The University of California is dealing with its worst financial crisis in decades and a very uncertain financial future. But its leadership has another problem: convincing many of its employees that the situation really is as bad as it looks.
As thousands of faculty members, staff members, and students stage protests on the university’s 10 campuses this week, many of the demonstrators are charging the university’s leaders with fiscal mismanagement. President Mark G. Yudof and the system’s Board of Regents, they say, have resorted too quickly to drastic measures such as employee furloughs, layoffs, and sharp increases in tuition to offset large budget cuts imposed by the state.
A vocal faction of the faculty and staff argue that the university could avoid much of the budget pain by tapping billions in “hidden” university reserves or by further cutting administrators’ salaries. Some of the critics argue that in a time of crisis, the university should divert money from hospitals, laboratories, or athletics to serve its basic educational needs.
The suggestions—which university leaders reject as “myths” or “fantasies"—show the gulf of trust that has opened between parts of the faculty and administrators.
On Thursday, thousands of faculty and staff members say they will join a one-day walkout, organized by a collection of staff unions and ad-hoc faculty groups. Organizers say they are protesting what they see as their exclusion from the decision-making process, and are demanding changes in the furlough program and “full disclosure of the budget.”
The unrest comes during a dismal year for the university in which previously unthinkable steps have been introduced and adopted in rapid-fire succession: the furloughs, layoffs, caps on enrollment, and steep tuition increases. Many faculty members have been angered by the furloughs in particular, arguing that the university should have found other places to cut. The furlough plan, approved by the regents in July, requires employees to take 11 to 26 unpaid days off this year, depending on their pay level.
Suspicions of a Hidden Reserve
Some professors believe the university has been dishonest about its financial situation. George P. Lakoff, a professor of linguistics at Berkeley, wrote a letter to the regents in July arguing in part that the university could find places to cut other than faculty salaries. The letter garnered more than 1,000 faculty signatures.
Mr. Lakoff said this week that he believed it may be possible to use income from the system’s hospitals to prevent cuts to other parts of the university. He said the administration had failed to answer faculty questions about what money could and could not legally be used to support academic programs.
“Is that legal or illegal? We do not know. They refuse to ask that question,” said Mr. Lakoff. “It’s not a question that the regents or the administration is even thinking or willing to ask.”
But university leaders say that they have taken pains to explain why such steps are impossible, and that their explanations have fallen on deaf ears. Peter J. Taylor, the university’s chief financial officer and executive vice president, said that administrators have been open about the budget details, holding town hall-style meetings on each campus and starting a Web page to debunk misconceptions about the budget.
“I can’t quite figure out how a myth got out there that UC is sitting on $5.3-billion of unused, unclaimed cash that could somehow be used to get through this financial crisis,” Mr. Taylor said.
Diverting money from the university’s reserve to try to fill a structural budget deficit would be “the stupidest thing we could do,” Mr. Taylor said. The money is typically either earmarked for specific purposes or must be maintained at a certain level for the continued fiscal health of the university, he said.
For instance, he said, about $400-million of the university’s reserve is dedicated to ensuring that its five medical centers have enough cash on hand to last about 40 days. Taking money out of that account would endanger the hospitals’ bond ratings, he said.
Legacy of Pay Scandals
Administrators accuse their critics of trying to score cheap political points by hooking onto a familiar California narrative: that university administrators are lining their pockets while students and faculty members pay the price. That story line gained currency as a series of pay scandals rocked the university during the past decade, and it has often been repeated by state lawmakers critical of the university.
In an impassioned speech to the Board of Regents last week, Mr. Yudof urged employees to “face the hard reality” of declining state support. He said blaming university leaders for the financial problems or accusing them of “hiding the money” was the easy way out.
“The real challenge is not that we are squirreling money away, not that we just have all this largess,” Mr. Yudof said. “The real challenge is that if we’re not careful and this continues for a couple of years, there won’t be any checking account, and we will have no wiggle room whatsoever.”
Some faculty members have sided with the administration, arguing against blaming the university’s leaders for the budget situation and declining to participate in the walkout. The universitywide Academic Senate has defended Mr. Yudof’s treatment of the faculty and has not supported the walkout.
Henry C. Powell, chair of the senate, said it was clear that the university does not have hidden financial reserves that it can use to help solve the budget crisis. Most of the objections claiming there is discretionary money to be found, he said, “simply aren’t true.”
“I find it very frustrating that there’s such a high level of mistrust,” said Dr. Powell, who is a professor of pathology at the University of California at San Diego’s School of Medicine. “But on the other hand, you just have to explain constantly and provide numbers and information and scenarios to help people understand why certain funds cannot be accessed.”
Turmoil over the budget crisis has reached an unusually high level at the University of California, which has traditionally had one of the nation’s strongest systems of shared governance, said William G. Tierney, director of the Center for Higher Education Policy Analysis at the University of Southern California. The current conflict could be expected at institutions with more-tumultuous faculty-administration relations, such as the university’s sister system, California State University, he said.
But in the late 20th century, the University of California system was held up “as an example of good governance: that people got along, that people understood issues, and that faculty got involved in decision making,” Mr. Tierney said. “The real question is: How did we get to a point where people don’t trust any more?”
