jerry kissler ucop budget office budget and planning a universitywide perspective april 2005

Jerry Kissler UCOP Budget Office

BUDGET AND PLANNING

A Universitywide Perspective

April 2005


Today’s Agenda

Large Trends The Impact of California’s

Fiscal Crisis The Regents’ Benchmarks


The University’s Context

Large Trends A Changing Economy with

More Professional and Managerial Jobs


California Is Losing Its Comparative Advantage

0%

5%

10%

15%

20%

1970 1975 1980 1985 1990 1995 2000 2005 2010

Source: Actual data from U.S. Bureau of Economic Analysis Projection from the Anderson Economic Forecast

Actual Projected

National Average

Pe

r C

ap

ita

Pe

rso

na

l In

co

me

Ca

lifo

rnia

as

% a

bo

ve

th

e N

ati

on

al A

ve

rag

e

+

+

+

+


California Needs More Well –Paying Jobs

$23,036$32,240

$38,844

$56,836$65,260

$85,306

($100,000)

($80,000)

($60,000)

($40,000)

($20,000)

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

< HS H.S. Grad A.A. Bachelor's Master's Doctorate

2003 Average Earnings

Source: Bureau of Labor Statistics

15%

10%

5%

0%


$23,036$32,240

$38,844

$56,836$65,260

$85,306

($100,000)

($80,000)

($60,000)

($40,000)

($20,000)

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

< HS H.S. Grad A.A. Bachelor's Master's Doctorate

2003 Average Earnings

2003 Average Unemployment Rate

Source: Bureau of Labor Statistics

15%

10%

5%

0%

Well –Paying Jobs Are Linked to Higher Levels of

Education


California Needs Companies Creating Well-

Paying Jobs

UC helps create fast-growing companies. R&D-intensive industries rely upon

universities because they under-invest in basic research.

Thousands of new professional and managerial jobs will be created over the next decade.


0%

25%

50%

75%

100%

125%

150%

1983 1986 1989 1992 1995 1998 2001 2004 2007 2010

Pe

rce

nt

Inc

rea

se

in

Jo

bs

Professionals

Managers

All Other Occupations

P

M

O

Actual Projected

Sources: Actual data from Bureau of Labor Statistics

California Firms Will Create More Jobs for Knowledge

Workers


The University’s Context

Large Trends A Changing Economy with

More Professional and Managerial Jobs

Changing Demographics: More Californians Will Want a University Education


California’sPopulation in 1980

0%

25%

50%

75%

100%

White Hispanic Asian Black

Pe

rce

nt

of

Po

pu

latio

n b

y E

thn

ic G

rou

p

Source: California Department of Finance, Demographic Research Unit

California Population 24 Million in 1980



0%

25%

50%

75%

100%


Pe

rce

nt

of

Po

pu

latio

n b

y E

thn

ic G

rou

p




Hispanics & Asians Increase as % of

Population

0%

25%

50%

75%

100%


Pe

rce

nt

of

Po

pu

latio

n b

y E

thn

ic G

rou

p

Source: California Department of Finance, Demographic Research Unit, May 2004

Demographic Shift1980 to 2040

67%

26%

19%

50%

5%13% 8%

7%


0

150,000

300,000

450,000

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Source: California Department of Finance

Ca

lifo

rnia

Pu

bli

c H

igh

Sc

ho

ol

Gra

du

ate

s

Actual

2004 Series1998 Series

Projected

Tidal Wave II


UC Faces a Period of Exceptional Growth

-

50,000

100,000

150,000

200,000

250,000

1985-86 1990-91 1995-96 2000-01 2005-06 2010-11

Ge

ne

ral

Ca

mp

us

FT

E S

tud

en

tsIn

clu

din

g S

um

me

r

Source: UCOP Budget Office

Undergraduate Students

Graduate Students

Actual Projected

Can We Maintain Quality?

Can We Maintain Quality?


Today’s Agenda


Fiscal Crisis


State Dollars, Student Fees, and UC General Funds Are the

Foundation

Core UC

SupportState Funds

Student Fees

UC General Funds

Private Fund Raising

Research

Auxiliaries

D.O.E.

