UCI Medical Center: Where Does the Money Go?

By Jessie Lee


Earlier in 2009, the UC Irvine Medical Center (UCIMC) received a $21-million gift aid to finish the final construction phase of its new UC Irvine Douglas Hospital. Initiated in 2005, the 7-story unit is expected to be completed by the end of 2011 with 424 beds, 15 high-tech and spacious operating rooms, 45 neonatal ICU’s and more. The total project totaled $555.9 million, the largest project in Orange County. While the UCIMC continues to expand and build up its state-of-the-art unit, UCI students are struggling for survival at the bottom of the UC system due to the ongoing budget crisis.

With the financial shortfall resulting in budget cuts, fewer services for students, programs eliminated, furloughs, and layoffs, there have been complaints from unions and critics that physicians are still paid enormously high compensations. They have expressed opinions in seeking assistance from UC medical centers. Among the protesting voices against UC's budgeting transparency is Charles Schwartz, Professor Emeritus of Physics at UC Berkeley. He is a vocal critic who provides organized information and concepts on the finance, secrecy, and governance on his blog University Probe. Schwartz has written about redirecting medical revenues and faculty bonus pay generated from UC medical schools to cover the financial shortage. Through e-mail, Schwartz was also able to answer a few questions and offer some more pointers on the issue of alternatives to financing the UC.

To understand the medical center’s perspective, I met John Murray, spokesperson for the UCI Medical Center (UCIMC), who generated a great deal of knowledge on how funds work in the institution, and about physician compensation amidst the financial crisis.

The following are issues relating to the UCIMC amidst the financial crisis:

• Medical revenues cover expenses, reimbursement shortages, physician compensation, and bonus pay for the SOM
• Management reorganization in the UCIMC eliminates vacant positions and reduces costs
• UC medical centers are exempt from the system-wide furlough program
• Critical disparity in remuneration for senior management group and staff physicians

Source of Money

The UCI Medical Center (UCIMC) is an enterprise operation, meaning that it is self-sustaining. The institution is funded mainly through service fees and patient care, according to John Murray. There are a few grants, but they constitute only a minor portion. In the fiscal year ending on June 30, 2008, the UC Irvine Medical Center Audit Report records total operating revenues at $526.4 million in which net patient service revenue contributed to $502.8 million. The remaining “Other operating revenue”, amounting to $23.6 million, comes from chiefly State Clinical Teaching Support (CTS) funds, referral lab, cafeteria and parking operations. Government-supported health insurance programs Medicare and Medi-Cal provide for almost half the net patient service revenue.

(Click to enlarge, or download full document from link below)

UCIMC Statements of Revenues, Expenses, and Changes in Net Assets for the Years Ended June 30, 2009 and 2008, page 16.

While UCIMC earned $584.3 million in total operating revenue, its total operating expenses amounted to $530 million. Much of the profit earned goes out to pay for expenses, to purchase new equipment or medical technology, to construct the new hospital, and to license their technicians, Murray said. He added that the medical center expands moderately with small business, generating more revenue for continued development with the help of government-issued hospital revenue bonds.


READ THE FULL UC IRVINE MEDICAL CENTER AUDITED 2008-2009 FINANCIAL REPORT HERE.


SEE MORE UC and UC MEDICAL CENTER AUDITED ANNUAL FINANCIAL STATEMENTS: http://www.universityofcalifornia.edu/finreports/


Medical Revenues Cover Reimbursement Shortages and SOM Bonus

In response to the budget cuts, critics have expressed the possibility of using medical center revenues to patch up the financial deficit. Charles Schwartz wrote that “some of that extra money at the Medical Centers should be on the table,” in referring to the $512 million UC-wide “Unrestricted Net Assets” for the end of the fiscal year 2008 (UniversityProbe.org).

The UCIMC counters that these revenues are often used to cover other “committed” fees. For one, insurance companies may debate paying for clinical service fees at the going rate. This problem exists even with government payors such as Medicare and Medi-Cal, as official documents have evaluated. Government auditors, contractors, and intermediaries may dispute on many issues, including the diagnosis, and clinical procedure. Thus, the medical center allocates a portion of its revenue to charity care, which is omitted from net patient service revenue. Charity care helps provide clinical services to uninsured patients at lower or no charge. They also cover differences from insurance reimbursements less than the actual cost of hospital fees. In the fiscal year ending June 30, 2009, UCIMC spent $81 million on charity care.

