UC Berkeley Needs at Least 18% Layoffs Soon to Survive

We have been following the deficit saga of UC Berkeley closely, because it is a trend-setting university. That means every major university in this country will have to follow similar course sooner or later. You can see our previous posts on this topic here, here and here.

This week, the university administrators announced their plans to cut the deficit, and it includes 6% staff cut among various measures.

UC Berkeley forecasts $85 million deficit reduction over next year

The first results of UC Berkeleys 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 universitys goal was to have a balanced budget by 2019-20.

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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.

Here is why we believe those measures are too little too late, and will not lead to ‘balanced budget by 2019-20’.

Given that the university got blind-sided by the huge deficits this year, it is very likely that their forecasts for revenues over the next few years are optimistic. UC is in a hole despite the state of California experiencing one of the biggest tech bubbles in many years. Imagine what will happen, when the bubble bursts and everyone around the state government scrambles for money. Add to that declining income from student tuition because the student debt shell game can go on for only so long.

The only way UC Berkeley can survive is by being pro-active and making larger cuts than needed. Chasing the downtrend will be suicidal.