UC Berkeley

Chancellor Dirks warns of UC Berkeley’s unsustainable structural deficit

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‘A substantial and growing structural deficit’ is spurring a comprehensive strategic review of costs, processes and revenues at UC Berkeley. Photo: file

In a message to the UC Berkeley community at 8 a.m. today, Chancellor Nicholas Dirks warned about the consequences of “a substantial and growing structural deficit,” which he termed unsustainable.

The strong statement on the deficit announced a comprehensive strategic planning process, with a detailed reexamination of all discretionary expenditures, including athletics and capital costs. Formerly sacrosanct areas, including the number of academic departments, will be included in the review.

“We are fighting to maintain our excellence against those who might equate ‘public’ with mediocrity,” Dirks said in the statement. “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.”

According to Berkeley campus sources, the deficit this fiscal year is projected to be around 6% of the operating budget, around $150 million. The sources point to Berkeley being heavily tuition-dependent, compared to some UC campuses that have medical centers with high revenues.


Student tuition and fees make up about 30% of total campus revenues — compared to state support of 13% of revenues. In the 1980s, about half of Berkeley’s funding came from the state. Undergraduate tuition rates, the focus of vehement student protests in recent years, have not risen for the past five years and under Governor Jerry Brown’s plan, will not increase until 2017-18.

“Because this deficit does not reflect a short-term dip in funding,” Dirks’ message said, “but a ‘new normal’ era of reduced state support, responding to this deficit requires that we take a long-term view. We must focus not only on the immediate challenge, but also on the deeper task of enhancing our institution’s long-term sustainability and self-reliance.” 

UC Berkeley Chancellor Nicholas Dirks at Uncharted 2015. Photo: Kelly Sullivan
UC Berkeley Chancellor Nicholas Dirks: ‘Fighting to maintain our excellence.’ Photo: Kelly Sullivan

Dirks’ statement says the review will identify areas for new investments as well as “other areas in which the expenditure of resources may be less critical to our overall excellence and core mission.” Some of the high-profile campus initiatives, including the Berkeley Global Campus at Richmond Bay and the Undergraduate Initiative, will be entirely supported by philanthropy and external partnerships, Dirks said.

Berkeley shares its financial constraints with other UC campuses, as well as with the majority of public research universities across the country. The drop in state funding, and the increasing reliance on tuition, has become the norm, according to a report published last week by the American Academy of Arts & Sciences. “No one has yet devised a workable plan to reverse these trends,” the report notes.

The statement focuses on seven areas that will be included in the review:


  • An assessment and analysis of staffing levels will be completed by the end of the current academic year. The statement makes a point that senior administrative functions will be under review. According to campus sources, the university’s administrative headcount has grown about 2% annually over the last five years.
  • “Improving support for our teaching and research,” while also redesigning “many of our work processes” to achieve greater efficiency.
  • New investments to expand fundraising capacity.
  • “Achieving additional revenues through our ‘brand,’ land, and other assets.” It will include examining ways in which the university’s real estate “can both yield revenues and help to address the ever-pressing housing needs of our faculty, staff, and students.”
  • Working with the Academic Senate and deans “on the redesign of some of our academic structures.” The statement makes clear this could mean some units “combining and rearranging… to ensure sufficient scale academically, administratively, and financially.”
  • Expanding online offerings, the University Extension, and professional and other master’s programs that earn revenue. Financial support for “admitted doctoral students will be improved, while some enrollments will be reduced.”
  • Examining the gap between intercollegiate athletics’ revenue and expenses, “which has widened in recent years.”

According to campus sources, the announced strategic planning process will be handled with internal resources, although consultants may be brought in for some of the analysis. In 2009-10, the university spent $7.5 million on strategy consulting firm Bain & Co in a project called Operational Excellence, designed to find administrative savings and develop cost-saving shared services. Executive Vice Chancellor Claude Steele will lead the strategic review, with Vice Provost for Strategic Academic and Facilities Planning Andrew Szeri and Associate Vice Chancellor-Financial Officer Rosemarie Rae serving as implementation leads.

Dirks, Steele and Rae will be speaking to the media at noon today. Professor Ben Hermalin, chair of the Academic Senate, will speak to the media at 1 p.m. Berkeleyside will update the story after those press conferences.

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