UNIVERSITY OF CALIFORNIA
EXECUTIVE VICE PRESIDENT - BUSINESS OPERATIONS
Office of the President - Budget and Capital Resources
May 12, 2009
Dear Professor Schwartz:
President Yudof shared your April 11 letter with me and asked me to
respond on his behalf. I regret that you found "The UC Budget: Myths
& Facts" misleading, and I am pleased to have the opportunity to
address your concerns. I will venture to respond to each of the points
you made, although I suspect the information I am providing here will
not be new to you.
With respect to funds generated from sales and services, these
activities may not be restricted in the legal sense, but they are of
limited use in a budgetary sense. The University's medical centers and
auxiliary enterprises compete in the marketplace. Prices charged for
services are subject to market pressures and do not yield profits
sufficient to
subsidize the University's educational and research activity.
These enterprises are facing economic pressures similar to those of
other parts of the University - rising costs for employee health
benefits, purchased utilities, and equipment, the need to re-start
retirement contributions, and an economic climate making stable
revenues
highly uncertain. There is little room in their budgets to help
fund the rest of the University's operations.
In response to your statements about medical faculty compensation, UC
medical schools receive State funding to cover only a fraction of the
salaries of their faculty, and must fund the salaries of many clinical
faculty entirely from non-State sources, including income from the
medical enterprises. Medical school faculty and other health
sciences faculty who are members of the University's Health Sciences
Compensation Plan receive a base salary according to the University's
faculty salary scales and may also earn negotiated additional
compensation (funded by clinical services or grant funds) as well as
occasional additional compensation that includes funds generated by the
faculty themselves from outside professional activities.
This supplemental income is necessary to retain them as our
faculty. Without an ability to pay competitive salaries, we
believe we would lose faculty to our competitors.
Regarding the growth in management and senior professional employment,
the University is an increasingly complex and growing organization
which necessitates an increase in staffing levels to provide
management/administrative infrastructure and professional analytical
support. Some of the forces driving these changes include student
enrollment growth, a concomitant increase in University owned and
maintained space, the number of primary courses offered, growth in our
medical centers/hospitals and a very significant increase in the number
of contracts and grants awarded. In addition, over the last 10
years, the University has increased the power and availability of
information systems and technology available to students, faculty and
staff, enhancing and streamlining business processes and providing an
enhanced student experience. In some instances, new financial,
payroll and personnel, and student service systems have improved the
business structure of the University, and the popularization of the
internet and computer technology has introduced on-line capabilities in
course settings when none has been there before. The University
is a microcosm of the increased complexity and technological
sophistication that the world has experienced as a whole since 1996.
While technology has enabled productivity improvements in many areas,
it has also created new needs for professional analysts to meet the
needs of a modern organization.
Finally, concerning the cost of education, consistent with the Master
Plan for Higher Education, the University of California is a research
university whose faculty are charged with - and the State provides
funding for - a three-part mission of instruction, research and public
service. Undergraduate and graduate students alike benefit from
the full complement of faculty activities and our students choose to
pursue an education at UC specifically because of the high quality of
the University's faculty, quality that includes excellence in teaching,
cutting-edge research, and leadership in academia.
UC faculty are exceptional because of their direct, inextricable, and
ultimately unquantifiable links to research, which informs their
instruction and their ability to serve as real-time mentors in the
development of undergraduates' own research skills. This link to
the research mission is essential to the nature and quality of
instruction that UC faculty expect undergraduates to receive,
differentiating it from the instruction received at other types of
colleges and universities. While State support for UC has
declined over time, it remains a critical component - nearly double the
contribution from student fees - that helps the University attract and
retain these faculty.
UC undergraduates are immersed in a culture of high discourse and
intellectual orientation in all parts of campus life and the value and
substance of undergraduate education is intrinsically related to the
student's presence on campuses of UC's nature and quality.
Reductions in State support make it more difficult for the University
to recruit and retain the high quality faculty who contribute to the
rich intellectual environment of the University.
We at UC are hopeful that the state will renew its commitment to
support public higher education, helping to relieve the burden on
students and maintaining its obligation to the Master Plan. In
the meantime, UC is forced to make difficult decisions while trying to
mitigate the impact on students, faculty, staff, and the citizens of
California. I appreciate your continuing interest in the UC
endeavor.
Sincerely,
Patrick J. Lenz
Vice President - Budget and Capital Resources
cc: President Yudof
Executive Vice President Lapp
Senior Vice President Dooley