As the UC system’s fiscal crisis worsens — and this week’s election results did not help — so too does UC Davis’ projected budget shortfall in state funding for 2009-10.

How big could it be? Associate Vice Chancellor Kelly Ratliff estimates $68.2 million, factoring in Gov. Schwarzenegger’s proposal for dealing with the voters’ rejection of five budget-related measures on the May 19 ballot. The governor’s proposal leaves the UC system in a $531 million hole, some $206 million worse than before, according to the Office of the President.

The estimated shortfall at UC Davis includes $16.4 million in cuts resulting from the state’s February budget deal and $22.5 million in unfunded costs. Now, post-election, Ratliff is figuring the gap could grow by $29.3 million, if the Legislature goes along with the governor’s budget revision and if the Office of the President follows its usual formula for allocating reductions among the campuses.

The cutback could be less if the university implements employee furloughs or pay cuts, or decides to raise student fees even higher (the Board of Regents already approved a 9.3 percent increase for next year).

The February budget deal relied on the May 19 special election's complicated package of ballot measures to extend taxes, shift funds and borrow from the lottery. Unofficial election results on the secretary of state’s Web site the morning of May 20 showed all the measures losing by large margins.

UC stood to lose either way, because tax revenue is way short of the projections built into the February budget deal, leaving the state with a $15.4 billion shortfall. Therefore, in a May 14 revision, Schwarzenegger proposed cutting an additional $125 million from the UC budget, regardless of the fate of Propositions 1A through 1E.

He also prepared a Scenario B, assuming the measures failed and left the state with a $21.3 billion budget gap. In Scenario B, he wants to take $81 million more from UC, including $31 million for academic preparation programs.

Hours after the governor put forth his budget revisions, UC President Mark G. Yudof warned of serious consequences to the level and quality of service that UC provides to students and taxpayers.

“Additional budget cuts of this magnitude would have a devastating effect on the students, the faculty and the staff of the University of California, and ultimately on the service we provide to the state,” Yudof said in a news release.

(Read the UC president's post-election statements.)

The February budget deal left UC with a funding reduction of $115.5 million. With the additional cuts in Schwarzenegger’s Scenario B, the reduction would climb to $322 million, or about 10 percent of what the UC system would receive from the state under normal circumstances.

UC boosts the total shortfall by $122 million to account for what the state is not paying for extra enrollment the last few years, and by $213 million to account for unfunded mandatory costs for utilities, employee health benefits and other inflationary costs.

The total, then, would be $657 million — were it not for the May 7 fee increase. It lowers the UC shortfall to $531 million under Scenario B.

Had voters approved the ballot measures, the UC system would have faced a $450 million shortfall, under Schwarzenegger’s Scenario A.

“The severe reductions envisioned in these scenarios, especially if the ballot measures fail, threaten a dramatic change in the quality and accessibility of the university,” Yudof said in the May 14 news release.

“If these cuts are implemented, we will have to look at a wide variety of unpleasant options to close our budget gap in the coming years — from enrollment and student fee levels to class sizes, academic program offerings, and availability of campus services for students, in addition to pay reductions or furloughs for our employees.”

The UC president said the consequences for academic preparation and student accessibility are “daunting,” especially at a time when the Public Policy Institute of California is warning that the state’s work force will be short nearly 1 million college graduates by 2025, unless state leaders implement policy changes to enroll and graduate more students.

Steps taken, possible actions to come

UC already has taken a series of actions to deal with the shortfall in state funding. These include:

• Freezing senior managers’ salaries.
• Cutting bonuses and incentive pay.
• Curtailing travel.
• Downsizing and restructuring of the Office of the President, where more than $60 million in savings has been achieved.
• Undertaking a legal analysis to create a viable framework for implementation of salary reductions or furloughs for employees.
• Reducing 2009-10 freshman enrollment targets by 2,300 students.
• Raising student fees by 9.3 percent for the 2009-10 academic year.

Achieving a range of budget cuts, reductions in hiring and faculty recruitment, and administrative efficiencies on campuses.

Already in recent years, the state’s contribution to the per-student cost of education at UC has fallen significantly in inflation-adjusted terms, and student fees have made up part of the gap.

Officials said additional budget cuts such as the ones contained in the governor’s budget scenarios would exacerbate UC’s already difficult budget situation and force the university to consider a series of actions — either in 2009-10, the following year, or both — that could negatively impact the university’s quality and accessibility.

While no decisions have been made, these actions could include:

• Further enrollment reductions, thereby increasing the difficulty of gaining admission to UC.
• Cuts in academic programs, reductions in course offerings and increases in class sizes.
• Cuts in student services ranging from academic and career counseling to student mental health services.
• Pay reductions or furloughs for UC employees.
• Higher student fees, which may become unavoidable as one part of a series of cuts and cost-saving measures to confront new potential cuts.

President Yudof's post-election statements.

UC Davis budget news: budgetnews.ucdavis.edu.