UC Berkeley deficit crisis threatens its long-term stability

Dramatically reopening what had seemed to be a settled matter, the University of California at Berkeley revealed plans for a sweeping spending reassessment due to vast deficits.

Berkeley chancellor Nicholas Dirks said “the university had a ‘substantial and growing’ deficit that could threaten its long-term stability,” according to the New York Times, “and that it needed to reduce expenses and raise revenues to maintain its position as a premier public institution.”

Dirks indicated that a new committee would “develop proposals to address the $150 million deficit, or about 6 percent of Berkeley’s $2.4 billion budget, including looking at reducing staff, particularly in administration, and using online courses, real estate and branding to bring in new revenue,” the paper added.

A broader problem

The embarrassing revelations reverberated nationally amid an ongoing debate over the value of a college education in today’s cultural and economic situation. But in California, where Gov. Jerry Brown had entered into a protracted and at times acrimonious debate with UC president Janet Napolitano, news of Berkeley’s massive shortfall led observers to speculate whether the delicately negotiated agreement the two power players finally settled on would hold. Napolitano swiftly announced her support for Dirks’ plan, the Times reported, “while Mr. Brown declined to comment on it.”

Berkeley’s woes have come to epitomize the difficult situations colleges often find — or place — themselves in. “One of the campus’s primary sources of revenue — tuition and fees — has been frozen for undergraduate students for the last five years,” the Daily Californian noted, obliquely referencing the negotiated plan to keep UC tuition at current rates for in-state students through the 2017-2018 school year. “Meanwhile, inflation continues to inch upward, and costs beyond the university’s control have continued to rise, all in the context of an era of public disinvestment, according to campus sources.”

Sacred cows

The crisis has turned out to be so bad that the campus’s athletic programs could wind up on the chopping block. “Even Cal Athletics, which many perceive to be the campus’s biggest revenue generator, will not escape budgetary review,” added the Daily Californian. “Intercollegiate Athletics has run a deficit in recent years, with even more strain put on its pocketbooks by debt obligation — about $18.1 million annually until 2032 — accumulated after upgrading Memorial Stadium.”

Campuses across the country have come under fire in recent years as critics have questioned the impact of lavish facilities, prized sports teams, and ballooning administrative staff on tuition costs. At the same time, state support for schools in states like California has decreased. “The amount of money the state gave the University of California, as measured per student, fell from $16,000 in 2007-08, before the recession, to $10,000 in 2011-12,” the Los Angeles Times reported. “Meanwhile, tuition more than doubled between 2002 and 2012, according to a 2014 analysis by the Public Policy Institute of California.”

In an effort to stave off another mutiny among alumni, Dirks “ruled out eliminating any teams,” according to the San Francisco Chronicle — “a subject of sensitivity in the past. When the university tried to cut the men’s baseball team in 2011, it prompted an uproar among alumni who eventually helped raise enough money to rescue it.”

Teams weren’t the only special groups taken off the chopping block. Although Dirks has insisted that “every aspect of Berkeley’s operations and organizational structure will be under consideration,” the Chronicle noted, he conceded in a recent news conference that “we’re not laying off faculty.”

In the red

To stay afloat, UC Berkeley has resorted to a supervised emergency bailout, with strings attached, from the UC system as a whole. The campus will “receive at least $200 million in loans and debt restructuring from University of California headquarters,” the Chronicle reported, “and will spend the next several months working with UC officials, faculty and the campus’ fundraising foundation to identify cuts and brainstorm ways to attract more cash.”

Plans have already been in the works sketching out exactly what that months-long process will entail. “Berkeley will scrutinize its entire workforce, redesign some academic programs, step up fundraising, expand online course offerings and take other steps to cut costs and increase revenue,” according to the Los Angeles Times.