What ‘Draconian’ Cuts Mean for UC : Education: Meredith J. Khachigian of San Clemente, chairwoman of the Board of Regents, says the university might be forced into a ‘drastic’ overhaul of its role.

The University of California, indeed all of higher education in the state, is facing a “near-crisis” in state funding that threatens to undermine the very essence of its mission, said Meredith J. Khachigian, chairwoman of the UC Board of Regents.

Dire new economic forecasts, which have prompted Gov. Pete Wilson to recommend trimming $5.7 billion from his earlier $60.2-billion state spending plan, could spell “Draconian cuts” in the UC operating budget for the coming school year, Khachigian said in an recent interview at her San Clemente home.

That, she said, will leave regents just three choices: cuts in programs, deeper cuts in student enrollment or new increases in student fees.

All would be distasteful, Khachigian said, but she would most object to raising fees, which have nearly doubled to $2,824 since the fall of 1990.

With state support to UC expected to continue to decline, even as the number of eligible college students is projected to soar, it might be necessary to rethink the state’s Master Plan For Higher Education, Khachigian said. It calls for the nine-campus UC system to take the top 12.5% of California’s high school graduates, the California State University system to take the top 33% and the state’s 107 community colleges to take the rest.

Khachigian also conceded that the university has been wounded politically by the recent furor over retiring UC President David L. Gardner’s hefty compensation package and by revelations of other deferred benefits for top administrators that were awarded in secrecy.

She and others worry that a backlash could result among state legislators trying to divide a shrinking state pie.

As she concluded her first year as chairwoman of the 26-member governing board--one of the most traumatic and tumultuous in recent UC history--Khachigian, 47, discussed the future of the university with Times Staff Writer Kristina Lindgren in a rare extended interview.

Q. Gov. Pete Wilson’s initial budget would have given the UC system 1.5% more state money this year than last, although the university sought a 9.8% increase. Economic forecasts have now prompted Wilson to recommend unspecified cuts of about 10% in his $60.2 - billion spending plan. What will this mean for UC?

A. We’re hearing that the cuts could be as much as 16% to 20%. That would be Draconian. It would have a dire impact on the University of California. . . . That would be like closing down one or two of our campuses for a year.

Q. How will the regents deal with those cuts?

A. There are only three possible ways to do it: Raise student fees again, cut enrollment or cut programs.

As for raising fees, I just can’t imagine we would do that. We certainly don’t want to do that. I wouldn’t support it at this point. I would have to be convinced that we would seriously cut into the quality of the university if we didn’t.

Nor do we want to cut enrollment. We already cut it by 5,500 people last year.

Q. Have the higher fees reduced access to UC for otherwise - qualified students?

A. You always lose some, and that is regrettable. For people to be denied an education because they can’t afford it is deplorable and shouldn’t happen. But I can’t deny that that isn’t a fact.

Or (the higher cost) may delay graduation because students may have to take another job and less classes. . . . That affects the quality of their education too, because they aren’t able to participate as fully in the campus life and other things in addition to the classroom experience. That is really regrettable.

Q. How would you respond to critics who say ever - higher fees are turning UC into an elitist institution?

A. We have the top 12 1/2% of high school graduates, so in a way, you can say we are elite. But I don’t see us as elite when it comes to finances, because we provide substantial financial assistance. It’s always inadequate for the need, but there is a good student aid program. Part of the fee increase last year was to make sure there was financial assistance for those who couldn’t afford it.

Q. UC President David P. Gardner and others have said state support for higher education is declining. Do you agree?

A. I don’t deny that the Legislature is committed to higher education. But the facts seem to be that now 85% of the budget is for mandated programs, and for protected programs of kindergarten through 12th grade, the prisons, the welfare system and health care. So the university and CSU and all the other programs that are not protected have to vie for this remaining 15%. . . . It’s a drastic situation, it really is.

Q. What is UC doing to prepare for budget cuts?

A. We definitely are in the process of a lot of belt-tightening. We are looking at programs that could be eliminated. We started that process last year with our voluntary early-retirement program. That has had the effect of reducing our faculty numbers. . . . So now we can either hire people at a lower rate or cut programs as we see fit.

