Capitol Alert

UC Berkeley preparing to ‘reinvent’ to address financial challenges

People walk through Sproul Plaza near Sather Gate on the University of California, Berkeley, campus on June 1, 2011.
People walk through Sproul Plaza near Sather Gate on the University of California, Berkeley, campus on June 1, 2011. The Associated Press

Facing a mounting budget shortfall, the University of California, Berkeley, will overhaul its academic and administrative operations in an effort to stabilize its finances.

In an e-mail sent to the campus Wednesday morning, Chancellor Nicholas B. Dirks announced a “strategic planning process” to cut costs and increase revenue that could potentially result in a reduced workforce, restructured academic programs, an expanded fundraising push and new licensing agreements.

“Every aspect of Berkeley’s operations and organizational structure will be under consideration,” he wrote. “What we are engaged in here is a fundamental defense of the concept of the public university, a concept that we must reinvent in order to preserve.”

Berkeley faces a structural deficit of about $150 million, or 6 percent of its operating budget, according to the university, a gap that Dirks said is growing and cannot be sustained long-term. Speaking later to reporters, he said the campus has undergone “dramatic changes” in the way it’s funded and is looking to become not only more financially sustainable, but also more self-reliant.

Dirks said public support for Berkeley has “bottomed out” at about 13 percent of the campus budget, half the proportion it was a decade ago. Without a medical center, the university is also more dependent on tuition than other UC campuses, he added, which has been a hindrance in the midst of an extended tuition freeze for resident students, now in its fifth year. Pension and health care costs are rising, while the campus faces debt obligations for seismic retrofits and other capital projects.

As a result, officials are looking to boost revenue by building Berkeley’s endowment, making use of assets such as its “brand” and real estate, expanding enrollment in online courses and professional programs that generate income, and finding more external funding for athletic teams.

The university will also redesign its its academic offerings, including “combining and rearranging” or “narrowing the focus” of some departments. A review of staffing and “senior administrative functions” at the campus is due by the end of the academic year, with a possible downsizing to follow, though Dirks promised to protect faculty.

“We are not departing in any way from our core strengths and our core mission,” he said.

Gov. Jerry Brown’s Department of Finance pushed back on the assertion that falling state support contributed to Berkeley’s predicament. UC is in the midst of a four-year budget deal with the governor that provides annual funding growth, though its allocation is just now reaching the same level it was before the economic recession.

“It’s pretty clear from the record that the governor has followed through on his commitment to provide ongoing increases to the university,” spokesman H.D. Palmer said.

Dirks said Berkeley is merely responding to a funding reality that is “here to stay” and denied that the announcement is a budget play: “I wish I were that gifted.”

Alexei Koseff: 916-321-5236, @akoseff