Comments made by UC-Riverside Chancellor Córdov at the ACE National Conference

February 15, 2005

Best of times, worst of times: Higher education and the states

As recently as 2000, with a $12.3 billion budget surplus, California's budget was so strong that then-Governor Gray Davis announced the creation of four institutes of science and innovation for the University of California, putting up $100 million in state funding for each.  California's economy had burgeoned to become the fifth largest in the world, producing 13 percent of the nation's output.  This was viewed as a "Season of Light" for Higher Education in California.

The following year, state revenues dropped by $13 billion while expenditures climbed, and by spring 2003, California faced a $38.2 billion shortfall.  California's unemployment rates grew to exceed the national average, and per capita personal income increased more slowly than the rest of the nation.  In response, citizens voted to recall the Governor, only a short while after he commenced his second term.  It was a nadir, a "Season of Darkness."

Over this four-year period, the University of California endured $490 million in base budget cuts.  Another $420 million in cuts were offset by student fees.  Overall, UC absorbed a 15 percent cut in state funding, while at the same time experiencing a 19 percent increase in enrollment.  Faculty and staff had no salary increases, and the concomitant skyrocketing of health benefit costs further eroded the buying power of their salaries.  Undergraduate students had fee increases of 14 percent in 2004-05, and will have another 8 percent for each of the next two years.  For graduate students, fee increases are 20 percent in 2004-05 and 10 percent in the following two years.  But the real story is that undergraduate students have experienced a dramatic 60 percent increase in fees since 2000.  For the poorest UC students average need-based grant support  (Cal Grants, Pell Grants, and UC Grants) increased by 33 percent. But the burden was clearly felt on the middle-class.

Although the state provides only 21 percent of the University of California's budget ($3.3 of $15.3 billion), these cuts have had dramatic impacts.  Our ability to recruit and retain the finest faculty, students, and staff has been seriously jeopardized. Faculty salaries have fallen 10% behind those of comparison universities.

But it appears that we are now entering the "Spring of Hope."  UC entered into a compact with our new Governor that takes effect with the coming fiscal year and extends for a six-year period.  This agreement stops the hemorrhaging and provides stability to the University's budget.  In fact, the Governor's budget for 2005-06 offers a $97.5 million or 3.6 percent increase for UC's operations (another 2.6% comes from the increase in student fees, both resident and nonresident).  This proposed budget provides many of the basic resources we need to begin rebuilding programs, provide faculty and staff salary increases, fund student enrollment growth, and sustain UC's contributions to California's economic competitiveness and quality of life.  In exchange, the University will be held accountable by the state for maintaining or improving performance outcomes in a variety of areas, including access, time to degree, and program quality.

Although the state is expected to experience continued financial constraints for the next two years, UC's budget has been sufficiently stabilized to plan and even to grow in terms of enrollment.  As I said at recent budget forums held for faculty and staff, "What a difference a year makes!"

So how has the University of California weathered the storm?  First and most importantly, we have confronted this challenge as a system.  Negotiations with the Governor, Department of Finance, and legislature are conducted by our Office of the President.  This has afforded the University greater flexibility and allowed us to compromise in ways that would not have been possible on a campus-by-campus basis. 

An example is in the area of academic preparation, more commonly referred to as "outreach."  Originally, the 2004-05 budget called for the complete elimination of UC's outreach funding.  Through negotiations with the legislature and some internal redirection of funds, however, we were able to come up with $17 million in one-time state support.  Even so, the result was a $4 million reduction in outreach funding.  UC will confront the same issue this year, but the system is working hard to sustain the current level of funding.

The second factor working in UC's favor is the importance placed by the state on public higher education.  The California Master Plan for Higher Education has been the state's blueprint since its formulation in 1960, ensuring access, quality, and affordability to the citizens of our state.  Further, the Governor and the state legislature have recognized the unique contributions of the University of California in fostering and stimulating the state's increasingly knowledge-driven economy.  Not only do we help provide a highly trained workforce, our research forms the basis for new knowledge and innovation that create new products, new companies, new jobs, and entire new industries.  The state can recover more quickly from its fiscal crisis with continued investments in higher education.  Long-range forecasts indicate that UC expenditures between 2002 and 2011 will result in approximately $144 billion in Gross State Product, $56 billion in California state and local government tax revenues, and more than 2.36 million jobs statewide.

