Even if proposed state funds contained in last week’s state budget update materialize, U. California will still face a sizable budget gap, university officials told the UC Board of Regents Wednesday.

Though Gov. Arnold Schwarzenegger’s May budget revision maintains $370 million in funding for the 10-campus system, Executive Vice President for Business Operations Nathan Brostrom and Chief Financial Officer Peter Taylor told the board that additional cost-saving efforts are required to make up for a roughly 20 percent drop in state funding since the 2008-09 fiscal year.

The two presented a plan already under way aimed at saving $500 million in administrative costs over the next five years that can then be channeled into academics and research funds.

The plan would focus primarily on utilizing the size of the university and its buying power to purchase items in bulk.

Taylor said although the university’s state funding has been able to bounce back after past periods of decreased state funding, the prolonged nature of the current recession has necessitated this move.

“The (state’s) structural deficit is such that we have an obligation, on our end, to understand that the state problems are likely to last for a good three, four, five years and we got to be prepared,” he said in a press conference following the presentation.

“We are at that Rubicon where we got to make a choice in terms of: are we going to continue that kind of quality and service that we got to be known for, or are we are going to change the way we operate … in order to kind of get over that difficult hurdle that is blocking us from achieving growth.”

The move would also focus on centralizing operations at both individual campuses and across the 10-campus system. Brostrom said among the initiatives will be centralizing human resources at each of the campuses to mirror UC Berkeley’s model, as well as centralizing payroll services at all of the UC’s campuses.

The various cost-saving proposals will require “substantial investment,” Brostrom said, noting the costs to bring in a project manger to integrate the payroll system at the 10 campuses and five medical centers.

“There are investments that are necessary up front in order to realize the longer term savings,” he told the board.

The cuts to the system’s administration have been a long time coming, Taylor said, but it took the severity of the current recession to make the proposal a reality. Russell Gould, chair of the board, said even if the increase in funds contained in the revision becomes a reality, the university will still have a $237 million gap.

“It’s very clear, in spite of the governor’s tremendous commitment to us that there is going to be a substantial funding gap,” Gould said. “This just helps erase some of that gap.”

Though Schwarzenegger’s budget also includes an additional $355 million, that money is for UC construction projects and cannot go toward anything else, according to UC Vice President for Budget Patrick Lenz. He said the new funds’ restriction was in keeping with the budget’s focus on creating new jobs. He added that the university faces tough competition in the budget process, but it could still close some of its deficit.

“You can’t compete against CalWORKs, you can’t compete with child service but (the Legislature) can recognize the importance of higher education,” he said.