Each year, the medical center transfers a portion of its revenue to the university to “further education”, as hospital officials said. Another portion of these revenues were given to the UCI SOM, named Transactions with the University and University Affiliates. Part of it goes to pay physicians for their services, and after the expenses are deducted from that amount, the rest is called “health system support”. The excess is a bonus. The center transferred a little less than $75.3 million to the UCI School of Medicine (SOM) in the fiscal year 2009 for “academic and clinical support”, and the final health system support was reported as $53.4 million.

The UCIMC does not seem to have any additional money to contribute to the UC system. Sources show that the sum of charity care and SOM transfers is around $134.4 million. This number is surpasses their income from operations alone, stated in official 2009 fiscal year audit reports. Despite that, there is an imbalance in what this financial gift for the SOM is used for. This issue will be discussed further later in the article.


Effects of the Budget Cuts on the UCIMC

Despite the economical downturn, healthcare remains a necessity to the public. As the hospital seeks methods to “absorb the cuts internally,” no programs at the UCIMC have been cut, the PR said. By getting more juice out of every penny, the hospital has felt minimal impacts. There have been halts on salary raises, and job duties are redistributed due to hiring freezes, which is the key method of compensating for these cuts. The MC has also “winded down contracts” with consultants, a position that generally requires higher compensation than other employees. A majority of these consultants are in the information technology department. Although union members have claimed four layoffs from the medical center (read more about it in Sebastian Ontiveros and Emily Ma's report), the hospital stated that there have been no furloughs and layoffs among UCIMC employees.



UC Medical Centers Free From Furloughs

The UC Regents exempted medical centers from the regular furlough program. The rationalization behind this decision, as Murray explained, is because hospitals need to stay open for service to the community. Even if employees were furloughed, the institution would still need to hire other people to come in and do the job. If a furlough program were instigated to save $20 million, these positions would still need to be filled up. In essence, additional help would be needed, amounting to more expenditure. The PR said,

"On Thanksgiving holiday, it takes roughly $1 million to operate the medical center."

If you place these employees on furlough for 18 days, that would cost the institution $18 million. Furloughs would not be an efficient strategy to implement at medical centers.

While there have not been any furloughs, there has been restructuring in the management division. But whether or not the restructuring is driven by the financial cutbacks is undetermined. In March 2008, the Regents combined two positions into one: Chief Financial Officer – Medical Center and Associate Dean for Fiscal Affairs – School of Medicine. The gross pay for these positions in the year 2007 was $368,750.04 (Ronald L. King) and $201,056.67 (Mona M. C. Wapner), respectively. This reorganization resulted in one new position: Chief Financial Officer – Health Affairs, Irvine campus. Ronald L. King was given a 13% raise for this new position, earning $431,500 in base salary. (Numbers obtained from The Sacramento Bee and ucpay.globl.org). Slap on an additional $60,518 bonus pay, cited from official sources, and $492,018 is King’s total compensation in calendar year 2008 (Annual Report on Executive Compensation for Calendar Year 2008). As CFO – Health Affairs, King is responsible for overseeing the finance of UCIMC, the University Physicians & Surgeons, SOM, and also School of Nursing and Programs in Pharmaceutical Sciences and Public Health. UC Davis, UC Los Angeles, and UC San Francisco have all adapted a similar position, too.

Currently, the UCIMC has no Chief Financial Officer of its own or Chief Nursing Director. The responsibilities of these jobs are distributed among existing officials. In the case of the nursing division, nurse managers assume the extra duties of Chief Nursing Director.

Another reformation occurred in July 1, 2009, when Dr. David N. Bailey, former UCI Vice-Chancellor for Health Affairs, resigned. This position was then separated into two positions: Vice Chancellor of Health Sciences and Dean of the School of Medicine. Ralph V. Clayman is currently an Interim Dean of the SOM. Similarly, over at the UCIMC, Terry A. Belmont is an Interim CEO at the UCI Medical Center. Both are still awaiting announcement for the search of a permanent Dean/CEO.