Committed by Policy

Restricted by Source




State Dollars, Student Fees, and UC General Funds Are the

Foundation

Core UC

SupportState Funds

Student Fees

UC General Funds

State ProvidesState Provides60% of UC Core 60% of UC Core

SupportSupport

State ProvidesState Provides60% of UC Core 60% of UC Core

SupportSupport


Internet Boom Produced Capital Gains and Stock

Options Revenue

0%

5%

10%

15%

20%

25%

30%

95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05

Fiscal Year

Stock Options

Capital Gains

$2.6 billion

$4.0 billion

$5.5 billion

$7.5 billion

$12.7 billion

$17.6 billion

Cap

ital

Gai

ns

and

Sto

ck O

pti

on

Rev

enu

e a

s a

Per

cen

t o

f T

ota

l G

ener

al F

un

d R

even

ue

Source: California Department of Finance, January 2004

Actual


Tax Revenue Fell Sharply When Bubble

Burst

0%

5%

10%

15%

20%

25%

30%

95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05

Fiscal Year

Stock Options

Capital Gains

$2.6 billion

$4.0 billion

$5.5 billion

$7.5 billion

$12.7 billion

$17.6 billion

$8.2 billion

Cap

ital

Gai

ns

and

Sto

ck O

pti

on

Rev

enu

e a

s a

Per

cen

t o

f T

ota

l G

ener

al F

un

d R

even

ue

$5.2 billion


Actual

$12.4 Billion


0%

5%

10%

15%

20%

25%

30%

95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05

Fiscal Year

Stock Options

Capital Gains

$2.6 billion

$4.0 billion

$5.5 billion

$7.5 billion

$12.7 billion

$17.6 billion

$8.2 billion

Cap

ital

Gai

ns

and

Sto

ck O

pti

on

Rev

enu

e a

s a

Per

cen

t o

f T

ota

l G

ener

al F

un

d R

even

ue

$5.2 billion $6.2 billion


Actual

$7.3 billion

Estimate

The Structural Problem


$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

2001-02 2002-03 2003-04 2004-05

Sta

te G

en

era

l F

un

ds

($ i

n B

illi

on

s)

Actual State Funding

Normal UC Workload Budget

$1.5 Billion Shortfall in

State Support

California’s Fiscal Crisis Has

Impacted the UC Budget

UC Enrollment Has Grown by UC Enrollment Has Grown by 19% While Our Budget Has 19% While Our Budget Has

Been Cut by 15%.Been Cut by 15%.

UC Enrollment Has Grown by UC Enrollment Has Grown by 19% While Our Budget Has 19% While Our Budget Has

Been Cut by 15%.Been Cut by 15%.


$15,100$14,110

$10,900

$12,680

$9,120

$1,350

$1,570

$1,640

$1,670

$1,940

$2,010$2,270

$4,150

$3,340

$4,750

$0

$2,500

$5,000

$7,500

$10,000

$12,500

$15,000

$17,500

$20,000

1985-86 1990-91 1995-96 2000-01 2004-05

State General Funds UC General Funds Student Fees

Co

st

of

Ins

tru

cti

on

(in

20

04

-05

Do

lla

rs)

State Budget Cuts Create Gap of $2,650

per UC Student

Funding Gap = $2,650

Funding Gap = $2,650


Today’s Agenda


Fiscal Crisis The Regents’ Benchmarks


UC BenchmarksIndicators of Quality

QualityQuality QualityUndergraduate

Education

LeadingGraduatePrograms

Excellent Research

Slow MovingSlow MovingIndicatorsIndicators


UC BenchmarksEarly Warning Indicators

EnablingEnablingFactorsFactors

QualityQuality

EarlyEarlyWarningWarning

IndicatorsIndicators

StaffStudents Facilities

FacultyAcademic/

SupportServices

QualityUndergraduate

Education

LeadingGraduatePrograms

Excellent Research

Slow MovingSlow MovingIndicatorsIndicators


0%

25%

50%

75%

100%

1988-89 1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03 2004-05

One-Year Persistence Rates

for Freshmen

Five-Year Graduation Rates

for Freshmen

Source: Office of Student Academic Services

UC Has High Persistence and Graduation Rates


$-

$25,000

$50,000

$75,000

$100,000

1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03

Ge

ne

ral C

am

pu

s R

es

ea

rch

E

xp

en

dit

ure

s p

er

La

dd

er

Fa

cu

lty

FT

E

Federal

FoundationIndustry


Increase in Competitive Awards to UC Faculty


Many Indicators of Strong Graduate Programs

Of the 261 doctoral-granting universities in the U.S., only 62 are members of the prestigious American Association of Universities (AAU).

