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Friday, July 10, 2009

Friday, July 10, 2009

Yudof Recommendations: Shrink Your Pay with Furloughs and Your Campus with Cuts

President Mark Yudof's recommendation to the Regents has been posted on the Regent's meeting agenda. I haven't absorbed all of this 28 page document, but here are some insta-highlights:
  • The recommendation is for furloughs (Option 2) rather than paycuts or a combination. This fits with the overwhelming majority view of the various Senate agencies that opined throughout the system.
  • the furlough has a finite time limit (ending August 31, 2010), though the President would retain powers of modification (p 24).
  • There is a sliding scale of reductions from 4% through 10% (see tables pp 7-8). An 8% reduction starts at $90,000 / year and equals 19 furlough days (or almost four weeks of working days).
  • non-state-funded employees are exempted (if 100% non-state), as are Berkeley Lab employees, various categories of student employees, and employees on H-type visas (pp 10-11)
  • pensions are not to be reduced by the pay reduction
  • the furlough plan is completely intertwined with the proposed change to the Regental Standing Order that grants the President emergency powers. Attachement A is itself the Declaration of Extreme Financial Emergency. The abundance of bad budget news within the document itself is, I assume, meant to satisfy the requirements of the proposed Standing Order that justifies this declaration.
  • there is no mention of greater student fee increases (beyond the 9.3% already voted for next year) or of any other revenue enhancements.
  • all emphasis is on downsizing and shrinkage, e.g. Attachment C is a summary of costs savings and includes notation such as "Most campuses expect between 10 – 15 percent reductions in faculty FTE and similar reductions in staff positions. Campuses have laid off 724 staff so far and most anticipate more layoffs in the coming year. Most campuses are deferring planned faculty hires by at least 50 percent; some are entirely freezing faculty recruitment, despite the fact that enrollment is continuing to grow for FY 2009-10." See also the long paragraph on page 5.
It appears that this document mirrors a strategy that has become familiar in the Governor's office: all budget cuts, no new revenues. Our Futures Report and Cuts Report (see Links) showed that this is a doomsday strategy.

The strategy leads, as I blogged only yesterday, neither to a stable privatized UC nor to a stable public UC but to a poor public UC with gated communities for small numbers that enjoy supplemental revenue streams. One reason it leads there is that state funds subsidize the non-state activity that is being exempted from the cuts; there are many other reasons as well.

This also continues UC's poor strategy with Sacramento and the public. If they know that we never fight, they will cut us first and most. This is exactly what Sacramento has been doing for 1990, and UCOP seems ready to continue the tradition.

The same goes for UCOP in relation to the campuses. It's easier to cut your own people's pay than to twist arms and make enemies in Sacramento and Silicon Valley. UCOP keeps doing this because, well, they always can.

If I am wrong, I would like to know why. I welcome reaction and discussion about next steps.


Jack Chen said...

Thank you, Chris, for taking the time to sum up the argument. While the overall strategy of UCOP hasn't changed, I would say that the furlough option at least represents a useful PR move: that less state funding means fewer hours of teaching and research. Granted, this doesn't address the basic problems of state defunding and (what amounts to) the buyout by corporations of the research units, but it might provide a first step by which to make the case to the voting public.

Gerry Barnett said...

A number of things going on, as always. 1) there's a cash flow problem. One doesn't have to cut pay or jobs to deal with it. 2) there's a never waste a crisis thing giving a chance for folks who want to go after the university to do so; 3) there's a reality check that the economy just shrank a whole lot and the old pay status isn't justified, but then the mortgage and other obligations aren't adjusting, so attacking pay is equivalent to driving people out of the university, maybe out of state; 4) politicians need compelling events to rally around if they are going to support the university over other things, and they aren't getting those. Protest or strike ups the ante, but doubt it has the broader population on its side at this point, per all that Chris makes so evident; 5) there is crazy stupid desperation because too many things are breaking all at once for folks who never built them and never gave them serious study, just rode them for a job. I'm not expecting smart or calm will be enough to make up for lack.

For cash flow, other things have been suggested or could be: a) defer some portion of pay rather than cut it--like the IOUs CA is issuing now--convert 8% into IOUs...warrants that earn some interest, like little savings bonds that mature in 5 years years..b) convert some deferred pay into added service benefits--say for those already vested, an incentive to stay on in the short term, bad as it is; c) convert some deferred pay to future tuition credit for children or grandchildren in UC or CSU systems; d) convert some deferred pay into "California dollars" good for services and fees payable to the state--like state income tax--which would shift some % of pay owed now for future losses of state revenue spread across more functions. Why not have choices, let people pick their way of "helping" the cash flow.

I don't see anything like this coming up for discussion.

Anonymous said...

1) re Jack Chen's comment:

I do not think the furlough policy means fewer hours of teaching. As I read it, Yudoff does not intend the furlough days to be taken on days when classes are scheduled.

2) while Yudoff and UCOP have acted in very problematic ways, I would not let those problems obscure the larger fact this is a State of California problem (and a national problem) in its biggest dimensions.

Fighting with Yudoff can only do so much. And I do not think he sees this as a useful crisis in the same way or to the same extent as Schwarzenegger and the Republicans.

Our actions need to be devised with the population of California in mind as the ultimate audience.