One example is UC's role in launching an initiative to meet the state's demand for qualified teachers in mathematics and the sciences.  According to the National Assessment of Educational Progress, math and science test scores of 7th and 8th graders in California rank at or near the bottom nationally.  This is due in part to the lack of credentialed teachers.  In California, approximately 26 percent of the math teacher workforce is not technically qualified to teach mathematics, and 38 percent of those teaching science are not qualified to teach science.  As part of the compact, the Governor has asked UC to work with the California State University system, K-12, and business leaders to improve the quality of the workforce upon which California's competitiveness depends. 

What does the budget crisis mean for my campus, the University of California Riverside?  Like all the UC campuses, we are looking to augment our state operating budget with other sources of funding.  As a system, UC receives almost $4 billion annually in extramural funding.  Of this, 55 percent is from federal sources; another 25 percent is privately funded.  Gifts have reached $1 billion for each of the past two years.

At UCR, we remain focused on our strategic goals and vision for the campus.  Despite budgetary constraints, we have been working to develop creative new ventures that will initially help us through troubled times, but that ultimately expand the capacity of the campus once the economy has recovered.  Let me provide you with a few examples of how we are attempting to do this. 

UC Riverside is in the process of opening a satellite 'campus in Palm Desert, which is next to Palm Springs. It will offer graduate education and further our strategic goal of expanding learning opportunities for our students.  The themes around which these new programs are built are entrepreneurial management, environmental sustainability, and arts and culture.  Although it seems counter-intuitive to mount such an ambitious new effort during a time of budgetary retrenchment, it was made possible through a $6 million gift from a private donor, contributions of land and infrastructure from the city, and $10 million dollars from the State. The Coachella Valley that it serves is, like Riverside, one of the fastest growing areas in the United States.

An example of effective partnership and leveraging of resources is UCR's collaboration with California State colleges and community colleges, and local K-12 institutions on a project known as Copernicus.  With an $11.5 million grant from the U.S. Department of Education, Project Copernicus will identify prospective science teachers early, educate them in science and teaching methodologies, and mentor them through their early years of teaching.  Members of the consortium are providing another $6.7 million as a cost sharing/matching contribution.  The project seeks to substantially increase the number, quality and diversity of the state's science teachers, and to become a nationally recognized model program for science education.  Thus, UCR is addressing a statewide situation in which far fewer science and math teachers are being produced than are needed for K-12.

Finally, UC Riverside is aggressively working to launch a health sciences research institute and evolve our two year biomedical curriculum into a four year medical school.  This will be one of the first new medical schools in the U.S. in this millennium. This initiative responds to the needs of our diverse region, which is underserved in health care.  A recent report by the Center for Health Workforce Studies at the University of Albany, SUNY, shows that California has the lowest medical school enrollment and lowest number of medical residents per capita in the country.  Further, the region in which UC Riverside is located has the lowest number of primary care and specialist physicians, and is projected to have a 53 percent shortfall by 2015 unless something is done.  In response, UC Riverside is actively seeking partnerships with local hospitals to offer residency programs and, at the same time, to avoid the expense of constructing and funding our own hospital.  We are capitalizing on our existing strengths while pursuing a strategic goal that will strengthen our campus overall:  that of building professional schools for a large and booming, underserved region which is more populous than 22 states of the union. The focus on medicine and its concomitant research and technology promises to attract venture capital and biotech startups to the region. In short, we are attempting to create the foundation for a knowledge-based economy in what has heretofore been a warehouse and logistics economy – a sprawling corridor linking the California coast to the rest of the country.

All three of these initiatives—the Palm Desert satellite campus, Project Copernicus, and a biomedical research institute and medical school—squarely meet UC Riverside's strategic goal of forging closer ties with our community and assisting the region in economic development.

In summary, my experience during the past few years has led me to conclude that the worst of times can bring out the best in us.  Principally because they encourage us to invest in our strengths and let go of the rest. California's prospects look better now than they have in a long time. Our hope is that, in this land of eternal sunshine, we will enter a new Season of Light. With focused strategic planning, we will be ready to embrace it.

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