Who is Responsible for Hospital Faculty Compensation?

As one institution, UCIMC has two employers. The UCI School of Medicine is accountable for compensating the hospital faculty, including physicians, RN’s, and Ph.D’s. On the other hand, the medical center itself compensates around 60% of the base pay of its 600 residents and fellows.

The compensation of physicians at the UCIMC is determined and distributed through the Health Sciences Compensation Plan (HSCP). As described in documents from the UCI School of Medicine (SOM)’s website, this plan is an organization of the SOM faculty that “hold a University appointment at 51% or greater, funded by the SOM”. Murray stated that HSCP compensates the base pay for these physicians working at the UCIMC. There are three factors affecting the amount:

1. Stipends from duties including teaching, assuming administrative/management offices such as Vice Chair, Division Chief, or departmental committees
2. Research grants, funded mostly by the government
3. On-call rates, and clinical practice, which are paid for separately through billing and insurance companies and managed by the University Physicians & Surgeons.

In addition to that, surgeries are mostly cash procedures, which increase cash compensation. The University Physician & Surgeons is another UCI faculty practice organization, formed in 2005. They manage “capitated contracts” and “oversee the entire clinical practice for UC Irvine’s faculty” (School of Medicine Timeline). Therefore, in correct terms, UC Irvine Healthcare, the clinical entity of UC Irvine Health Affairs, is made up of two parts, the UCIMC and the University Physicans & Surgeons.


Bonus Pay and High Compensations

Unions and critics say that money from medical centers could smooth out budgetary differences. Unexpectedly high compensations are one of the major aspects that has been criticized and attacked consequently after the budget setback. Charles Schwartz writes that, “[Yudof] chose not to mention that all the bonus income from the physician practice enterprise would be exempt from the paycuts” in University Probe. Through an e-mail Q&A with Schwartz, the professor concisely suggests that instead of compensating faculty bonus pay, the money should be used to cover budget holes. He refers to his previous essay "Financing the University - Part 7," which writes,

"If we were to take (or borrow) 15% of that bonus pay, to help preserve the core missions of UC, that would bring something like $100 million to the table."

("Budget Alternatives for the UC").

UC doctors and coaches are substantially the highest paid UC employees. The large compensations mostly result from a hefty “bonus pay” as several California newspapers show in a 2008 salary database they have compiled. These may be stipends for temporary office, merits, one-time relocation allowances, bonuses, and more. In the case of the medical center, official UCIMC salary guidelines regulate these bonuses to be paid for by the funds that remain from patient care professional fees after expenses have been met (Faculty Salary Guidelines).

Hospital officials commented that UC medical centers are under more scrutiny, because they are part of the UC system. As a public institution, many documents are required by law to be disclosed, whereas private clinics are not. In actuality, physicians’ salaries at UC Medical Centers are already lower than free market compensation levels. Many can easily ask for salaries 30% to 40% higher in private practice. To be willing to work at the UC medical center would require a more serious devotion to academia than the monetary compensation. The PR stressed that many administrators at the UCIMC are far from the top in the list of high salaries UC employees. The Dean of the School of Medicine, Ralph V. Clayman, is paid around 33% lower than the market average, Murray enumerated.

In 2008, Clayman’s compensation as “Professor-MedComp” in 2008 was $439,507.73. This number doesn’t make it to the top 50 in the UC system. UCI takes its first ranking at #49, with John Stuart Nelson raking in a meager $663,257.12, compared to #1 from UCLA, Ronald W. Busuttil with $1,776,403.71. In a separate category of “Executive Dean of School/College” on ucpay.globl.org, the highest paid UC faculty in 2008 was Gerald S. Levey of UCLA ($630,190.98). UCI enters the billboard at #23, with Thomas C. Cesario earning $397,274.97.

