cost avoidance rather than cost savings moves
40:00 can't measure OpEx savings til this year and report on it next year
new employees not staying as long, institutional knowledge issues
Campus climate survey discussed, morale
58:00 revenue opportunity on the academic side
66:00 budget and deficit
70:00 question answered a bit more in depth on potential layoffs
budget targets for Cal are being set externally by UCOP
UC PATH may have effect on CSS future layoffs
Discussion of real estate and potential projects
Ends with discussion of mood on campus and nationally
And this companion article to the talk above:
"Fixing a hole: pain, progress as Berkeley seeks to repair its budget"
"Berkeley News: As of six months ago, the campus faced a 2016-17 budget deficit of $150 million. Can you give us a quick snapshot of where we are now?
Carol Christ: We’re very much on course to meet our target for June of 2017 of a deficit of $110 million. Just to clarify, the deficit would have grown to $170 million had we done nothing. Through a combination of budget cuts and postponement of capital expenses we have reached $110 million. We’re very confident about that number.
So we’ve actually trimmed $60 million from this year’s budget? Where did those savings come from?
Roughly half, $23 million was through a set of across-the-board measures — a 2 percent cut to the non-contract-and-grants salary budgets of all units on campus, plus instruction that all units on campus have to cover the merit increases for their own staff and the increases in benefits costs for their staff. Another $9 million in cuts was directed at specific units, including Intercollegiate Athletics. And then there was about $30 million in deferred capital expenses.
All of which is encouraging, but still leaves a $110 million deficit. What now?
The second [fiscal] year will be much more challenging. Our goal is to cut an additional $54 million. We’re in the very active process of planning for revenue generation as a way of meeting at least half of that target. I’m working closely with the Council of Deans and the Academic Senate. We’ve already identified the areas of revenue generation.
Before we look ahead, what’s your assessment — from the unique perspective of a Berkeley provost who led a private college for 11 years, and is now back in the provost’s office — of how our budget got out of balance? Is it fair to blame state disinvestment in higher education?
There are things that have created our budget situation that have been done to us by the state, if you will. But all the UC campuses are subject to those same decisions and forces. I’ve been much more focused on the things we’ve done to ourselves.
One is the increase in debt service. That’s in part because of our capital deficit. I think if the campus could roll back history and do it again we perhaps wouldn’t have gotten ourselves so deeply into capital debt.
Campus Shared Services was much more expensive than was anticipated. I think in retrospect it was probably a mistake to have jumped all in at the deep end of the pool. Implementation could have been more gradual, and perhaps more successful as a consequence. We’re trying to move to a more regional model, rather like the Engineering Research Services Organization, ERSO.
Shared Services grew out of Operational Excellence, which was framed as a way to address earlier budget challenges by boosting administrative efficiency. Centralizing services was seen as a way to reduce staffing levels.
Staffing levels dropped way down in 2008, 2009. Then they went back up, but I think they went back up beyond what the budget could really support. We increased about 500 positions in the last four years. I believe we’ve dropped about 200 positions already.
Was that growth due to problems with Shared Services, and continued demands by faculty for local, specialized staff support?
It’s importantly related to Shared Services, but there are other areas of the campus that have grown, too. And so we’re looking very carefully at staffing levels. We have strict hiring controls in place now that set a high bar for hiring. All positions on the academic side have to be approved by me, and the other vice chancellors do the sign-offs for positions in other areas. That’s been successful in reducing staffing levels.
Would staffing reductions be achieved through attrition? What about layoffs?
Attrition and retirement, yes, and very careful thinking about rehiring. Layoffs are always occurring on campus in the sense that positions are lost as units determine how to reorganize work differently. But in terms of across-the-board layoffs across campus, no. We’re not even thinking about a layoff strategy.
revenue-generating opportunities do you see for the campus?
We’ve identified six: enrollment increases, self-supporting degree programs, monetization of real estate, increase in contract and grant activity, entrepreneurial activity — patent income, agreements with business and industry — and focusing our philanthropy in ways that would support the core.
Increasing enrollment? How does that help the budget?
Colleges and universities are fundamentally in the business of enrolling students for tuition dollars. And so you can’t have a revenue plan without thinking about enrollment strategy and tuition. The tuition that we charge for our full-time students is not in our control, obviously. That’s in the control of the regents. But to a certain extent, we have various enrollment levers that we can use.
The demand is there, certainly.
The state of California is No. 50 in the relationship of the places in four-year colleges and universities, public or private, to the size of the population. So we have a real shortage. The population of the state is projected to continue to grow. And we already have our public institutions bursting at the seams. So I believe that enrollment capacity is going to be a huge issue for the state of California. And it’s appropriate for Berkeley to figure out what we can do to help with this problem.