6 of the 8 UC campuses eligible for the AAU are members. In spite of being small and young, UCR and UCSC are

in top 15 on Graham/Diamond ratings.

Of the top 12 universities on the NRC rankings, 3 are UC campuses.

Of the 229 rated UC programs, more than half were in the top 20.


First UC Benchmarks

Slow Moving Indicators Graduation rates for undergraduates Research funding Rankings of departments and programs

Early Warning Indicators Undergraduate enrollment Graduate enrollment Faculty salaries Staff salaries Academic/Support services Financial aid Graduate student support Facilities

2002


Are We Still on Track?

Slow Moving Indicators Graduation rates for undergraduates Research funding Rankings of departments and programs

Early Warning Indicators Undergraduate enrollment Graduate enrollment Faculty salaries Staff salaries Academic/Support services Financial aid Graduate student support Facilities

20052002


50,000

75,000

100,000

125,000

150,000

175,000

200,000

1985-86 1990-91 1995-96 2000-01 2005-06 2010-11

Nu

mb

er

of

Un

de

rgra

du

ate

Stu

de

nts

Inc

lud

ing

Su

mm

er

UC Undergraduate Enrollment Plan

of 1999

Actual Projected


Undergraduate Enrollment Is Returning to the 1999

Plan Levels


0

10

20

30

40

U ofVirginia

Wisconsin U ofMichigan

NorthCarolina

Stanford Cal Tech USC UC SanDiego

UCAverage

Berkeley UCLA

Selected Flagship Public Universities

California Research Universities

Pe

rce

nt

of

Un

de

rgra

du

ate

s W

ho

R

ec

eiv

e P

ell

Gra

nts

University of California

UC Continues to Be Accessible to Low-Income Students


-

10,000

20,000

30,000

40,000

1985-86 1990-91 1995-96 2000-01 2005-06 2010-11

Nu

mb

er

of

Gra

du

ate

Stu

de

nts

Inc

lud

ing

Su

mm

er

UC Graduate Enrollment Goal

Actual Projected


Graduate Enrollment Is on Plan but …


-

50,000

100,000

150,000

200,000

250,000

1965-66 1970-71 1975-76 1980-81 1985-86 1990-91 1995-96 2000-01 2005-06 2010-11

Health Sciences

Graduate

Undergraduate

Un

ive

rsit

y o

f C

ali

forn

ia E

nro

llm

en

t(B

ud

ge

ted

FT

E S

tud

en

ts)

UC Enrollment Is Out of Balance


Serious Impacts of the Fiscal Crisis on the

University

Salaries


80%

90%

100%

110%

120%

1987-88 1990-91 1993-94 1996-97 1999-00 2002-03 2005-06

Fa

cu

lty

Sa

lari

es

as

% o

f M

ark

et

Faculty Salaries Will Be 8 to 10% Below Market


State Funding forUC Staff Salary Increases

-4%

-2%

0%

2%

4%

6%

8%

10%

1992-93 1995-96 1998-99 2001-02 2004-05

UC Staff Salary Increase Funding Market - Western Region

% I

nc

rea

se

/De

cre

as

e i

n S

tate

Fu

nd

ing

fo

r S

taff

Sa

lari

es

Source: WorldatWork, "Annual Salary Budget Survey"


-4%

-2%

0%

2%

4%

6%

8%

10%

1992-93 1995-96 1998-99 2001-02 2004-05

UC Staff Salary Increase Funding Market - Western Region

% I

nc

rea

se

/De

cre

as

e i

n S

tate

Fu

nd

ing

fo

r S

taff

Sa

lari

es

Source: WorldatWork, "Annual Salary Budget Survey"

Funding for Staff Salaries Has Fallen

Below Market


0%

5%

10%

15%

20%

1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03 2004-05

An

nu

al

Em

plo

ye

e T

urn

ov

er

Ra

tes

Source: Bureau of National Affairs

Large Organizations in the West (> 2500 Employees)

University of California

UC Staff Turnover Has Been Lower Than Other Large

Employers



University

Salaries Academic/Support Services

Student/Faculty Ratio


Inadequate Resources: Deterioration of Student/Faculty

13.0

15.0

17.0

19.0

21.01966-67 1971-72 1976-77 1981-82 1986-87 1991-92 1996-97 2001-02 2006-07 2011-12