The total compensation for Gregory R. D. Evans, a clinical professor and plastic surgeon at UCIMC, in 2008 was $564,325 (ucpay.globl.org). Amidst the recessive economy, budget cuts, and financial deficits, how do physicians similar to Evans continue to receive these seemingly large compensations? According to the Association of American Medical Colleges (AAMC), the annual earnings for plastic surgeons ranges anywhere from $300,000 to $791,510. Aside from being a clinical professor, Evans is also the Chief of Aesthetic and Plastic Surgery Institute at the UCI Department of Surgery. Without considering demographics, geographic location, and the income effect, at $564,325 from the University of California, he is only roughly in the middle of that range.

Furthermore, Murray also emphasized that salary level does not determine a job’s value in society. He said the high bonus pay of plastic surgeons could simply reflect a trend in Orange County that people like to do plastic surgery.

An important fact is that while some management officials have been given raises ranging from 10%-25%, they may at the same time assume two titles at once. By eliminating one office, the Regents save tens of thousands of dollars. Nevertheless, this still brings to question the need for such raises and high compensations, especially among senior management administrators, during this time of budget deficit.

The UCOP’s website provides the 2009 Update of Total Remuneration Study for Campus and UCOP and Medical Centers, evaluated by Mercer and Hewitt. The companies compared UC medical centers to 12 national and 10 California academic medical centers including Johns Hopkins Hospital, Stanford Hospital, University of Michigan Medical Center, University of Virginia Medical Center, Kaiser North and South, Long Beach Memorial, and more.

The following graphs show the results of the study, highlighting a significant imbalance for staff physicians and senior management groups.

(Click on any of the images to enlarge picture; download link provided below)

(p. 61) Official study shows that all UC medical center employees are within 5% above or below market average for cash compensation, except for staff physicians, which are 18% below average.

Any comparative search on various faculty members with ucpay.globl.org will reveal a significant disproportioned income among physicians of different departments, and also with management officials.

(p. 62) Graph compares that health and welfare benefits for all medical center employees are all below the mean by 2-7%, except for senior management groups and professionals and support staff (PSS) that are 2% and 3% higher, respectively.

(p. 63) Documents show that retirement benefits for UC medical center employees are all significantly above market average but at the same time widely disparaging amongst groups (the lowest being 22% for nurses, and highest being 100% for senior management groups)

(p. 66) In general, besides staff physicians whom are down by 9%, all UC medical center employees are remunerated uniformly above market average by 4-6%.

READ THE COMPLETE DOCUMENT, titled “New Retirement Plan Ideas for New Hires and Related Collective Bargaining Issues”


Overall, medical benefits for UC medical center employees are “close to market median,” while retirement benefits are 66% higher than average. To conclude on compensation, official documents analyze that “cash compensation for many [UC] employee groups is below market, significantly so in many cases, but that UC’s benefits are currently ahead of market.” Total cash compensation for employees of UC medical centers is 2% below market average. There exists a large disparity between categories: Management and Senior Professionals (MSP) are 1% above average while Staff Physicians are lower than their average by 31%. Yet cash compensations are defined as base salary, which exclude one-time relocation allowances, stipends for additional temporary responsibilities, one-time bonuses, and etc. Remuneration reports do not take into account bonus pays, which are often over the top. This places bonus stipends in an overlooked territory.

Information observed from official online resources show that the medical center spends what it earns, and that they contribute their share in the UC system. But even after extensive research, it is still hard to fully understand the budget. There are broad categories in financial reports, such as “Other.” As one of the administrators in the SOM Dean’s Office said, “Even we don’t know the numbers.” Yet ultimately it is the unwillingness of the UCI School of Medicine to speak that provides the public more reason to look at the medical center with more skepticism.

The School of Medicine receives millions each year from its teaching hospital in support of education, but when that money is simply regurgitated as bonus compensation for executive administrators and chief physicians, to what extent does that really further education?

As the Regents continuously approve of raises: 32% tuition fees for students, and salary increases for UC executives and physicians, there is only one obvious fact. Students are a segregated sector from all other categories. Students and the system are put to the test when students can’t keep up with the large fee hikes. Financial capability will become another stratification in public higher education. How much should the rules of economics weigh in on public education?

Money Matters: Is the cost of attending a UC now unattainable?

