The University of California is questioning how its reputation
and competitiveness with other universities could be affected by
the new state budget cuts. The university judges itself against a
group of similar public and private universities, dubbed the
“comparison eight,” but the cuts in university programs
and rise in student fees resulting from the proposed budget may
leave UCLA lagging behind some. The “comparison eight”
is composed of Yale, Harvard, Stanford, Massachusetts Institute of
Technology, State University of New York- Buffalo, University of
Virginia, University of Michigan and the University of Illinois.
The public schools on the list face many of the same difficulties
as the UC, difficulties such as juggling the spending needs of
various programs with their shrinking budgets. Student fee
increases, which are expected soon at UCLA, have also become
commonplace at other public universities in the United States. The
University of Illinois, UVA and SUNY-Buffalo all increased tuition
this year in response to slashed budgets. However, these increases
alone have not been enough to cope with the losses. UM is already
bracing for more expected budget cuts, up to 15 percent, when
Michigan state releases its budget for 2003-2004 later this month.
The University of Illinois is planning to cut administrative costs
even further this year and UVA last year began charging students a
mid-year fee of $385. Because of these problems ““ and despite
the fact that UCLA and the other UCs may struggle with the new
budget cuts ““ they will likely be able to remain competitive
with other public institutions dealing with similar circumstances.
Where UCLA could now suffer the most is in its competition with
private schools. While the struggling U.S. economy has reduced the
coffers of nearly all institutions, private universities have been
less directly affected by the recession or by state and federal
budget reductions because of their reliance on private donations
rather than government funding. Further damaging to the University,
the new California budget has not allocated money for faculty
salary raises, another factor which may diminish the
university’s chances of attracting top professors from
private universities able to pay higher salaries.
“Competitive compensation is key to quality, and a merit
program must continue to be a high priority for the
university,” said Atkinson. The “comparison
eight” private schools, including Harvard, with the largest
endowment of any school in the country, are more equipped to absorb
their losses, and have not yet needed to resort to the large
program cuts public universities have. While Yale increased its
tuition costs by 3.9 percent this year, it also increased financial
aid distribution, suggesting its finances are not in dire straits.
Harvard and Stanford have dealt with the negative effects of the
dwindling economy by delaying various construction plans and
postponing hiring faculty and staff in open positions.

No “rainy day” reserve Some critics of the
university, notably labor union members, have charged that the UC
has substantial funds on hand not included in budget statements.
But the university contends it lacks a “rainy day”
fund. While the University Office of the President and the
individual campuses do keep discretionary funds, monies allocated
by Sacramento are expected to be spent in full or else they revert
to the state general fund. “The state, when it gives the
university money, expects it to spend that money,” said UC
press aide Brad Hayward. Similarly, federal money at the UC is
expected to be spent on specific programs, but private sources of
income ““ which include sponsored research and alumni
donations ““ are not necessarily earmarked, and some in the
state legislature are curious as to how much money the university
really has. Max Espinoza, higher education consultant for the
Assembly budget committee, said committee members are examining all
sources of UC financing to form a fuller understanding of the
university’s fiscal standing. “It’s still in a
very investigative process and we’ll do anything to make sure
no stone is left uncovered,” Espinoza said. The UC is not the
only school taking on budget troubles without emergency reserves.
The CSU and University of Illinois systems do not keep reserves,
though they do allocate discretionary funds. “We, like many
colleges and universities, put some money in an account … what we
would use that for during the year is contingencies,” said
University of Illinois Sr. Associate V.P. of Business and Finance
Mike Provenzano. If the UC did have a reserve, it would likely not
be enough to compensate for the massive cuts proposed by Davis.
“It’s really not realistic … the hole is just too
big,” Hayward said.