimated the new revenue will trim the state's $15.4 billion deficit by $2.54 billion, though finance department officials cautioned that until new costs are factored in, the state's budget is still in flux.

Changes in population-driven services like schools, health care and correction facilities have to be factored in against new revenues, according to a statement issued by Ana Matosantos, director of the department. Those revenues will not be weighed until Brown releases his spring revision of the state budget May 16. Until then, Brown's plan to fill the state's deficit remains unclear.

Though his original budget released in January proposed cutting $12.5 billion from state expenditures and levying $14 billion in voter-dependent tax extensions, Brown failed to get the two-thirds majority vote required to place the tax extensions on the June ballot and only ended up signing $11.2 billion in cuts in March.

What remains to be seen is if Brown's May revision of the budget resorts to an all-cuts approach to bridge the deficit. A profile of Brown in The New York Times published online Wednesday cites sources who attended a private meeting of Democratic legislators where Brown defended his budget plan by saying he believes in the "Hernando Cortes approach ... when you hit the shore, burn the ships. There is no Plan B."

But for the University of California, the difference between $500 million and $1 billion in cuts could be devastating, considering that it received $2.9 billion in state funding in 2010-11.

During his testimony, Yudof - who opened his remarks by characterizing the UC system's relationship with the state as a "bad romance" in reference to the hit by pop star Lady Gaga - said the system can absorb the initial $500 million cut, but if the state increases the size of the cuts the university will have little choice but to raise tuition "geometrically" and cut services.

"We are not flexible in the middle of the academic year ... all things are not possible because we have made commitments to our students, our staff, our faculty," he said. "It took over a hundred years to build these great institutions, but they can be destroyed."

For now, the UC will have to wait for Brown's May 16 revision of the budget to come out to see if its prospects have changed. And though the new $2.54 billion in revenue offers a small reprieve, it is not enough to fill the daunting deficit.

"(The new revenue) in no way lessens the necessity of continuing to close the rest of the budget," said H.D. Palmer, a spokesperson for the state finance department. "There are a number of other factors that determine what the (deficit) will be on the 16th."


Contact Javier Panzar at [email protected]

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