Re: Continuing Cost Reduction Activities
To: All employees
Dec. 14, 2020
Dear Campus Colleagues,
As you are now aware, the campus leadership has made the decision not to implement a salary and time reduction program for the current fiscal year. Although we have elected not to implement this approach it is critical for the campus to understand that our current financial situation is significant. Over the last few months, we have made an unprecedented effort to inform the campus community of savings options, solicited feedback through townhalls, surveys, and individual meetings with key stakeholders.
Each of these actions is part of a broader strategy to increase financial transparency and to ensure you are knowledgeable of our current fiscal situation and the efforts we are taking to mitigate the impacts of this pandemic. Even before the curtailment proposal was announced by UCOP, at the direction of the Chancellor my office began working with divisional leads and deans on their budgets to identify potential savings and to increase budgetary transparency.
We appreciate the campuses’ participation in the recent Fiscal Responsibility townhall on Dec. 4, as well as for providing its feedback through the survey. We received 671 responses (a response rate of 36%) to the survey and over 850 thoughtful and creative qualitative responses. The qualitative results indicate that the preferred time and salary savings program, had one been implemented, was Model 3 with 54% of respondents supporting that approach.
To date, we have taken concrete actions to reduce costs on our campus. We have held vacant positions, critically evaluated the renewal of contracts, reviewed high level expenditures and developed budget reduction targets of 5% for the current fiscal year to address the structural deficit of approximately $33 million, a result of our prior financial decisions, as well as an estimated $58 million loss in auxiliary revenues this year resulting from the pandemic.
These cost reduction efforts have generated the targeted savings established by UCOP, but it is important to know that this target is not commensurate with the level of cost savings we need to achieve as a campus. It does not cover the costs incurred by the pandemic nor help to alleviate our structural deficit and support our future debt burden. We need to, and will, reduce our expenditures moving forward.
At the same time that we strive to increase our current cost saving measures, we will closely monitor the financial health of the state and how it may impact our future state appropriations, report on the status of our enrollment growth and how it impacts our fiscal health, and pay close attention to the potential Federal stimulus packages that may benefit us moving forward.
In order to put people first, we must continue to carefully curb expenditures in such a way that has a material effect on our finances, protecting us to the greatest extent possible from furloughs, salary reductions or layoffs in the future.
These are tough financial times for many. I have no doubt if we pull together and work together in the same direction, we will persevere. Thank you for your resilience as a community and for remaining, #BobcatStrong.
Interim Chief Financial Officer