The problem with cutting programs is that we can’t lose sight of the commitment we have made to (students) who are already in these programs on our campuses. . . . You can do these cuts, but it will take three or four years to see them take effect.

Q. You served on a commission to re-examine the state’s Master Plan for Higher Education in 1985. What were your conclusions?

A. I saw it as a reaffirmation of what had been written into the original master plan of 1960 to provide access to public higher education . . . and a new look at how we needed to provide more access for under-represented (minority) students. . . .

California cannot afford, nor is it a smart way to proceed, not to provide that access and (not) to promote it. We can’t have a large portion of the population that does not participate in higher education. We’re losing too much talent.

Q. Given fiscal realities, do you foresee a change in UC’s role in higher education under the Master Plan?

A. That is certainly on the table as a possibility. There have been some ideas thrown out. For instance, instead of UC taking the top 12 1/2% (of high school graduates), reduce that and take the top 10% or 9%, or something like that.

Q. Do you approve of the business park planned for UC Irvine that Chancellor Jack W. Peltason outlined at the May regents’ meeting?

A. I think it has really a lot of potential. I think that one thing that UCI has been able to do to a great extent is to work very closely with the surrounding business community and to see the potential. . . . I think he has been very successful with that.

Q. What about the ethical considerations?

A. This has been a longstanding controversy, technology transfer and all of that. I have never been convinced that this technology was improperly transferred. . . .

I think that in these difficult economic times, we have to look into these private funding sources, as long as at the same time you are not selling off or giving away your academic freedom.

Q. Why did regents name UCI’s Peltason as the new UC president?

A. We did a national search and looked at a lot of names. . . . Jack had the national stature, he had the statewide stature and he has the experience. He has a long history with national universities and with UC. And with his talents, it was just obvious, I think, to the committee.

Q. What are those talents?

A. I would describe his talents as knowing the system thoroughly, understanding how UC fits into higher education nationally. He is a political scientist, and we have to have someone who understands and works well with legislative people. . . . Jack is very easy to work with. He is so unassuming, and yet highly, highly regarded and respected. Out of all the different candidates, he was the person who emerged on top.

Q. Has the controversy over Gardner’s compensation package hurt UC’s standing with the Legislature and the governor?

A. Our timing couldn’t have been worse, there’s no doubt about it. But it was the timing that was necessary because David Gardner was retiring and needed to make his plans for the future, and we had to bring Jack Peltason on board and set his compensation. . . .

What is upsetting to me is that . . . this was money previously voted on by the regents to give to David Gardner over a period of time. . . . It wasn’t a golden parachute. . . . It wasn’t that when David Gardner said, “I’m going to retire,” we said, “We really appreciate what you’ve done, here’s this bundle of cash.” What we did was allow him to receive this money that had accrued up to this time but hadn’t been given to him yet.

Q. Some would say that even if that is the case, the amounts of deferred compensation were extraordinarily generous, above and beyond what a public institution ought to be doing .

A. I have heard that a lot, and all I can say is that those amounts of compensation were set according to studies we had done. . . . Those were studies we went by for what is appropriate compensation for an institution of this size and the scope of these administrators.

Q. In retrospect, as one regent, would you do it differently, or not agree to such large compensation packages?

A. I must say that all of us, I think, will be looking at these things with a different eye. While I still agree with what was done, I think we’re currently in a different world. . . . I’ve often said throughout this whole issue, that five years ago nobody would have batted an eye at this. It wouldn’t even be an issue. But now, with the whole nation and the world looking at executive compensation, this has become a big issue.

But we’re dealing in a very different political climate right now. This makes you re-examine the way you have been conducting business and the way things have been done.

Q. The Gardner compensation package was done in closed session. Did regents act with too much secrecy?

A. The more I familiarize myself with some of these issues, the more I realize that I would feel more comfortable having these things brought into the public eye and certainly openly discussed at regents meetings.

For basic expediency, we had developed a practice over the past years . . . of discussing these things in closed session. I think people have said it was an attempt to mislead and not be forthright.

I don’t see that. I do see it as a need to discuss personnel matters privately. . . . But I do think improvements will be good. The ones we have suggested go a ways to doing that.