UC Berkeley:
Cuts to intercollegiate athletics and layoffs are possible as the university tries to balance its budget.
UC Berkeley has been overspending by millions of dollars a year since 2013, a precarious course that prompted Chancellor Nicholas Dirks to announce Wednesday the possibility of layoffs and cuts to intercollegiate athletics as part of sweeping changes needed to balance the budget.
The campus will also receive at least $ 200 million in loans and debt restructuring from University of California headquarters and will spend the next several months working with UC officials, faculty and the campus’ fundraising foundation to identify cuts and brainstorm ways to attract more cash.
“This is a moment not just to stabilize our finances, but also to consider our future as a leading institution of higher education,” Dirks said in a statement sent Wednesday to faculty, staff and students. He said UC Berkeley is operating with a “substantial and growing structural deficit, one that we cannot long sustain.”
UC Berkeley is projecting a deficit of $ 150 million this fiscal year — about 6 percent of its operating budget of $ 2.5 billion. The campus overspent by $ 109 million last year and by $ 12 million in the 2013- 14 fiscal year, according to campus officials. In previous years, despite the economic recession, Berkeley enjoyed surpluses.
When it comes to cuts, “every aspect of Berkeley’s operations and
organizational structure will be under consideration,” Dirks said.
In a news conference later, however, Dirks added that “we’re not laying off faculty.” The campus employs roughly 1,600 tenured professors.
“Change is difficult,” Dirks said. “There will doubtless be some changes that the campus will be enthusiastic about, and others that will be painful.” He emphasized that no firm decisions have been made.
Athletics deep in red
One area Dirks singled out for possible reductions was intercollegiate athletics, but he ruled out eliminating any teams — a subject of sensitivity in the past. When the university tried to cut the men’s baseball team in 2011, it prompted an uproar among alumni who eventually helped raise enough money to rescue it.
But intercollegiate sports are also operating at a deep deficit. Campus records show that athletics spent $ 9 million more than they took in last year, the first time sports reserves were too depleted to fully cover the gap. In 2013- 14, athletics overspent by $ 4 million, and the year before by $ 2 million.
The campus doles out $ 18 million a year to pay for the rebuilt Memorial Stadium, a debt that contributes to the athletic department’s financial troubles. Even so, said campus spokesman Dan Mogulof, the athletic department debt represents only a small portion of the campus’ overall problem.
Officials blame campuswide deficits on minimal increases in state funding, combined with a four- year UC tuition freeze they say has hit Berkeley hard because the campus is especially reliant on tuition and fee money.
UC records show that tuition and fees make up 30 percent of Berkeley’s budget. The three other UC campuses that are similarly dependent on money from students — Riverside, Santa Barbara and Santa Cruz — don’t need to spend as much on research, Dirks said.
“We have a very, very high level of research,” he said. “That plays a very important role here.”
Some UC campuses also benefit from medical center revenue, which
Berkeley doesn’t have.
Spending restrictions
Of the remainder of Berkeley’s budget, 42 percent comes from research funding and philanthropy and must be spent for specified purposes. State funding accounts for 13 percent, and 15 percent comes from miscellaneous sources.
UC Berkeley officials say the most recent 4 percent increase in state funding doesn’t begin to cover ballooning costs, which come primarily from pension and health care obligations, as well as seismic and infrastructure needs at UC’s oldest campus.
Weighing options
Berkeley campus officials began analyzing their financial problems last spring, when UC President Janet Napolitano and Gov. Jerry Brown agreed that the tuition freeze would continue until 2017. After that, tuition is expected to rise by the cost of living.
The campus will spend the next several months deciding what steps to take — including whether layoffs are needed or whether the average departure of about 200 employees a month will be enough to avoid them.
Other changes and new policies are expected to be implemented beginning this summer.