The 2005-06 state budget proposal issued Monday by Gov. Arnold Schwarzenegger offers an increase in state funding for UC after four years of substantial cuts. The proposed increase includes funding for student enrollment growth, faculty and staff compensation, and the opening of UC Merced, among other things.

The proposal fulfills last year's "compact" between the governor and UC, an agreement that provides the university with new budget stability by establishing funding and performance expectations over a multi-year period. Previously, over a four-year period ending this year, UC had taken a 15 percent cut in state funding while also seeing a 19 percent increase in enrollments.

"We are pleased that the governor understands our impact on the state economy and has supported higher education by proposing to fully fund the compact with the university," said Provost Virginia Hinshaw. "This brings us the stability we need to be able to move forward and stop further erosion."

John Meyer, vice chancellor for resource management and planning, said that while the governor's budget shows him living up to the compact, there are still challenges for UC and the Davis campus. For example, Meyer said, the budget also withdraws $17 million in state support that was provided to UC at the end of the 2004-05 budget process, as one-time funding outside the compact, and asks UC to take the cut in either enrollments or K-12 academic preparation programs, formerly known as "outreach."

In addition there are no provisions for restoration of cuts taken in prior budgets and no funding for deferred maintenance of buildings. "We still have a lot of hard work to do," Meyer said.

"The withdrawal of $17 million, intended to be targeted to either enrollment or academic preparation, is a concern to us," said UC President Robert Dynes.

"While we understand that the state's fiscal condition is still serious, we intend to work with the governor and Legislature over the course of the budget process to demonstrate the importance of these programs. Strong academic preparation programs and broad access to a college education are both important to California's continued leadership in the global economy."

Student admissions for fall 2005 will not be affected by the proposed $17 million cut, and the university still expects to offer a place next fall to every eligible applicant. If the university's efforts to restore the $17 million are not successful and enrollments ultimately are affected, there could be an impact on winter and spring admissions.

Overall, the governor's budget calls for a $97.5 million increase in state general funds for UC operations, or 3.6 percent, over the 2004-05 fiscal year. UC's state-funded operating budget in 2005-06 would total $2.806 billion under the governor's proposal.

The governor's budget will now be reviewed by the Legislature, which will hold hearings and make alternate proposals over the course of the spring. A final budget is expected to be approved this summer.

Anticipating the governor's budget proposal, and acting to give maximum notice to students and their families, the UC Board of Regents set 2005-06 student fee levels at the board's November meeting.

The action included increases of 8 percent ($457) for resident undergraduates and 10 percent ($628) for resident graduate academic students. Details about student fees are available at http://www.ucop.edu/news/archives/2004/nov18.htm.

The governor's budget does propose sufficient Cal Grant funding to cover the 2005-06 fee increases for eligible students.

The governor's budget also emphasizes the importance of efforts by universities to bolster the development of high-quality math and science teachers for California's K-12 schools. And for the last several months, UC has been leading an effort, working with its faculty, to develop a plan to increase the number of college students who receive math, science, and engineering bachelor's degrees and to increase the number of these students who go on to become K-12 math and science teachers.

UC will be working to refine its plans and move forward on this effort with the California State University in the coming months as another means of helping California stay competitive in the global economy.

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The governor's proposals for UC at a glance

Below are major elements of the UC budget outlined in the governor's proposal:

• Enrollments: Funding for enrollment growth of 5,000 full-time-equivalent students in 2005-06, a 2.5 percent increase, consistent with the compact.

• UC Merced: Continuation of $10 million in ongoing operating funds plus $14 million in one-time money for the new campus opening in fall 2005, along with enrollment funding (part of the above 5,000-student allocation) to enroll 1,000 students in 2005-06.
• Faculty and staff compensation: A 3 percent increase in UC's base budget. This funding will support a 1.5 percent general salary increase for all eligible employees, funding for faculty and other academic merit programs, 1.5 percent for merit-based increases for eligible staff employees, and additional funds to help cover the cost of increasing employee health benefits and to address market-based and equity issues where newly hired faculty and staff are paid significantly more than current employees with similar experience and skills. UC faculty salaries are now estimated to be 8-10 percent below those of comparable institutions, with a similar problem affecting UC staff.
• Proposed reduction: A cut of $17 million in state support that was provided to UC at the end of the 2004-05 budget process as one-time funding outside the compact. The budget asks UC to take the cut in either enrollments or K-12 academic preparation programs, formerly known as "outreach." UC will work with the governor and Legislature to seek restoration of this funding.
• Labor research: A reduction of $3.8 million in one-time funds for UC labor research programs. UC will work with the governor and Legislature to gain restoration of funding for this research.
• Capital improvements: Funding of $305.2 million from a voter-approved general obligation bond measure to expand and upgrade academic facilities to support enrollment growth and to maintain progress on seismic and other life-safety improvements, while also addressing essential infrastructure and building renewal needs.

The governor's budget documents are at: http://govbud.dof.ca.gov/home.htm