By: Jenna Benty

Class. Work. Study. Work. Class. Repeat. Jean (who asked that her last name not be disclosed) a business student at University of California Irvine, may seem like the typical student. However, most do not know that all this work is needed just to be able to attend a UC school. In the midst of her typical chaotic day, she was able to spare a couple moments to talk about the recent budget cuts and their affect on her as a low-income student. At the University of California, Irvine budget cuts seem to be the main concern circulating around campus. According to Cathy Lawhon, the Director of Media Relations at UCI, as of early August 2009, the “cuts imposed in the state budget...[pushed the UCI] budget cut up to $77 million now.” With budget cuts soaring through the roof, the University of California administration is looking to a possible tuition increase to help overcome the large cuts. In this new proposal by University of California President Mark Yudof, there will be a tuition increase for undergraduate students of $585 starting in January 2010 and an increase of $1,344 starting in fall 2010. However, these fee increases do not alarm students such as Jean, because the new proposition does not look to cut financial aid. In fact, the proposition states that “one-third of the revenue generated from any undergraduate fee increase would be set aside to mitigate the impact of higher fees on undergraduate students with financial need.” Jean claims that she is “one of the lucky ones,” and that because she falls under the $60,000 dollar a year cap for financial aid, she still qualifies for Cal grants, work-study, and other financial aid programs. Jean’s main goal at UC Irvine is to keep her GPA up so she can continue to receive the financial aid she needs to attend. She states that “if [her] GPA drops, [she] will lose a lot of financial aid, and [she] would have to drop out.”

Jean believes it is those borderline students; the students who barely miss the “Blue and Gold Opportunity” program who will be affected the most. The “Blue and Gold Opportunity” program assists students who fall under the $60,000 dollars a year in income by covering their fees through grants, scholarships and other financial programs. Jean has already seen the effect of the tuition spikes affect her friends. She witnessed one of her friends “find a second job because the first job did not pay enough to fund his tuition, he is a full time student with two jobs.” In another case, two of Jean’s friends had to “drop out of UC Irvine all together to go to a community college because they couldn’t pay the tuition.” The students are struggling with funding their education even before these new tuition spikes are implemented. Jean was a member of the recently cut program known as SAAS, or the Student Academic Advancement Services, which helped support low-income, first generation or disabled students. Past SAAS Peer Advisor Deborah Lee, who graduated Magna Cum Laude in June 2009, now witnesses the effect of the budget cuts on her past low-income students from afar. Deborah was also a low-income student until she graduated as a Criminology, Law and Society major, so she has worked first hand with the stress that comes with financial aid and paying for college. As a peer advisor to the SAAS program she worked to recruit individuals to the program, which was a challenge for the first time in 2009. She claims “the lack of response was due mostly to the economic situation. These prospective students who are first generation, low-income students had decided not to attend the university anymore…the tuition increase would be devastating especially towards first generation college students and low income students.” Tuition increases have already affected low-income students and their ability to attend a University of California. The average parent income for full year applicants has drastically increased from the year 2000. According to the Regents of the University of California, in 2000 the average parent income of a student at UC Irvine averaged at $77,662 and for the year 2009 has sky-rocked to an average parent income of $98,439.

Ironically, the program SAAS was recently eliminated due to budget cuts, considering these are the students that are largely affected by the budget cuts and tuition increases. When talking to past SAAS students and now ex-coworkers, Deborah was shocked to find “the students were rationing their food in order to fight the termination and tuition increase just so they could have the opportunity to study abroad.”

Low-income students have now taken the budget problems from both ends, not only will they have to pay a higher tuition; important programs that assisted them in financial aid are being cut. Former SAAS student Leandra Ordorica states “SAAS has helped me find resources to be able to pay for UCI. Every time I applied for a scholarship, there was always someone there to write me a letter of recommendation.” These small amenities make the largest impact on the low-income students where finances are constantly a concern. Not only did the SAAS program assist in finding low-income students scholarships, “each counselor sat down personally with a student to see what their specific needs and goals were. After assessing each individuals students ambitions, they would personally find a type of aid that fit their specific needs,” according to Deborah Lee.

