The UC Board of Regents discussed possible ways to address imminent budget problems, including a 5% tuition increase, as well as complications to a fall reopening.
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University of California students eager to return to classrooms in the fall will have to wait until mid-June to learn if courses will resume in person.
“These decisions must all be made in the context of local, state and federal public health restrictions,” UC President Janet Napolitano said Wednesday. “I anticipate, however, that most if not all of our campuses will operate in some kind of hybrid mode.”
The hedge on whether classes will be online or not contrasts with the state’s two other public higher-education systems, California State University and the California Community Colleges, whose respective leaders each signaled plans to largely conduct courses virtually in the fall.
Napolitano’s reveal was one of many made during the three-day meeting of the governing body overseeing the University of California, the Board of Regents, that ended Thursday.
The big news was that the regents voted unanimously yesterday to end the requirement that students submit SAT or ACT results for admissions and is exploring creating a standalone exam by 2025.
But the regents tackled other major questions about the system’s plans during the COVID-19 pandemic. Here’s what you need to know about the regents’ most recent meeting.
When the regents met virtually for the first time on March 18, the U.S. had fewer than 10,000 COVID-19 cases. Fast forward to May 19, when the regents met virtually again, the U.S. had 1.5 million cases and more than 87,000 people had died.
The spread of COVID-19 has been swift, as has the fallout. Classes moved online and remain there. UC’s hospitals, a major source of income for the system, saw revenues collapse as inpatient numbers dropped by 40 to 50 percent at the peak of the pandemic. Many students canceled their dining and housing contracts.
The damage has been deep. System leaders said the UC has lost $1.2 billion through April — $700 million of that attributable to its medical centers. During a finance committee meeting, Paul Jenny, interim chief financial officer for the UC, said he expects the UC to lose a total of about $2 billion by June 30. The UC medical system is seeing a rebound in patients, but a total return to pre-pandemic form may take several years.
Other sources of revenue decline include Gov. Gavin Newsom’s revised budget proposal for next year, which calls for a 10% cut in state support to the UC, a decline of roughly $370 million.
Carol Tecla Christ, chancellor of UC Berkeley, translated how systemwide cuts affect her campus. The pandemic has already led to losses of $49 million, the vast majority of that due to revenue collapses in housing, dining, athletics and the extension program; janitorial, tech and health services expenses cost the school $5 million. Next year she said Berkeley is eyeing losses of at least $150 million and a deficit as high as $300 million.
Revenue declines at campus nonacademic operations may result in “workforce reduction,” Christ said. She also floated the possibility of a tuition increase, something the regents would have to approve systemwide. Because tuition accounts for double the school revenues the state provides, a 10% state cut could be gained back with a 5% tuiton hike, Christ said.
“Our cost of attendance is already high,” retorted regent Hadi Makarechian moments later. “The last place that we should be looking at is tuition increases.”
UC loose change
The system’s losses may be approaching $2 billion for this year, but the UC has the economic resources to thwart layoffs and tuition increases, said leaders from the system’s largest employee union, AFSCME Local 3299.
Its analysis of UC’s $31 billion investment pool found that the system has several billion dollars in assets that can be used as cash. While large shares of endowments are reserved for specific purposes, like academic programs or athletics, UC has $5.2 billion in unrestricted endowment funds it could tap into, the union’s research director Claudia Preparata said. There’s another $1.8 billion in endowment funds that the UC drew down earlier in May.
The union said the UC could also collect a larger percentage of its endowment earnings. Increasing the payout from the current rate of 4.75% to 6.75% would generate an additional $188 million, the analysis said. The UC voted to keep the current 4.75% rate this week.
A spokeswoman for the university said that the UC will discuss the findings with the union once they’ve been reviewed.
UC promised no layoffs to its career employees — a special UC designation — until June 30. It’s also imposed a virtual hiring and wage freeze on staff, but not for faculty. Napolitano and the chancellors of the 10 UC campuses are taking 10 percent salary cuts.
UC finance leaders said the system is considering borrowing money that would have to be paid back in 7 to 10 years, citing current low interest rates as one incentive. AFSCME also proposed borrowing as a solution for the UC.
Both sides are looking for the federal government to provide another stimulus to states on top of what it’s allotted already. So far, the UC has received about $288 million in federal stimulus money for its hospitals and $267 million for institutional costs — roughly half of that meant as direct for UC students.
Testing the system
Much of the system’s ability to resize financially depends on the public health picture. If schools remain closed and instruction continues online, students may not return next fall at similar levels, hurting UC’s bottom line. Out-of-state and international students, who pay triple the tuition in-state students do, may seek cheaper options back home. Dorm operators, responding to social-distancing protocols, may have half the tenants that space permits.
Dr. Carrie L. Byington, a top UC medical expert, pulled the curtain back on what campus re-openings would look like; the expenses are significant and the logistics complex. She said that she predicts that both COVID-19 cases and circulation of the flu will increase in the fall.
Universal testing is unfeasible, said Byington, the executive vice president of UC Health, which includes five academic medical centers, a community-based health system and 18 health professional schools.
With roughly 600,000 students, faculty and staff at the UC, weekly testing would cost the system $24 million a week because each test is $40. Instead, fall term will require social distancing, even within buildings.
“That may mean staggering (class start) times, giving people a direct time when they can enter or exit a building or an elevator. The density is going to be really important,” she said. Everyone on campus will need to wear masks, track their symptoms, be truthful about when they think they’re getting sick and stay away from others, and wash hands constantly. Access to soap and hand sanitizer is paramount.
Partial testing based on a model is also a possibility to figure out “the minimum proportion of people that we can test to understand the likelihood that the virus is in our facility,” she told regents.
Many of these strategies were formalized in a document the regents approved Wednesday that lays out the principles for safely operating campuses during the pandemic.
Byington also shed light on a possible vaccine for COVID-19 in the form of a patch developed in conjunction with UC Davis. The hope is that the vaccine patch will go into clinical trials in the summer.
“Not only does it give us hope for having a vaccine, but also a mechanism to deliver that vaccine that would allow millions of people to receive the vaccine in their own homes, as the vaccine could be mailed, and they could place it on themselves in their own homes,” she explained.