Jack Chen said...

Gerry, your idea of IOUs is a great one, and perhaps one reason why something like this hasn't come up is the rhetoric of emergency that has cloaked much of this past month. I think Chris pointed to Schmitt's "state of exception" in an earlier posting, and coupled with the general lack of transparency (and problematic accounting figures), I wonder if there was a prior plan to shrink the university that coincided with the crisis.

In response to Anonymous, yes, of course, faculty will probably all continue to teach the same number of hours. We might grumble about holding all of our office hours, but the furlough plan, which doesn't reduce the salary base, seems a safer bet to me. For university staff, there was a very clear consensus that furloughs were preferred. And presumably, closed offices and work slow-downs will cause students to complain to their tax-paying parents and draw attention to the public university's plight in a way that grumbling faculty tend not to.

Gerry Barnett said...

I know it doesn't help to introduce the crowd, but do think the comment stream at SFGate on the Yudof proposal is worth it to get a sense of what a politician might also be sorting through.


There, one gets the idea that furloughs do not reduce work but intensify it. That pay cuts for all does not address the appearance of senior administration perks such as high salaries, car and housing allowances, many functionaries. That the economy has fundamentally changed and UC is in denial and seeks to preserve its status rather than that of the core enterprise it is charged with. The people of the state are not paying for prestige. Prestige is not in the mission of the university, nor a mandate for senior management.

Jack Chen said...

Gerry, this seems to me to be what happens when you abandon the field of public opinion, which is what UCOP has done. I would have thought that Yudof would have engaged the CA public more directly, since he's come from a run at another large public university, or at least have had a better sense of how to argue for the role of the university in CA public life and its economic/social health. I haven't seen any evidence of this (and I think I got here around when he did.) In the absence of a defense of the university -- how it is a vital engine of knowledge, social change and prosperity -- what's left is demagogy.

Cassie said...

The furlough end date is not August 31, 2010 - that is the date the emergency order (or whatever it's called) ends. However, the furlough would end 12 months after a given employee starts their furlough. I guess for employees that are part of collective bargaining units, they might not start the furloughs with everyone else (Sept 1st) - so if they start, (for example) Dec 1, they would go until Nov 31 of the following year.

I did read somewhere (I think it was a newspaper article) that faculty cannot use days that they teach as furlough days.

Andrew Dickson said...

Well well! It seems that a significant number of the manifold suggestions communicated to the Office of the President were heeded. A surprise (I regret to say)!

Yet, your main point: that "all emphasis is on downsizing and shrinkage" is perhaps the most important. The University must decide just what form a sustainable University will take, and make sure that changes that occur for fiscal convenience are indeed focussed towards that end.

Based on my own review of the State of California's contributions to the University since 2000-01 (further articulated in the Cuts and Futures reports) and a personal, ghoulish interest in the State budget over a number of years, I suspect that the University will find it a long (and probably indefinite) wait for restoration to even the 2000 level, let alone that of the good old days! It seems the people of California would far rather see unemployed Professors than unemployed felons on their street corners.

I am uneasy at leaving such decisions in the hands of a regental commission (apparently an idea of Russell Gould), a "Strategic Planning Committee" at the Office of the President,or even a Long Range Guidance Team (such as was convened in 2005) and apparently met in relative secrecy (see http://ist-socrates.berkeley.edu/~schwrtz/Secrets1.html) to define "UC 2025". As a parenthetical note, the UC 2025 report (http://www.universityofcalifornia.edu/future/lrgt1106.pdf) simply punted when discussing funding, noting simply that the University needed significantly more money than it was getting (my words).

The individual campuses must first to clarify their own vision -- appropriately constrained by fiscal probabilities and realistic budget models -- in discussions involving their own faculty and staff. Then there need to be inter-campus discussions that act to bring the various campuses together ("the power of 10"?) rather than set them at each others' throats. Ultimately there may (will?) be blood on the ground, but I hope we will stop our apparent belief in the State as tooth fairy and realize we have to make our own luck (to mix metaphors).

Sydney said...

Am I understanding this part of Yudof's statement right? That furlough days for senior management, the highest paid being Yudof himself who was recruited with an astronomical compensation, will be 10, while the "bottom tier" making less than $40,000 will have to bear 11 days?

"There are seven graduated tiers. The bottom tier is 11 furlough days for those below $40,000 or roughly a 4 percent pay cut. For those making over $240,000 a year, there will be 26 furlough days, or roughly a 10 percent pay cut. For senior management, the number of furlough days will be limited to 10."

In that case, I would amend your title, Chris, to "Shrink your pay... shrink you campus...and remain a fat cat".

Anonymous said...

Gerry, I like the thrust of your argument about core enterprise versus status. However, this statement: "Prestige is not in the mission of the university, nor a mandate for senior management" ignores the nature of higher education.

1. The quality of your education is linked the the kinds of jobs you can do.
2. The quality of your education is linked to the kinds of jobs people will hire you to do.
3. While not inherently linked (at all!), prestige is often used by employers as a measure of quality.

The UCs should not be focused just on prestige, I agree. I also think the focus on prestige is distracting people from the kinds of hard decisions that need to be made. That said, the UCs should be providing the brightest Californians with the best public, affordable education possible in order for the state as a whole to succeed.

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