For the weeks leading up to the much anticipated UC regents vote on whether there should be a 32% increase in tuition, students on the UC Irvine campus have been holding “Teach-ins” to keep students aware of the issues at hand. One of the questions being brought up: how are students going to handle the tuition increase and budget cuts financially? On November 16, a “Teach-in” directed by students Patrick Lee and Emmeline Domingo brought the financial question to the forefront. The possible tuition increase was questioned at many levels, including the low-income “Blue and Gold Program.” Through this new tuition increase, President Yudof claims that he will raise the income cap from $60,000 a year to $70,000 a year requirement and that their financial aid will be protected through fundraising.

Emmeline Domingo questioned his proposition, “Yudof states he will fundraise, but from where? He did not specify and it is implied that it will come from our own pockets. And if we had the resources to fundraise for us in the beginning, why aren’t we taping them now? Or why haven’t we tapped them before?” With the threat to tuition increases fast approaching, students are already feeling the hit on their wallets, and their grades. Many are unaware that the tuition increased for the 2009-2010 school year by 9.5%, and according to Emmeline “the quality of our education is [still] decreasing… the quality of our education is not dependent on how much we pay, because really isn’t the quality dependent on us students? If we have to pay more…we will have to take out loans on top of loans…that means we have to work more, we can’t focus on school as much and others will have to withdraw all together.” The fee increase now poses a threat to our quality of education, which is already evident as we have dropped in ranking from 44^th to 46^th reported by US news.

As the teach-in progressed, students began revealing their personal struggles with paying for their higher education. Tia Peterson, a grad student of the School of Psychology and Social Behavior explained how the fee increase and the budget cuts have affected her quality of education. She explains that her quest to graduate education has been “incredibly disappointing, the cost of trying to take [her] education in steps has become overwhelming.” The graduate program at UC Irvine operates much differently then the undergraduate program. The typical graduate student will sign a contract for a period of time in which they will be employed by the school while receiving their graduate education. However, due to the budget cuts, the funding used to employ these students has been cut, and even students such as Tia who are in good standing in their department have to take out large loans to pay for school. The “Blue and Gold Program,” is not accessible to graduate students, so students with very low incomes are not receiving any assistance from the school. The lack of funds forced Tia to take out loans “a total of four grand, to cover tuition even though [she] is not taking any classes or doing anything except training [resident advisors] and collecting research data.” The excessive amount of loans the graduate students are filling out are going directly to the school, and in essence they paying the school to be allowed to work and not receiving any compensation in return.

As Tia reflects on her pursuit for higher education, her disappointment is undeniable, she states “I have put more then a decade of my life into my education and into trying to educate people, and in the end will have paid very very dearly for it.” One by one students stood up to share their struggles with the financial aspect of higher education. Another student participating in the "teach-in" describes her struggle as a middle class student. Despite the fact that she is out of the range for any type of financial aid, she still “hold[s] three jobs and works about 20 hours per week,” to support her education. The fee increase will no longer affect the lower income families but branch out to the middle class families as well, which make up the majority of the UCs. Those students who are not covered by financial aid packages and those who cannot afford to pay more will end up being squeezed out of the UCs and will have their pockets drained. Though each story was different, they all left a negative impact on their studies, their extracurriculars and their college life.

Not only are low-income students fighting to keep the administration from cutting programs detrimental to their financial research, they are now fighting against an even large threat, a large tuition increase. The UC Regents board will be meeting at UCLA Tuesday November 17^th and Wednesday November 18^th to discuss the possible tuition increase and will come to a vote Wednesday November 18^th. This may be the determining factor for many current and prospective students whether a UC education is in their grasp financially.

Financial Aid Expert: "We've seen an increase in demand for financial aid."

by Kaela Berry

Chris Shultz is the acting director of the University of California, Irvine’s Office of Financial Aid and Scholarship. He was the person many students spoke to on the phone when they were unable to get through the Financial Aid office this summer, due to the lack of staff because of the budget cuts. The Office of Financial Aid took one of the hardest hits from the budget cuts. I was able to get Shultz’s viewpoint on the budget cuts and how it has affected the Office of Financial Aid.

