Berkeley considers 'painful' cuts to alleviate budget pressure

The university has been managing with a tight budget for years

The University of California, Berkeley is taking drastic cost-saving measures across all of its operations as the school weathers an ever-growing budget deficit.

Growing financial woes

According to university officials, Berkeley's expenses are projected to exceed its revenues in 2016 by about $150 million, or 6% of its operating budget. From 2014-2015, about 13% of the university's operating budget came from state appropriations.

Berkeley's financial troubles are similar to those at many other public colleges, particularly in California, such as:

  • Declining state funding;
  • Flat tuition rates; and
  • Increasing pension and health care costs.  

However, Berkeley's situation is unique in some ways, compared with other schools in the University of California (UC) system. The university does not operate a medical center, which is a common source of revenue for public institutions, and also faces capital expenses for earthquake safety because of its location and aging infrastructure.

Evaluating across the board

In a message to the campus community, Chancellor Nicholas Dirks said Berkeley is in the midst of "a substantial and growing structural deficit, one that we cannot long sustain." He wrote, "Even as some of the investments we make will be greeted enthusiastically, we also know that some of the changes we will undergo will be painful," noting, "Every aspect of Berkeley's operations and organizational structure will be under consideration."

Dirks says he will consult with university faculty, staff, students, alumni, and the UC system president, Janet Napolitano.

He outlined a number of steps the university will take to contend with the budget deficit, including:

  • Evaluating university workforce and staffing levels to reduce administrative overlap;
  • Expanding fundraising capacity and alumni outreach;
  • Expanding online offerings, extension courses, and professional and other master's degree programs that earn revenue;
  • Improving support for teaching and research;
  • Raising revenue through use of the Berkeley "brand," land, and other assets;
  • Scrutinizing the widening gap between athletics revenue and expenses; and
  • Working with the Academic Senate and others to redesign academic units.  

Dirks says all possibilities are up for discussion but does not currently plan to lay off any faculty or eliminate any athletic teams or its global campus initiative. However, the university is considering cutting graduate student enrollment, according to Provost Claude Steele.

Additional details about the plan should become available in the coming months, according to Dirk, with some changes going into effect this summer. More in-depth academic and administrative updates will take longer to implement, he says. The plan is likely to be fully implemented within the academic year.

What's left to cut?

With Berkeley having operated for years on a slim budget, some fear that the university has no more room to downsize. In the last decade, Berkeley has grown its expenses at only 5% each year on average.

Benjamin Hermalin—professor of finance and economics and the president of Berkeley's Academic Senate—says the "simple formula of cutting the fat," does not apply to Berkeley's situation. Instead, he says, the university must develop innovative measures to become more sustainable.

"Our university has been so drastically cut back and our students' financial well-being so drastically hurt over the course of the past years that it doesn't seem to most of us that cuts of the size that are said to be coming could be assimilated," says Mitchell Breitwieser, a professor of writing. He notes, "There's no fat left on the bone. But the members of the campus administration speak as if they are on the verge of coming up with a way forward. So we wait to see" (Anderson, "Grade Point," Washington Post, 2/10; Kelderman, Chronicle of Higher Education, 2/11; Flaherty, Insider Higher Ed, 2/11).


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