Notice, November 1996

New Budget Initiative's 'Accountability' Measures To Be Implemented in Phases

The University of California's new Budgeting Initiative has brought a greater degree of fiscal freedom to UC's campuses than has existed previously. From the initiative's inception, however, the Office of the President intended that this freedom be tempered by a set of "accountability" measures that will specify what is expected of campuses in return for the funding they receive. In October, the Office of the President decided it was better to put a limited group of these measures on a fast-track to implementation, rather than obtain agreement on a broader set of them. Some members of the Academic Senate were concerned about the move, on grounds that it might remove from consideration some accountability measures they regard as critical to faculty interests. UC Provost Judson King said late in the month, however, that all measures that might be suggested by Senate or administration will still be considered and that he hopes a comprehensive set of measures can be agreed upon by the end of this academic year.

The Budget Initiative, partly put into effect this past July, provides funding to the campuses in the form of base budgets plus "block grants," rather than base budgets and allocations earmarked for specific purposes, as had been the case previously. The new system has greatly reduces controls on how chancellors may allocate money across their campuses. The move effectively makes UCOP a pass-through point, rather than a control point, for much of the state funding the University receives. As such, the Office of the President announced last year that an integral part of the initiative would be a set of accountability agreements, originally conceptualized as "compacts" between campuses and UCOP, that would specify what campuses were expected to do. For example, campuses would be expected to use a given portion of fee money for financial aid, to adhere to specified faculty teaching loads, and to honor transfer agreements with community colleges.

UCOP consulted in the spring and summer with campus administrators and the Senate's University Committee on Planning and Budget before releasing a draft set of accountability measures in August. That set of measures got a critical reception from at least one quarter, however; UC's Council of Vice Chancellors (COVC) argued that, while many of the proposed measures were fine, others could not be meaningfully discussed without a prior campus review. In addition, the COVC had problems with the procedure that was proposed for deciding on what measures would be put in place.

UCOP, meanwhile, felt that it could not wait for a comprehensive set of measures to be agreed upon. The University is obliged to adhere to both Regental policies and to agreements it has made with state government regarding certain aspects of University performance. Having granted budgetary freedom to the campuses in July, UCOP now needs to get a mechanism in place to make sure that all campuses honor UC's commitments to the Regents and the state. UC is operating, for example, under a four-year compact with California Gov. Pete Wilson; this written agreement assures UC of a certain level of state funding but also requires the University to achieve or work toward certain goals. UC is expected to increase its enrollments by about 1 percent annually through 1998-99, for example, and must make "productivity improvements" that result in a savings of $10 million across the campuses for each of the compact's four years.

Given the need to report regularly to state government on these matters, UCOP decided in October to go forward in the near term only with such accountability measures as are necessary to insure compliance with state agreements and Regents policies. Thus, accountability will now be instituted at UC in phases. Provost King said in October that he hopes the "Phase I" agreements (dealing with the Regental and state-agreement issues) will be in place by the end of 1996, and the "Phase II" agreements (dealing with all other concerns) in place by the end of this academic year. The Phase I and Phase II measures will differ from each other in several respects, he noted.

In Phase I "it's clear what the system needs to do, and you do not find any differentiation among the campuses with respect to these requirements," he said. "We do contemplate that the second set of agreements could be different from campus to campus." Thus, "implementation" of Phase I may amount to a single memo going out to all campuses specifying what the accountability measures are, while Phase II is likely to entail nine separate accountability agreements.

Learning of these developments in October, the Senate's Academic Council expressed concerns about them to King at the Council's monthly meeting. "I believe members of the Council had two levels of concern," said Council Chair Duncan Mellichamp. "The first was that some accountability measures that were under consideration were put on a slower track; many of these have to do with academic quality, and the concern was that deferred consideration of them might eventually mean they wouldn't be implemented at all. The second level was that some Council members feel there are accountability issues important to faculty that have never been set forth for consideration by the administration, but that ought to be."

John Edmond, chair of the Senate's University Committee on Planning and Budget, says that, in his view, the primary threat raised by the new budgeting system is of "entrepreneurial activity" on the campuses that could harm both UC's faculty and the quality of its degrees. Under the new system, he says, a business school, for example, might be free to pay for new faculty on the basis of how many students it could attract -- for various degrees tailored to market demand. "But the market goes up and down," he says. "The last thing we want is to go before the Legislature and announce that we've got 2,000 unfunded FTE's because of entrepreneurial activities gone bad." Such a scenario, he points out, would replicate on the general campuses the difficulties now being played out at the medical schools over in-residence faculty. He notes that none of the draft accountability measures that have been suggested by the administration have addressed the entrepreneurial question.

King says, however, that this issue -- and any others the Senate wishes to have considered -- will be taken into account in the Phase II discussions. "What we're doing in Phase II is drafting a list of areas in which we want to establish accountability measures," he says. "These areas are not frozen or fully identified. That's the process we have to go through."