Q: So you’re the acting director for the Office of Financial Aid and Scholarship. What is that exactly?

A: Well, what happened was, about two years ago, the then director was promoted into an acting or intern role for enrollment services which is the registrar, admissions, and financial aid, and when he was put into that role for a temporary basis, he asked me to assume the role of director, in this office, on a temporary basis and it’s continued for two years.

Q: So you’re a temporary director?

A: Yeah, I’ve been temporary for the last two years.

Q: As you know, the budget cuts have been going on right now. How have they affected financial aid?

A: Well, there’s a couple of major ways. One, we’ve seen an increase in demand for financial aid. One thing that we had, an additional 900 students utilize financial aid in paying their fall fees as compared to the prior year, so that’s quite a significant jump. Seems that we’ve also experienced staffing shortages and hiring freezes at the same time. There is a significant workload deficiency there. The demand has increased as the economy has changed. We’ve seen a lot of people interested in utilizing student loans rather than, in the past there’s been a drop-off in borrowing, and what the community at large was thinking is that it was people were utilizing home equity loans or other lines of credit to finance education, which now the credit’s a little bit harder to get to. People just don’t have those options. Also if their unemployment increases people are looking more at what options they can qualify for, more of the traditional financing method.

Q: What kind of financial aid are our students using?

A: Well, there’s all variety of financial aids. There are grants, scholarships, loan, and work. The work would primarily be federal work study where students work on campus and the positions are subsidized by the federal government so the department pays 25% of the salary and the federal government pays the other 75%. There are different sources of grants. There are state grants, federal grants, and we also have a pretty unique university grant program here, where a third of all the fees that are paid are set aside for grant assistance for needy families. So every time there’s a fee increase, it actually makes available more grant dollars because a third of that additional fee increase is actually returned for additional grant support. There’s a variety of different scholarships. We have campus-based scholarships, either through endowments or scholarship funds that are through different departments where a donor may have set up a scholarship or a department may have cobbled together some of their own funds. There’s a lot of outside scholarships also like through Kuwanis or things like that where students receive. And then we also have some campus-based scholarship. Our most prestigious is the Regents Scholarship and that’s a recruitment scholarship that’s the given to the upper tier students as far as test scores and GPA. It’s similar to the campus-wide honors program.

Q: How have the budget cuts affected the types of financial aid students are using? Do the budget cuts mean less money for them?

A: Actually, as I was saying, on university grant side, when there are budget cuts that coincide with fee increase. The fee increase actually makes more grant dollars available because, say the fees were a thousand dollars, a third of that would be 333, but if the fees were doubled to two thousand dollar, then we would 666 dollars to return to us for grant dollars. Yes, it does, in a sense, water down the pool because you’re off-setting the higher fee amount, but for the needier students it actually makes more grant dollars available for them. The budget cuts are kind of different than the fee increases because the budget cut doesn’t necessarily automatically translate into a fee increase or an increase into a university grant, so budget cuts, on the state level, what we’ve seen, is pressure from the state is to change the Cal grant program which is one of our biggest state grant programs. There was a lot of pressure last year to discontinue the program because it is very costly for the state as opposed to a billion dollars for all the different Cal grants that are paid, so the governor proposed eliminating the Cal grant program. We saw in the budget compromise that it was actually funded again, but there’s still pressure from the state government to change the program.

Q: Does this mean Cal grants are getting less money?

A: Well, currently they are fully-funded, so the state did prioritize in the budget agreement to fund the Cal grant. We haven’t necessarily seen a reduction in support because of the budget situation or student financial aid. On the federal level, we’ve seen a little bit of increase because of the federal stimulus package included some extra funding, so for example, there’s extra work funding. There are also additional tax credits that were made for individuals going to school. This year there’s some additional money that’s available. Next year when the stimulus money isn’t available any longer…that money’s going to dry up and there’s going to be some pressure, because they’re running this huge deficit to start reducing some of these funding sources. We haven’t heard that they will, but there’s always that concern for us.

Q: Do the budget cuts affect you as a director or just you personally in any way?