Stu

de

nt

/ F

ac

ult

y R

ati

o

Regents' Goal = 17.6/1

Governor's Proposed

Reductions



University


Student/Faculty RatioLibraries and Other Academic Support


Inadequate Resources: Less Funding for Academic/Support

Services

0.00

0.40

0.80

1.20

1.60

1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03

UCLA

Yale

U. of Michigan

Co

mp

ute

d A

RL

Ind

ex

Va

lue

Ba

se

d u

po

nL

ibra

ry B

oo

ks

, Su

bs

cri

pti

on

s a

nd

Sta

ff

Source: UCOP Academic Affairs using data from Association of Research Libraries


0

25,000

50,000

75,000

100,000

125,000

150,000

1990-91 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03

-

1,750,000

3,500,000

5,250,000

7,000,000

Bo

ok

s L

en

t B

etw

ee

n U

C C

am

pu

se

s

Request Service Begins in Jan. '99

California Digital Library Begins

in Jan. 1999

However, UC Has Leveraged the Power of the Multi-Campus System



University


Student/Faculty RatioLibraries and Other Academic SupportMaintenance of New Space


40%

60%

80%

100%

120%

1993-94 1995-96 1997-98 1999-00 2001-02 2003-04 2005-06 2007-08 2009-10 2011-12

Pe

rce

nt

of

CP

EC

Sta

nd

ard

s


If State Capital Funding in the Compact Is Not

Provided

Actual Projected

If State Capital Funding in the

Compact Is Provided

The Compact Provides Needed Capital Funding, but …


The University Has Not Received Funds to Maintain

New Space

Over 2 million ft2 of New State-Supportable Space but No OMP Funding

More Than $10 - $15 Million in Unfunded Costs



University


Student/Faculty RatioLibraries and Other Academic SupportMaintenance of New Space

Graduate Student Support


Inadequate Resources: Grad. Fee Increases w/o More

Support

In 2001 the Commission on Growth and Support for Graduate Education identified additional financial support as a high priority.

Since then, graduate academic and professional student fees have increased sharply.


SummaryPlan against Current

Status

Slow Moving IndicatorsGraduation rates for undergradsResearch fundingRankings of grad/prof programs

Early Warning IndicatorsUndergraduate enrollmentGraduate enrollmentFaculty salariesStaff salariesAcademic/Support servicesFinancial aidGraduate student supportFacilities

2005Goal Current Status

Actual near plan

Actual near planCompetitive

Competitive

Increase core $

Affordability

Competitive offers90 – 100%

Maintain or improve

Maintain or improve

Increase by 7%

Returning to plan

Near plan

Below Market

Below Market

Large budget cuts

Increased aid

Not keeping up

92% by 2012

Slightly higher

Above goal but …

Maintaining


The New Compactwith Governor

Schwarzenegger

Ends Four Years of Budget Cuts and Provides a Floor for Future Budget Increases

Provides Operating Funds for Enrollment Growth and Continues the Current Level of Capital Funds for Our Facilities

Contains a Schedule of Fee Increases So That Students and Parents Can Plan

Includes Accountability Elements for Student Enrollment, Timely Graduation, Faculty Workload, etc.


Budget Development

UC Drafts Budget Request

January

July

Year 1Year 1President Meets with Dept. of Finance

Regents Approve Budget Request

Governor’s Budget

Leg. Analyst Recommendations

Subcommittee Hearings


The Political Process

UC Drafts Budget Request

January

July

Year 1Year 1President Meets with Dept. of Finance

Regents Approve Budget Request

Governor’s Budget

Leg. Analyst Recommendations

Subcommittee Hearings

Conference Committee

Senate and Assembly Approve Budget BillLine Item Veto and

Gov. Signature


Summary

The economy and demographics of California are changing. Higher education is more important than ever.

More Californians will want and need a university education for tomorrow’s jobs.

Must protect quality if this valuable public asset is to be an engine of economic growth.

Resources are essential for quality but early warning signs are pointing in the wrong direction.

The new Compact with the Governor offers hope for future increases beginning in 2005-06.

jerry kissler ucop budget office budget and planning a universitywide perspective april 2005

Documents

uc budget uc enrollment

source slide

uc core support slide

managerial jobs slide

paying jobs slide

university education

structural problem slide

comparative advantage