1. 1 The State Budget Crisis and the University of California Presentation to UCLA Legislative Assembly February 10, 2004

2. 2 Worst State Fiscal Crisis Ever? Or Not? $25 billion in accumulated General Fund debts $15 billion gap between ongoing spending and revenues State credit has fallen to a BBB rating – one step above “Junk Bond” status Previous fiscal meltdowns – the 1930s, early 1990s – occurred during severe economic downturns Current crisis caused primarily by spending increases

3. 3 Governor’s Proposal for 2004-05 Consolidate $15 billion in existing debt  Prop. 57 GO Bond No tax increases, roll back VLF Significant spending reductions, across broad spectrum of programs Ongoing gap of $6 billion between revenues and spending, beginning in 2005-06

4. 4 March 2 Primary Election Proposed Ballot Measures Prop. 55: K-University Public Education Facilities Bond Act Prop. 56: Budget Accountability Act -- Initiative Prop. 57: Economic Recovery Bond Act Prop. 58: California Balanced Budget Act Become informed and vote!  www.ss.ca.gov

5. 5 Impact on University of California Quick Recap Budget reduces state funding for UC by $372 million $205 million to be offset by increased student fees  Undergraduates  Graduate academic  Graduate professional Reduction in enrollment -- 3200 freshman Faculty merits funded in 2004-05 No new funds for:  COLAs or staff merits  Health Benefits  OMP, DM

6. 6 Impact on University of California What We’ve Learned Since January Overall level of budget cuts likely, but mix may differ Broad consensus in UC that increased fees for graduate academic students is too high UC now exploring various options to increase professional school fees Freshman at UCLA to fall to lowest level in fifteen years – 3915 new students No current consensus regarding potential value and risks of new funding agreement with state

7. 7 Potential Impact on UCLA Impact will depend on Regents decision on fees Major effects expected in following areas  Graduate student fees  Reduced freshman enrollment  Increased student faculty ratio  Cuts in institutional and academic support Overall net impact likely to be in the $30 to $40 million range

8. 8 Major Planning Tasks Rethinking enrollment trajectory Moving professional schools toward market Reallocating academic resources to reflect changing academic priorities Reducing costs