A: Director-wise, we have some significant budget cuts in the office here. Over the last year and a half, we’ve lost several positions and this last round of cuts, that we’re still dealing with, we’re losing a couple more. Fortunately, we had positions that were open or people that were leaving right as the cuts were coming, so we haven’t had to lay off anybody, but we’re not able fill the position. We’ve lost some pretty key positions. One that impacts me directly is an associate director position. That position was in charge of policy development and fallen regulations or statutory changes. Financial aid is always evolving. The federal government passes new laws. They change their regulations and we have to react to those ongoing. The position was designed to really follow all of those and make sure we’re up to date on our compliance. With that position being vacant, it’s really fallen onto me. The other ones that have affected to me are student support roles and financial aid advisors and counselors because what has ended up happening is we’ve had those positions removed. We haven’t been able to offer the level of service that we want to. For example, we recently changed our office hours. We worked nine to five, Monday through Friday. Now we’re ten to five. So we open each day at ten. During this summer, we weren’t able to respond to email messages and students weren’t able to leave voicemails on the general line because we didn’t have staff that could actually return their calls. I got a lot of disgruntled students and parents calling me because they couldn’t get through. At one time, our front staff was five people and it’s down to two. It was just impossible with the work that needed to get done to also offer the level of customer service. It’s been pretty stressful trying to think of different ways to assist our clientele with these limited resources.

Q: Have you had to work longer hours because of the lack of staff?

A: I work long hours anyway. I think it’s just the level of stress. The stress level has been much higher. I wouldn’t want to directly to stay I have personally worked longer hours, but I know some of our staff has and they’ve take on just more work. There’s a general feeling in the office that people aren’t able to perform the tasks that they have at the level they would like to, work as diligently as they like to because there isn’t enough time in the day. I’ve had a number of staff that come in on the weekend and work late, just to keep up with the work load.

Q: How much has the staff decreased since the budget cuts?

A: At the top of my head, I want to say probably seven positions.

Q: Seven positions? That have been dropped?

A: Yes, that have been eliminated, out of an office of 35. Before we were now 35 people, so it is quite a significant drop.

Q: How is the university responding?

A: Obviously, the cuts are a big way. Another way that’s affected everybody is the staff is with furlough and pay cuts. We’ve all taken staggered pay cuts and, then corresponding to that, we’re being furloughed. That’s definitely a negative for people. Although, on the other side, there are a lot people that we interact with everyday that are unemployed or their parents are unemployed, they’ve lost their homes. So I personally feel fortunate that I still have a job and benefits, you know, medical, insurance, and so on. That’s one way the university is dealing with it. The others are the series of fee increases that proposed and that have come in effect. Last year, there was a 9.3% Fee increase. The Regents are discussing a 15% midyear increase that would take place starting winter quarter and then another 15 % on top of that starting fall of 2010.

Q: So it would be a 30% increase?

A: Actually it would work out to be a little bit more than 30, because if you take 15% and you add 15% on top of that, it’s called compounded interest, so it works out to be above 30%.

Q: As you know there have been walkouts. Do you support the walkouts or have you been involved with the walkouts?

A: I haven’t been involved with the walkouts. I can see both sides of it. On one hand, I can see the point of the walkouts is to emphasize the quality of education and what the state is sacrificing…One of the problems I had with the walkouts is the fact that the students that are here are paying more than they ever paid before and I don’t really see it as being fair to them to have a day of class-cut when they are paying more for it than ever. I think there are other ways to protest it.

Q: Do you have any ideas of how to protest it?

A: There could be protests that don’t directly impact a class. There could be the same type of events, but not necessarily where you walk out of a class or you shut down an office, where you use other times that are less critical. For example, if we are open every day of the week, you could schedule some time, like we’re now closed for the first two hours of the day. If we were going to do something, that would be an opportunity where we could do something and it wouldn’t directly impact the clients, where they need assistance.

Shultz continues to give other examples of times where students and staff could have a protesting event.

I understand on the opposite side of that part of it is that without showing any pain or implications of the cuts that the rationale is that the university might continue with the cuts thinking that, “Oh well, there wasn’t really any pain so we can continue in this mode.” So it’s really demonstrating the implications.