July 10, 2009 / 7:50 PM / 9 years ago

University of California plans furloughs to cut costs

SAN FRANCISCO, July 10 (Reuters) - The president of the University of California (UC) said on Friday he would propose to its regents that they approve pay cuts through furloughs to shave $515 million from the public university system’s costs amid the state’s broader budget crisis.

UC System President Mark Yudof in a letter also said he would propose additional spending cuts, restructuring the system’s debt and student fee increases worth $200 million.

“Admittedly, given the difficult circumstances, no plan is perfect and any solution includes difficult choices,” Yudof said in his letter to the system’s faculty, staff and students.

His letter was released amid a stalemate in state budget talks between Republican Governor Arnold Schwarzenegger and Democrats who control the state legislature.

Both sides have agreed deep spending cuts will be needed to fill the state’s $26.3 billion budget gap but are at odds on a handful of issues, including potential further cuts to education spending and the need for reforms in welfare programs to prevent fraud.

The massive deficit reflects the hard hit California has taken during the recession and from rising unemployment. Revenues have been tumbling as critical personal income taxes have dropped at their steepest rate since the Great Depression.

To cut state spending, Schwarzenegger has imposed three furlough days for a variety of state employees. The UC System would under Yudof’s plan follow with a tiered furlough schedule, with its highest-paid employees subject to 26 furlough days, which would equal a pay cut of 10 percent.

The university system’s lowest paid employees would take 11 furlough days, which equals a 4 percent pay cut.

“Again, while there are no perfect choices for how to achieve the needed cost-savings, I believe this plan reflects an appropriate balance centered on fairness and shared sacrifice,” Yudof said.

The UC system’s regents will consider his proposals on Wednesday.

The California State University system is tackling and expected $584 million cut in state funds by not accepting student applications for its 2010 spring term.

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