UC Berkeley forecasts $85 million deficit reduction over next year

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UC Berkeley Chancellor Nicholas Dirks announced yesterday the first results of the strategic review started in February.

The first results of UC Berkeley’s comprehensive strategic review account for a deficit reduction of $85 million by the end of the next fiscal year and staff cuts of 500 over the next two years, according to an email sent to faculty and staff by Chancellor Nicholas Dirks yesterday.

In February, Dirks warned about “a substantial and growing structural deficit,” which he termed “unsustainable.” The deficit for the current fiscal year was forecast to reach about $150 million.

In his email yesterday, Dirks said the university’s goal was to have a balanced budget by 2019-20. 

Savings and new revenue-producing ideas generated as part of the annual budget process would produce a $20 million deficit reduction, Dirks wrote. There will also be savings from a variety of campus-wide programs, including improved student health insurance costs and tighter controls on discretionary travel.


Increased revenue from philanthropy is expected to produce $50 million in additional deficit reduction in the coming fiscal year. Assistance from the University of California Office of the President will help UC Berkeley get lower interest rates and lengthen the payback period on loans for recent campus construction projects. That debt restructuring will reduce the deficit by $16.5 million in 2016-17 and by more than $27 million a year in the subsequent three fiscal years.

The most visible action detailed in the email is the administrative staff reduction, which will be achieved “including through using normal attrition and position control.” The reduced levels “would be consistent with those we had in the fairly recent past,” Dirks wrote. He estimated that $50 million in annual savings would result “from this moderate reduction of 6% of our staff workforce.” Those savings would be beyond the initial $85 million he announced.

Dirks’ email noted that work is continuing on the “academic realignment assessment” that forms part of the strategic review. In February, Dirks and other leading administrators suggested that could lead to academic department mergers or some departments being eliminated.

Read the full email.


Related:
Chancellor Dirks: Expect ‘painful changes’ at UC Berkeley (02.11.16)
Chancellor Dirks warns about university’s unsustainable structural deficit (02.10.16)

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