UC Berkeley is currently facing a potential $82 million dollar budget deficit. Chancellor Carol Christ updated the community on budget plans during a Campus Conversation on March 27.
According to campus spokesperson Dan Mogulof, the deficit arises from an imbalance between revenue and expenditures; the costs of funding campus are rising.
“Berkeley is facing financial challenges because our two primary sources of operating revenue — tuition and state funding — have not kept pace with increases in the costs of goods, services and labor,” Mogulof said in an email.
The main cause of this growing divide between revenue and costs is recent increases to compensation for faculty, staff and graduate students, according to Mogulof. A campus press release on March 27 explained that all wage increases for faculty and non-union represented staff total to around $108 million. Within this number, the United Auto Workers, or UAW, contract with graduate student instructors increased costs by an additional $20 million and the UC regents increased pay for faculty by 4.6%, according to the campus press release.
However, current revenue sources are not increasing at the same rate.
Mogulof noted that campus currently incurs $33,000 of instructional costs per enrolled in-state student and receives $25,000 in tuition and state support in return. He stated there has been a growing decline in state funding support in proportion to campus’s other sources of funding.
“This gap has been growing since at least the early part of this century, when UC Berkeley experienced a sharp decline in state funding that has still not been fully recovered,” Mogulof said in the email. “The campus does not have direct, unilateral control over the level of annual state funding (set by the legislature) or tuition (set by the regents). We will continue our efforts to advocate for a continuation of robust state funding for the university.”
According to Christ, this is not the first time in recent years that campus has faced budgetary challenges. In the campus meeting she explained that campus already faced a structural deficit with the impact of COVID-19; only now, this current challenge has been worsened by inflation. Christ added that state funds and tuition used to be sufficient for campus funding, but now campus must turn to philanthropy and other forms of revenue to cover costs.
Mogulof does not consider the current $82 million deficit a “financial crisis,” because, he said, campus has the tools and means to support the changes. In the short term, campus Chief Financial Officer Rosemarie Rae said there will not be layoffs as a result of this deficit. She noted that campus plans to realize gains made through short-term investment plans or total return on investment pools. Campus will also use investments from the allocation pool of the general endowment, she added.
“This means that the university will sell some of its investments in order to realize approximately $82 million in gains that can be used to address the budgetary gap in the short term,” Mogulof said in the email. “This is a key element in the campus’s efforts to protect the quality of our academic program and student experience.”
In the long term, campus is working on a financial sustainability initiative to expand alternative revenue sources. Mogulof added the initiative will promote the expansion of funding so campus has more control over philanthropic donations and self-supporting degree programs.
Christ explained in the meeting that, despite a push for more private donations, campus’s status as a public university will not be jeopardized, since the state is still the largest financial supporter.
Mogulof claimed that current financial challenges will not result in changes to the availability of student resources or the overall academic experience.
However, campus anthropology professor Junko Habu said cuts to funding will significantly impact the campus libraries, alleging that budget cuts led to the merging of the Anthropology Library with Main Stacks.
“The library is the center of our department, and anthropology relies heavily on accumulation of knowledge from previous professors — our Anthropology Library is the anthropology library on the West Coast,” Habu said.
Habu alleged the merging of the Anthropology Library’s collection with other campus libraries will impact much of the work being done by the anthropology department. She explained how the closure will split up the collection of works currently housed in the Anthropology Library and spread it out among three other sites, making it harder to browse and search for sources.
Personally, Habu feels this closure is part of a prioritization of non-social-science departments in campus’s funding model and will have larger consequences than expected by campus officials.
The closure “will be a disaster” for the anthropology department, Habu said.