So we’re talking about in-state students?
Yes, of course. There would be state funding that would accompany these California residents. I think you would want to keep the proportion of out-of-state students we have if we grew in enrollment. But yes, of course we want to better serve the people of California by creating more places at Berkeley.
But doesn’t that mean more staff, faculty, infrastructure and so forth?
Absolutely. But it also means revenue’s coming in. A task force I’m co-chairing with [Vice Chancellor for Undergraduate Education] Cathy Koshland is addressing exactly this issue. What would it cost? What is our fiscal capacity? How much could we grow, just given our current capacity, what would we need to build, how would we grow the faculty — all of those are critical questions. But it seems to me rather than just getting an enrollment target from the Office of the President, we should ourselves take the initiative in thinking through the question, What plan would be best for Berkeley?
You referred to our growing debt service, but also to monetizing real estate. How would we do that?
We own a fair amount of property, and that property should be working for us, I think. We also have a real housing shortage for virtually every population of the campus — for graduate students, for postdocs, for faculty. I’m currently chairing a task force that is developing a long-term housing development plan for the campus.
Explain how building more housing benefits the campus financially.
There are two ways. One is that we are really dependent on public-private partnerships to develop student housing, because we don’t have any debt capacity of our own anymore, and that can often provide an income stream to the campus. And also there are sometimes commercial elements to these projects, like in the Berkeley Way building.
You also mentioned focusing our philanthropy in ways that support the core.
It’s what the privates do all the time.
Why don’t we?
First of all, Berkeley is relatively new to organized philanthropy on a campuswide scale. We did our first-ever comprehensive campaign for the campus in the late 1980s. It’s not that there wasn’t philanthropy before then. You have these great donors — Phoebe Hearst, Jane Sather — but in terms of the kind of organized philanthropy that private colleges and universities have been doing for hundreds of years, the campus is relatively new to that. And because the campus has been, until recently, very generously funded by the state, philanthropy was typically for buildings or “nice extras,” rather than for the core.
Now that the state is no longer generously funding us, we have to raise money in the ways that privates have raised it for decades upon decades — to fund faculty positions, to fund undergraduate financial aid, to really fund the core.
These are vital, obviously, but not terribly glamorous. Will donors go along?
I think people are going to understand. It takes a reorientation, but this is not some miraculous new invention. This is how most colleges and universities raise money that are not publicly funded.
It’s not mowing the lawns and fixing the roofs. It’s, “Wouldn’t you like to contribute a position to the School of Journalism?” Or, “Wouldn’t you like to support a deserving student in the Department of Rhetoric?”
You’ve said you’re more concerned with Berkeley’s capital needs than with its operating budget.
I sure am. First of all, there hasn’t been a general bond issue for higher education since 2006. And our capital budget has always been, importantly, funded by bond issues. This is particularly critical for the Berkeley campus. We’re an old campus. We’re a seismically challenged campus — we’re right on the Hayward fault. And we have many historic buildings, which we have to seismically reinforce and renovate. So that means we have a capital burden that’s really quite different from the other campuses.
In addition, deferred maintenance has been deferred and deferred and deferred. There is not an adequate budget for deferred maintenance. And the ultimate bill for not fixing the leaky roofs and not repairing things as they become broken is growing and growing. So I think this is a huge challenge.
Overall, then, how do you view the state of Berkeley’s budget?
We’re in the middle of what I think is a very challenging transition from a generously state-funded financial model that depended on multiple revenue streams with very distinct purposes. There wasn’t a lot of discretion demanded of the campus in terms of reapplication of these revenue streams — in fact, with a lot of them it wasn’t even allowed. And now we have to think about our finances in a much more holistic and integrated way, and encourage people who are financial managers — deans, vice chancellors, directors of units — to understand their revenue base as a whole, to seek to diversify revenue streams, all within the context of our public mission.
We will be a pioneer in doing this. But it doesn’t mean that the transition isn’t painful. I think in the near term, things are going to be hard, as we meet these budget-reduction targets. But in the long term I’m very optimistic about our ability to do this, and our ability to be even stronger at the end of this."
Then watch UC Regents Cap and Finance
Potential changes discussed on UC retirees group benefits and current employees health benefits discussed in one lengthy section of it:
New approved state audits of UC PATH and OP specifically came up in compliance and audit meeting , some Regents said they wanted some advance notice from staff, particularly did not want to find out about any neg results at the same time everyone else does, discussion about whether or not they can find out well in advance or five days before report is made public etc - they were upset press knew before or at same time they found out about recent results of audit on UC admissions etc- they don't want it to happen again this time around if possible, that came up in this vid:
Oh and this latest twist: