How much will it cost us to restore public higher education in 2015-16

Read “Financial Options for Restoring Quality and Access to Public Higher Education in California: 2015-16” below or download a PDF of it. If you’re really a policy wonk, download the spreadsheets behind this report.


WORKING PAPER

FINANCIAL OPTIONS FOR RESTORING QUALITY AND
ACCESS TO PUBLIC HIGHER EDUCATION IN CALIFORNIA: 2015-16


Stanton A. Glantz
Professor of Medicine
American Legacy Foundation Distinguished Professor in Tobacco Control
University of California San Francisco
Chair, University of California Systemwide Committee on Planning and Budget (2005-6)
Vice President, Council of UC Faculty Associations
glantz@medicine.ucsf.edu

Eric Hays
Executive Director
Council of UC Faculty Associations
info@cucfa.org

(February, 2015)

This report is available at http://keepcaliforniaspromise.org/473424/restore-2015-16

Council of UC Faculty Associations
1270 Farragut Circle
Davis, CA 95618
Phone: (888) 826-3623

EXECUTIVE SUMMARY

 

It is widely recognized that large reductions in state funding and sizeable increases in student fees have eroded quality and accessibility in California’s three-segment system of public higher education: the University of California, California State University and California Community Colleges. This report estimates what it would cost – through restored taxpayer funding or tuition increases — to restore the system’s historic quality while accommodating the thousands of qualified students excluded by recent budget cuts. This working paper considers state funding, student fees and accessibility to answer three basic questions about the public higher education system in California:

#1. How much would it cost taxpayers to push the “reset” button for public higher education, restoring access and quality (measured as per-student state support) while rolling back student fees to 2000-01 levels, adjusted for inflation (annual fees at UC would be rolled back by 60% to $5,364 from $13,200, by 55% for CSU to $2,488 from $5,472 and by 68% to CCC to $298 from $920)?

Answer: It would cost taxpayers $5.7 billion.

#2. Absent restoration of taxpayer support for public higher education, how much more would student fees need to be increased to restore the level of per-student resources available in 2000-01?

Answer: UC fees would have to increase over the current year’s fees by 63% or $8,252 (to a total of $21,452 per year) and CSU fees would have to increase by 39% or $2,122 (to a total of $7,594 per year); CCC fees would not need to increase.

#3.   If the Governor and Legislature were to decide to push the “reset” button, — reinstating the quality and accessibility standards of the Master Plan by returning state support and student fees to 2000-01 levels, adjusted for inflation — what would it cost the typical California taxpayer?

Answer: It would cost the median California taxpayer about $31.


Introduction

Beginning with Governor Gray Davis’ 2001-2 budget year, accelerating with Governor Arnold Schwarzenegger’s Compact for Higher Education,[1] and continuing under Governor Jerry Brown’s early budgets, higher education in California has suffered large reductions in state funding. Governor Brown has begun to reinvest in higher education since the passage of Proposition 30, but these increases do not yet make up for the massive earlier cuts. These reductions have effectively abandoned the California Master Plan for Higher Education[2] promise of high quality, low cost public higher education for all, through an articulated system consisting of the University of California, California State University and California Community Colleges. Over the past decade California has consistently spent less than most states per higher education student, and public higher education funding – even including massive tuition/fee increases – has fallen quickly in California relative to the United States as a whole in recent years.

 sheeo-2015

Data: State Higher Education Executive Officers

http://www.sheeo.org/resources/publications/shef-%E2%80%94-state-higher-education-finance-fy131

 

In response to large cuts in state funding, fees at UC and CSU have increased much faster than at colleges in the US as a whole (Figure 2). While these fee increases have generally been framed as responses to the State’s immediate budgetary problems, they are also congruent with the explicit public policy choice, based on conservative free market principles and embodied in Governor Schwarzenegger’s Compact for Higher Education, to shift higher education from a public good provided by society as a whole through taxation to being a private good purchased through user fees.

This shift in public policy is stated explicitly in the 2004 Compact on Higher Education between Governor Schwarzenegger and the UC President and CSU Chancellor: “In order to help maintain quality and enhance academic and research programs, UC will continue to seek additional private resources and maximize other fund sources available to the University to support basic programs. CSU will do the same in order to enhance the quality of its academic programs.” Until this point, the state was viewed as the primary source of support for “basic programs” with private sources being used for additional initiatives.

These rapid fee increases in California have been halted in recent years, but fees are still much higher at UC than they would have been if tuition had increased at the rate of the rest of US public 4-year schools.

 

tuition-ca-us-2015

Source: College Board, table 4a of http://trends.collegeboard.org/college_pricing/

 

This working paper seeks to tie together the three elements of change: cuts in state funding, fee increases, and declines in quality (measured as per student expenditures). It takes as its base year 2000-01, the last year that California higher education was reasonably financially intact before the recent large fee increases. This paper addresses three questions:

 

  1. How much would it cost taxpayers to push the “reset” button for public higher education, restoring access and quality (measured as per-student state support) while rolling back student fees to 2000-01 levels, adjusted for inflation?

 

  1. Absent restoration of taxpayer support for public higher education, how much more would student fees need to be increased to restore the level of per-student resources available in 2000-01?

 

  1. If the Governor and Legislature were to decide to push the “reset” button, — reinstating the quality and accessibility standards of the Master Plan by returning state support and student fees to 2000-01 levels, adjusted for inflation — what would it cost the typical California taxpayer?

 

Answer No. 1: Returning quality and fees to the level of 2000-01 would cost taxpayers $5.7 billion.

By restoring state funding to 2000-01 levels, it would be possible to return student fees to the levels of 2000-01 (adjusted for inflation) while maintaining quality (measured as total per student funding). Specifically, annual fees at UC would be rolled back by 60% to $5,364 (from $13,200), by 55% for CSU to $2,488 (from $5,472) and by 68% to CCC to $298 (from $920).

Table 1 shows the calculations that produced this number.[3] We begin with the numbers of full time equivalent (FTE) students in each of the three sectors of California higher education and total state general funds supplied to each sector,[4] then divide one by the other to obtain the state funding per student FTE. Next we adjust the 2000-01 dollar amounts for inflation to their equivalents for 2015-16 and subtract the actual levels of funding per student currently enrolled in each sector to determine the funding shortfall compared to 2000-01.

Restoring full state funding for existing enrollments would cost a total of $3.3 billion. These calculations do not tell the whole story, however, because all three sectors have responded to resource cuts by admitting fewer students than they would under the Master Plan. Providing funding to accommodate students who have been forced out of the higher education system would raise this number to $5.7 billion. This number is lower than it has been in recent years primarily because the state has begun to modestly increase funding to higher education.

 

table1-feb-2015

 

Answer No. 2: Restoring the public higher education system for all students only by increasing student fees would require raising UC fees an additional $8,252 (to a total of $21,452 per year) and CSU fees would have to increase by $2,122 (to a total of $7,594 per year);. CCC fees would not have to increase.

Table 2 outlines the calculations that led to these numbers. The overall approach is the same as in Table 1, except that rather than restoring per student total expenditures by increasing state support, it is done by increasing student fees. Calculations for UC and CSU assume that it continues its “high fee high aid” policy of allocating 33 percent of fees to student aid.[5] The total funding per student used as a measure of quality is the sum of state funding and net tuition and fees after deleting the fee amounts returned to aid.

 

table2-feb-2015

 

Answer No. 3: Restoring public higher education while returning student fees to 2000-01 levels would cost the median California taxpayer an additional $31.

Table 3 outlines these calculations. We obtained the distribution of taxes paid by adjusted gross income from the Franchise Tax Board for 2013,[6] the most recent year available, then allocated the $5.7 billion it would cost to restore public higher education to 2000-01 proportionately across all taxpayers. Note that the categories are for individual filers (where individual returns are often joint returns for families), partnerships and Subchapter S corporations, as well as corporations that pay income taxes.

For the median personal income taxpayer (including families), restoring the entire system while rolling back student fees to what they were a decade ago would cost about $31 on April 15, 2015. This number is lower than it has been in recent years primarily because the state has begun to modestly increase funding to higher education. For the three-quarters of state taxpayers with taxable incomes below $90,000, it would cost $204 or less.

Income taxes are presented as one option, simply to illustrate the cost for typical taxpayers. Personal and corporate income taxes are forecast to be about 75 percent[7] of all state revenue in 2015-16s; part of the $5.7 billion could be allocated to other taxes, which would lower the effect on individual income tax payers. We also assume that the costs would be distributed as a uniform surcharge across all tax categories. If the cost were allocated more or less progressively, that would also affect impact on individual taxpayers.

 

table3-feb-2015

 

Limitations

The calculations outlined in this working paper are all based on publicly available numbers and do not benefit from models of enrollment dynamics that may be maintained by state agencies or the three segments of the California public higher education system. The estimates do not account for price elasticity: as tuition and fees increase, some students decide not to attend public higher education in California, which will reduce student demand.

We assume, based on public statements and documents, that enrollment at California’s public higher education institutions has been constrained by their budgets.

Finally, the distribution of taxes is based on 2013, the most recent time for which data are available; this distribution will be slightly different in 2015.

These calculations will be updated and subsequent versions of this Working Paper will be released as better data become available.

 


 

[1] The full text of the Compact has been removed from the budget.ucop.edu site, but we have a copy of it at http://keepcaliforniaspromise.org/wp-content/uploads/2012/09/2005-11compactagreement.pdf.

[2] The full text of the Master Plan is at http://www.ucop.edu/acadinit/mastplan/MasterPlan1960.pdf. For a discussion of the history and current status of the Master Plan, see Legislative Analyst Office, “The Master Plan at 50: Assessing California’s Vision for Higher Education,” November, 2009, available at http://www.lao.ca.gov/laoapp/PubDetails.aspx?id=2141.

[3] The spreadsheet used to obtain all the results in this working paper is available at http://keepcaliforniaspromise.org/473424/restore-2015-16

[4] FTE data comes from the individual higher education systems, state expenditure data comes from the Legislative Analyst’s Office available at http://lao.ca.gov/sections/econ_fiscal/Historical_Expenditures_Source.xlsx.

[5] See page 16 of http://www.assembly.ca.gov/acs/committee/c2/hearing/2005/april%2020%20%202005-uc%20csu-%20public-%20cm.doc.

[6]State income tax revenue by adjusted gross income class and state income tax revenue from corporations: http://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/Annual_Reports.shtml

[7] Governor’s Budget Revenue Estimates: http://www.ebudget.ca.gov/2015-16/pdf/BudgetSummary/RevenueEstimates.pdf

February 2015 Assembly Budget Committee Presentation on UC is Misleading

At the February 18, 2015, Assembly Budget Subcommittee No. 2 on Education Finance meeting, the agenda included a short report on UC’s budget. The report is misleading for 4 reasons:

• The University had already been cut by 18% between 2000-1 and 2007-8, well before most of the other agencies were cut after 2007-8, making 2007-8 an artificially low base year for UC.

• The growth in the UC total budget includes massive increases in tuition paid by students, as well as increases in funding from non-state sources (hospitals, federal and other sponsored projects, student housing, parking garages, etc) that are not available to support core academic functions that have been historically supported by the state.

• UC enrollment grew by 15% during this period, so, allowing for inflation, UC’s core costs would be expected to increase by 29%-36% (depending what measure of inflation is used).

• Using a more appropriate base year of 2000-1 (before the large cuts to higher ed), shows state funding for UC was cut 31% and CSU was cut 10% from where they were in 2000-1, despite substantial enrollment growth.

change-in-funding

Below is a table from the report with a column added showing the percent change in state funding since 2000-01, which paints a very different picture for state funding of higher education.  Using the more appropriate 2000-1 base shows that state funding to UC declined more than the other departments in the report’s table (data for the chart above and the final column below comes from the Legislative Analyst’s Office).

State Agency 2007-08 2014-15 % Change % Change in state funding since 2000-01
UC Overall $19,207,958 $26,910,722 +40% *
UC Core Funds $5,427,851 $6,909,878 +27% -31%
Courts $3,760,630 $3,631,827 -3% -24%
Department of Social Services $9,014,213 $6,994,519 -22% -26%
Department of Corrections and Rehabilitation $10,032,411 $9,967,036 -1% +154%
California State University $6,836,696 $8,488,925 +24% -10%
State General Fund $102,985,674 $107,987,028 +5% +2%
*Excluded because most of this money is non-state funds that are not available to support UC’s core academic mission.

 

Who Is More Frugal?

Governor Jerry Brown will be releasing his state general fund budget proposal next week. He has carefully cultivated his image as a frugal fiscal disciplinarian. And he has been taking UC to task for asking for more money from the state, demanding more cuts first.

At the November 19, 2014 Regents’ meeting he said he was going to deliberately underfund UC to force the Regents to make big changes “because it is so hard to work change in complex institutions, often time the pressure of not having enough money can force creativity that otherwise can’t even be considered. I know the State, when we had a $27 billion deficit; we had to make changes, and not just cuts, but changes in the way that we do business.”

But who has been the real miser over the years?

In his first post-Schwarzenegger budget, Brown reversed Governor Schwarzenegger’s tripling of the Governor’s office budget. The Governor’s office’s budget was $7.8 million in Governor Davis’s last budget in inflation adjusted dollars (before Schwarzenegger boosted it to $23 million in his first year), and Governor Brown spent $8.4 million on that office in his first budget.

Brown also slashed UC’s budget drastically (by 25%) in his first budget, but, unlike the budget for the Governor’s office, Schwarzenegger had also slashed UC (Schwarzenegger’s final UC budget was 16% lower, in inflation adjusted terms, than Davis’s final budget for UC).

But what is more interesting is what has happened in Brown’s budgets since then. At a time of recovery from the drastic recession era cuts, Brown has increased the budget for his office by 35%. At the same time, state support for UC increased by the very slightly lower 34%. Accounting for Brown’s commitment to funding student aid, UC and the Student Aid Commission together only increased by 23%, two-thirds as much as the increase for Brown’s own office.

The long-term reality is even more striking. Since fiscal 2000-01, the state’s general fund has been held flat when adjusted for inflation, even as the state’s population grew 12%. Meanwhile, governors have cut state funding to UC by over 30% while increasing funding for the Governor’s office 40%. Since 2001-02 the number of students at UC climbed 36%. Using the state’s population as a crude measure of the Governor’s workload, UC’s inflation and workload adjusted state funding has been cut in half while the Governor’s office’s budget has grown by one quarter.

Year State general fund money to UC per FTE-student, in 2014 dollars State general fund money for the Governor’s Office per 10k state population in 2014 dollars
1992-93 $ 19,138 $ 3,626
1993-94 $ 18,024 $ 2,484
1994-95 $ 17,966 $ 2,409
1995-96 $ 18,190 $ 2,318
1996-97 $ 18,612 $ 2,237
1997-98 $ 18,932 $ 2,195
1998-99 $ 21,075 $ 2,357
1999-00 $ 19,767 $ 2,216
2000-01 $ 24,017 $ 2,224
2001-02 $ 23,486 $ 2,135
2002-03 $ 20,762 $ 2,199
2003-04 $ 17,918 $ 2,194
2004-05 $ 16,268 $ 6,237
2005-06 $ 16,513 $ 6,030
2006-07 $ 16,860 $ 5,981
2007-08 $ 16,900 $ 6,087
2008-09 $ 11,770 $ 4,290
2009-10 $ 12,335 $ 3,746
2010-11 $ 13,479 $ 3,512
2011-12 $ 10,106 $ 2,211
2012-13 $ 10,268 $ 2,761
2013-14 $ 11,896 $ 2,804
2014-15 $ 12,190 $ 2,771
Full period of data availability 54% 76%
since 2000-01 51% 125%
Brown era 121% 125%

A funding reset would eliminate almost all student debt for UC students

Pushing the reset button and restoring the promise of California higher education would eliminate almost all student debt for UC students

Under the reset plan (restoring state funding to 2000-01 levels) undergraduate students would save $7,821 per year (paying $5,379 rather than $13,200 per year in tuition and fees) or $31,286 over four years. This compares to an average undergraduate student loan debt at graduation (in 2011-12) of $19,751, with only 5% of students graduating with more than $31,401 in debt.

reset-debt-2012-13

What about CSU?

The reset plan would save CSU baccalaureate students about $2,977 per year (paying $2,495 in annual tuition and fees rather than $5,472) for a total savings of about $11,907 in four years. CSU’s average student loan debt for 2011-12 baccalaureate recipients is $18,460.

What about the effect on Community Colleges?

Under the reset scenario community college students would save about $621 per year (paying $299 per year rather than $920). The big effect on student debt by resetting community colleges, however, would not be due to cutting fees but to restoring funding for the 426,000 students pushed out of community colleges who end up in for-profit places like the University of Phoenix where they accrue huge debts and rarely have anything to show for it. All this costs taxpayers billions.

Council of UC Faculty Statement on Proposed Tuition Increases

The Council of UC Faculty Associations holds Governor Jerry Brown’s slashing of public higher education responsible for UC President Napolitano’s recent proposal to budget for 5% tuition increases every year for the next 5 years.

Raising tuition is not the solution. There is a better way: provide California students and their families high quality, affordable higher education, as defined by the California Master Plan for Higher Education.

The reality is that Governor Brown has not been willing to spend the necessary money to do so even though the cost to do so is surprisingly low.

Here are the financial facts:

• In 2001-02, Gov. Gray Davis provided $3.2 billion ($4.4 billion in 2014 dollars) to the University of California. Tuition was $3,964.

• On taking office in 2003, Gov. Arnold Schwarzenegger cut UC’s budget by 15% to $2.7 billion and pressed for rapid tuition hikes to shift costs on to students and their families. By the time Gov. Schwarzenegger left office in 2011, he was providing just $2.9 billion to UC. Tuition had tripled to $11,279.

• Brown cut UC’s provision to $2.4 billion in his first budget (2011-12).

• While Brown has provided small increases to UC in the last 3 years, his 2014-15 budget only includes $2.8 billion for UC, more than one-third less (in real dollars) than Gov. Davis provided more than a decade before.

• At the same time that governors have cut support for UC by one-third, the university’s student body has grown by nearly one-third: from 183,000 to 238,000 students as UC continued to meet its Master Plan obligations.

• While Governor Brown appealed to UC students to help pass Proposition 30 in 2012, he has only allocated 4.5% of the money it raised to UC.

UC’s leaders have responded to these unprecedented cuts by reducing budgets for teaching and research, boosting class sizes, shifting administrative tasks to faculty (leaving less time for students and research), admitting more out-of-state students, and massive tuition hikes that tripled tuition in 15 years.

Along with his legacy of high-speed trains and long-distance water tunnels, Governor Brown needs to restore the promise of the California Master Plan for Higher Education:

• He should budget for all public higher education, including the State University and Community College systems, at levels that will return them to where they were in 2001-2002, adjusted for inflation and student population growth.

• Tuition should not merely be capped but rolled back to 2001-2002 levels, inflation adjusted ($4,717 for the University of California, compared to the $13,860 planned for UC next year).

Unlike many dreams, offering affordable, high quality public higher education to all is a bargain. It would cost the median California household just $50 a year. (Details of calculation at http://keepcaliforniaspromise.org/3553/restore-2013-14.)

The UC Regents and President Napolitano must represent not only the institutional interests of UC students, staff and faculty but also the fundamental public interest of all Californians to restore one of the few fair-minded systems of advancement still open to anyone, from any background, who works hard and demonstrates talent.

How much will it cost us to restore public higher education in 2013-14

Read “Financial Options for Restoring Quality and Access to Public Higher Education in California: 2013-14” below or download a PDF of it. If you’re really a policy wonk, download the spreadsheets behind this report.


WORKING PAPER

FINANCIAL OPTIONS FOR RESTORING QUALITY AND ACCESS TO PUBLIC HIGHER EDUCATION IN CALIFORNIA: 2013-14

Stanton A. Glantz
Professor of Medicine
American Legacy Foundation Distinguished Professor in Tobacco Control
University of California San Francisco
Chair, University of California Systemwide Committee on Planning and Budget (2005-6)
Vice President, Council of UC Faculty Associations
glantz@medicine.ucsf.edu

Eric Hays
Executive Director of, Council of UC Faculty Associations
info@cucfa.org

(December, 2013)
Council of UC Faculty Associations
1270 Farragut Circle
Davis, CA 95618
Phone: (888) 826-3623

 

EXECUTIVE SUMMARY

It is widely recognized that large reductions in state funding and sizeable increases in student fees have eroded quality and accessibility in California’s three-segment system of public higher education: the University of California, California State University and California Community Colleges. This report estimates what it would cost – through restored taxpayer funding or tuition increases — to restore the system’s historic quality while accommodating the thousands of qualified students excluded by recent budget cuts. This working paper considers state funding, student fees and accessibility to answer three basic questions about the public higher education system in California:

#1. How much would it cost taxpayers to push the “reset” button for public higher education, restoring access and quality (measured as per-student state support) while rolling back student fees to 2000-01 levels, adjusted for inflation?

Answer: It would cost taxpayers $6.9 billion.

#2. Absent restoration of taxpayer support for public higher education, how much more would student fees need to be increased to restore the level of per-student resources available in 2000-01?

Answer: UC fees would have to increase over the current year’s fees by $9,646 (to a total of $22,846 per year) and CSU fees would have to increase by $3,646 (to a total of $9,118 per year); CCC fees would not need to increase.

#3. If the Governor and Legislature were to decide to push the “reset” button, — reinstating the quality and accessibility standards of the Master Plan by returning state support and student fees to 2000-01 levels, adjusted for inflation — what would it cost the typical California taxpayer?

Answer: It would cost the median California taxpayer about $50.


Introduction:

Beginning with Governor Gray Davis’ 2001-2 budget year, accelerating with Governor Arnold Schwarzenegger’s Compact for Higher Education, [1] and continuing under Governor Jerry Brown, higher education in California has suffered large reductions in state funding. Governor Brown has begun to reinvest in higher education since the passage of proposition 30 last year, but these increases do not yet make up for the $1.8 billion cut Brown made to California’s public higher education his first year as Governor. These reductions have effectively abandoned the California Master Plan for Higher Education [2] promise of high quality, low cost public higher education for all, through an articulated system consisting of the University of California, California State University and California Community Colleges. Over the past decade California has consistently spent less than most states per higher education student, and public higher education funding – even including massive tuition/fee increases – has fallen quickly in California relative to the United States as a whole in recent years.

 

figure1

Data: State Higher Education Executive Officers, http://www.sheeo.org/finance/shef-home.htm

 

In response to large cuts in state funding, fees at UC and CSU have increased much faster than at colleges in the US as a whole (Figure 2). While these fee increases have generally been framed as responses to the State’s immediate budgetary problems, they are also congruent with the explicit public policy choice, based on conservative free market principles and embodied in Governor Schwarzenegger’s Compact for Higher Education, to shift higher education from a public good provided by society as a whole through taxation to being a private good purchased through user fees.

 

figure2
 

This shift in public policy is stated explicitly in the 2004 Compact on Higher Education between Governor Schwarzenegger and the UC President and CSU Chancellor: “In order to help maintain quality and enhance academic and research programs, UC will continue to seek additional private resources and maximize other fund sources available to the University to support basic programs. CSU will do the same in order to enhance the quality of its academic programs.” Until this point, the state was viewed as the primary source of support for “basic programs” with private sources being used for additional initiatives.

These rapid fee increases in California have been halted in recent years, but fees are still much higher at UC than they would have been if tuition had increased at the rate of the rest of US public 4-year schools.

This working paper seeks to tie together the three elements of change: cuts in state funding, fee increases, and declines in quality (measured as per student expenditures). It takes as its base year 2000-01, the last year that California higher education was reasonably financially intact before the recent large fee increases. This paper addresses three questions:

  1. How much would it cost taxpayers to push the “reset” button for public higher education, restoring access and quality (measured as per-student state support) while rolling back student fees to 2000-01 levels, adjusted for inflation?
  2. Absent restoration of taxpayer support for public higher education, how much more would student fees need to be increased to restore the level of per-student resources available in 2000-01?
  3. If the Governor and Legislature were to decide to push the “reset” button — reinstating the quality and accessibility standards of the Master Plan by returning state support and student fees to 2000-01 levels, adjusted for inflation — what would it cost the typical California taxpayer?

 

Answer No. 1: Returning quality and fees to the level of 2000-01 would cost taxpayers $6.9 billion.

By restoring state funding to 2000-01 levels, it would be possible to return student fees to the levels of 2000-01 (adjusted for inflation) while maintaining quality (measured as total per student funding). Specifically, annual fees at UC would be rolled back to $5,379 (from $13,200), for CSU to $2,495 (from $5,472) and CCC to $299 (from $920).

Table 1 shows the calculations that produced this number.[3] We begin with the numbers of full time equivalent (FTE) students in each of the three sectors of California higher education and total state general funds supplied to each sector,[4] then divide one by the other to obtain the state funding per student FTE. Next we adjust the 2000-01 dollar amounts for inflation to their equivalents for 2013-14 and subtract the actual levels of funding per student currently enrolled in each sector to determine the funding shortfall compared to 2000-01.

Restoring full state funding for existing enrollments would cost a total of $4.6 billion. These calculations do not tell the whole story, however, because all three sectors have responded to resource cuts by admitting fewer students than they would under the Master Plan. Providing funding to accommodate students who have been forced out of the higher education system would raise this number to $6.9 billion.

 

table1
 

Answer No. 2: Restoring the public higher education system for all students only by increasing student fees would require raising UC fees an additional $9,646 (to a total of $22,846 per year), and CSU fees by $3,646 (to $9,118 per year). CCC fees would not have to increase.

Table 2 outlines the calculations that led to these numbers. The overall approach is the same as in Table 1, except that rather than restoring per student total expenditures by increasing state support, it is done by increasing student fees. Calculations for UC and CSU assume that it continues its “high fee high aid” policy of allocating 33 percent of fees to student aid.[5] The total funding per student used as a measure of quality is the sum of state funding and net tuition and fees after deleting the fee amounts returned to aid.

 

table2
 

Answer No. 3: Restoring public higher education while returning student fees to 2000-01 levels would cost the median California taxpayer an additional $50.

Table 3 outlines these calculations. We obtained the distribution of taxes paid by adjusted gross income from the Franchise Tax Board for 2011[6] the most recent year available, then allocated the $6.9 billion it would cost to restore public higher education to 2000-01 proportionately across all taxpayers. Note that the categories are for individual filers (joint filers are counted twice to arrive at a count of individual filers), partnerships and Subchapter S corporations, as well as corporations that pay income taxes.

For the median personal income taxpayer, restoring the entire system while rolling back student fees to what they were a decade ago would cost about $50 next April 15. For the two-thirds of state taxpayers with taxable incomes below $70,000, it would cost $147 or less.

Income taxes are presented as one option, simply to illustrate the cost for typical taxpayers. Personal and corporate income taxes are only 65 percent [7] of all state revenues; part of the $6.9 billion could be allocated to other taxes, which would lower the effect on individual income tax payers. We also assume that the costs would be distributed as a uniform surcharge across all tax categories. If the cost were allocated more or less progressively, that would also affect impact on individual taxpayers.

 

table3
 

Limitations:

The calculations outlined in this working paper are all based on publicly available numbers and do not benefit from models of enrollment dynamics that may be maintained by state agencies or the three segments of the California public higher education system. The estimates do not account for price elasticity: as tuition and fees increase, some students decide not to attend public higher education in California, which will reduce student demand.

We assume, based on public statements and documents, that enrollment at California’s public higher education institutions has been constrained by their budgets.

Finally, the distribution of taxes is based on 2011, the most recent time for which data are available; this distribution will be slightly different in 2013.

These calculations will be updated and subsequent versions of this Working Paper will be released as better data become available.

 


[1] The full text of the Compact has been removed from the budget.ucop.edu site, but we have a copy of it at http://keepcaliforniaspromise.org/wp-content/uploads/2012/09/2005-11compactagreement.pdf

[2] The full text of the Master Plan is at http://www.ucop.edu/acadinit/mastplan/MasterPlan1960.pdf. For a discussion of the history and current status of the Master Plan, see Legislative Analyst Office, “The Master Plan at 50: Assessing California’s Vision for Higher Education,” November, 2009, available at http://www.lao.ca.gov/laoapp/PubDetails.aspx?id=2141

[3] The spreadsheet used to obtain all the results in this working paper is available at http://keepcaliforniaspromise.org/3553/restore-2013-14

[4] FTE data comes from the individual higher education systems, state expenditure data comes from the Legislative Analyst’s Office available at http://lao.ca.gov/sections/econ_fiscal/Historical_Expenditures_Pivot.xls

[5] See page 16 of http://www.assembly.ca.gov/acs/committee/c2/hearing/2005/april%2020%20%202005-uc%20csu-%20public-%20cm.doc

[6] State income tax revenue by adjusted gross income class and state income tax revenue from corporations: http://www.ftb.ca.gov/aboutFTB/Tax_Statistics/2011.shtml

[7] Governor’s Budget Revenue Estimates: http://www.ebudget.ca.gov/pdf/BudgetSummary/RevenueEstimates.pdf

Note:  This post corrected two typos in November 2014.

Faculty Association President Meister's Op-ed on SB 520

by Robert Meister

After a decade of skyrocketing tuition, Sacramento politicians have seized on a new gimmick to avoid paying for the kind of low-cost, high quality college education California used to guarantee all its students.

SB520, sponsored by Senate Majority Leader Steinberg, proposes to “solve” the problem of over-enrolled gateway courses at California’s public universities and community colleges by requiring them to grant “full academic credit” for “comparable” courses completed on new for-profit online platforms (such as Coursera and Udacity) and existing for-profit schools (such as Kaplan and Straighterline).

This solution appears to be a zero-cost proposition for California’s taxpayers and students because many of the new online courses are presently free, except for the cost of providing certificates of completion.

The problem with this too-good-to-be true solution is that it is too good to be true.

As soon as SB520 becomes law, sellers of certificates of completion for online courses would find themselves in the new—legislatively-created—business of selling guaranteed transfer credits redeemable at any public university or college that admits the student to a degree program.

SB520 places no limits on what these for-profit providers could charge for these certificates despite the fact that the universities or colleges would have to honor them. At the same time, as budget cuts make access to gateway courses scarcer (particularly at the community colleges), SB520 would create windfall profits for the private sector that will not be burdened with the infrastructure or quality controls that have made public university and community college degrees valuable.

The long term result will be higher costs for students and a continuing decline in the quality of their publicly-funded education, all in the name of removing bottlenecks in lower division required courses that cuts in state funds have created.

SB520 would establish for the first time anywhere a system of legislatively-mandated transfer credits between a public higher education system and the for-profit sector of education providers. This hasty and ill-conceived bill is a legislative giveaway to a growing private industry with no commensurate public benefit or regulation.

Our public leaders should instead concentrate on restoring the promise of the low cost and high quality public higher education that built California.

How much will it cost us to restore public higher education in 2012-13 – updated with January 2013 state budget data

Read “Financial Options for Restoring Quality and Access to Public Higher Education in California” below or download a PDF of it (January 2013, 7 pp.) If you’re really a policy wonk, download the spreadsheets behind this report.


WORKING PAPER

FINANCIAL OPTIONS FOR RESTORING QUALITY AND ACCESS TO PUBLIC HIGHER EDUCATION IN CALIFORNIA: 2012-13

Stanton A. Glantz
Professor of Medicine
American Legacy Foundation Distinguished Professor in Tobacco Control
University of California San Francisco
Chair, University of California Systemwide Committee on Planning and Budget (2005-6)
Vice President, Council of UC Faculty Associations
glantz@medicine.ucsf.edu

Eric Hays
Executive Director of, Council of UC Faculty Associations
info@cucfa.org

(January 11, 2013)
Council of UC Faculty Associations
1270 Farragut Circle
Davis, CA 95618
Phone: (888) 826-3623

 

EXECUTIVE SUMMARY

It is widely recognized that large reductions in state funding and sizeable increases in student fees have eroded quality and accessibility in California’s three-segment system of public higher education: the University of California, California State University and California Community Colleges. This report estimates what it would cost – through restored taxpayer funding or tuition increases — to restore the system’s historic quality while accommodating the thousands of qualified students excluded by recent budget cuts. This working paper considers state funding, student fees and accessibility to answer three basic questions about the public higher education system in California:

#1. How much would it cost taxpayers to push the “reset” button for public higher education, restoring access and quality (measured as per-student state support) while rolling back student fees to 2000-01 levels, adjusted for inflation?

Answer: It would cost taxpayers $6.405 billion.

#2. Absent restoration of taxpayer support for public higher education, how much more would student fees need to be increased to restore the level of per-student resources available in 2000-01?

Answer: University of California fees would have to increase over the current year’s fees by $10,491 (to a total of $23,721 per year), California State University fees would have to increase by $2,470 (to a total of $8,989 per year); California Community College fees would not have to increase.

#3. If the Governor and Legislature were to decide to push the “reset” button — reinstating the quality and accessibility standards of the Master Plan by returning state support and student fees to 2000-01 levels, adjusted for inflation — what would it cost the typical California taxpayer?

Answer: It would cost the median California taxpayer about $48.


Introduction:

It is widely recognized that beginning with Governor Gray Davis’ 2001-2 budget year, accelerating with Governor Arnold Schwarzenegger’s Compact for Higher Education, [1] and now continuing under Governor Jerry Brown, higher education in California has suffered large reductions in state funding. These reductions have effectively abandoned the California Master Plan for Higher Education [2] promise of high quality, low cost public higher education for all through an articulated system consisting of the University of California, California State University and California Community Colleges. California has consistently spent less than most states per higher education student (Figure 1).

Data: State Higher Education Executive Officers, http://www.sheeo.org/finance/shef-home.htm

At the same time, fees at UC and CSU have increased much faster than at colleges in the US as a whole (Figure 2). While these fee increases have generally been framed as responses to the State’s immediate budgetary problems, they are also congruent with the explicit public policy choice, based on free market principles and embodied in Governor Schwarzenegger’s Compact for Higher Education, to shift higher education from a public good provided by society as a whole through taxation to being a private good purchased through user fees.

Source: College Board, table 4a of http://trends.collegeboard.org/college_pricing/

This shift in public policy is stated in the 2004 Compact on Higher Education between Governor Schwarzenegger and the UC President and CSU Chancellor: “In order to help maintain quality and enhance academic and research programs, UC will continue to seek additional private resources and maximize other fund sources available to the University to support basic programs. CSU will do the same in order to enhance the quality of its academic programs.” Until this point, the state was the primary source of support for “basic programs” with private sources being used for additional initiatives.

This working paper ties together the three elements of change: drops in state funding, fee increases, and declines in quality (measured as per student expenditures). It takes as its base year 2000-01, the last year that higher education was reasonably financially intact before the recent large fee increases. This paper addresses three questions:

  1. How much would it cost taxpayers to push the “reset” button for public higher education, restoring access and quality (measured as per-student state support) while rolling back student fees to 2000-01 levels, adjusted for inflation?
  2. Absent restoration of taxpayer support for public higher education, how much more would student fees need to be increased to restore the level of per-student resources available in 2000-01?
  3. If the Governor and Legislature were to decide to push the “reset” button — reinstating the quality and accessibility standards of the Master Plan by returning state support and student fees to 2000-01 levels, adjusted for inflation — what would it cost the typical California taxpayer?

 

Answer No. 1: Returning quality and fees to the level of 2000-01 would cost taxpayers $6.405 billion.

By restoring state funding to 2000-01 levels, it would be possible to return student fees to the levels of 2000-01 (adjusted for inflation) while maintaining quality (measured as total per student funding). Specifically, annual fees at UC would be rolled back to $5,278 (from $13,230), for CSU to $2,449 (from $6,519) and for CCC to $439 (from $1,080).

Table 1 shows the calculations that produced this number.[3] We begin with the number of full time equivalent (FTE) students in each of the three sectors of California higher education and total state general funds supplied to each sector,[4] then divide one by the other to obtain the state funding per student FTE. Next we adjust the 2000-01 dollar amounts for inflation to their equivalents for 2012-13 and subtract the actual levels of funding per student currently enrolled in each sector to determine the funding shortfall compared to 2000-01.

Restoring full state funding for existing enrollments would cost a total of $4.677 billion. These calculations do not tell the whole story, however, because all three sectors have responded to resource cuts by admitting fewer students than they would under the Master Plan. Providing funding to accommodate students who have been forced out of the higher education system would raise this number to $6.405 billion.

table1-jan2013
 

Answer No. 2: Restoring the public higher education system for all students only by increasing student fees would require raising UC fees an additional $10,491 (to a total of $23,721 per year), and CSU fees by $2,470 (to $8,989 per year). CCC fees would not have to increase.

Table 2 outlines the calculations that led to these numbers. The overall approach is the same as in Table 1, except that rather than restoring per student total expenditures by increasing state support, it is done by increasing student fees. Calculations for UC and CSU assume that it continues its “high fee high aid” policy of allocating 33 percent of fees to student aid.[5] The total funding per student used as a measure of quality is the sum of state funding and net tuition and fees after deleting the fee amounts returned to aid.

table2-jan2013
 

Answer No. 3: Restoring public higher education while returning student fees to 2000-01 levels would cost the median California taxpayer an additional $48.

Table 3 outlines these calculations. We obtained the distribution of taxes paid by adjusted gross income per tax return from the Franchise Tax Board 2009 (for tax year 2008),[6] the most recent year available, then allocated the $6.405 billion it would cost to restore public higher education to 2000-01 proportionately across all taxpayers. Note that the categories are for tax returns, not individuals, so the results are for joint returns (families), individual returns, partnerships and Subchapter S corporations, as well as corporations that pay income taxes. Thus, the numbers per taxpayer (as opposed to tax return) for joint returns would be half the numbers in Table 3.

For the median personal income tax return, restoring California’s entire higher education system while rolling back student fees to what they were a decade ago (adjusted for inflation) would cost $48 next April 15. For the two-thirds of state tax returns with taxable incomes below $60,000, it would cost $123 or less. Tax returns with the top 5% of adjusted gross income — $400,000 to $499,999 – would increase by $4,119.

It is also worth noting that our income tax distribution data lags our other data by several years and is just now falling into the deficit (2008 year data), which has an effect on the calculation of the median return. For comparison, using 2007 year data the median return would pay $41 to restore higher education in 2012-13. Certainly in 2012 the state’s economy looks a lot better than it did in 2008, so the actual cost to the median return is likely lower than $48.

Income taxes are presented as one option, simply to illustrate the cost for typical taxpayers. Personal and corporate income taxes are only 70 percent [7] of all state revenues; part of the $6.405 billion could be allocated to other taxes, which would lower the effect on individual income tax payers. We also assume that the costs would be distributed uniformly across all tax categories. If the cost were allocated more or less progressively, that would also affect impact on individual taxpayers.

table3-jan2013
 

Limitations:

The calculations outlined in this working paper are all based on publicly available numbers and do not benefit from models of enrollment dynamics that may be maintained by state agencies or the three segments of the California public higher education system. The estimates do not account for price elasticity: as tuition and fees increase, some students decide not to attend public higher education in California, which will reduce student demand. We assume, based on public statements and documents, that enrollment at California’s public higher education institutions has been constrained by their budgets. Finally, the distribution of taxes is based on a 2009 report of tax year 2008, the most recent time for which data are available; this distribution will be different in 2012.

These calculations will be updated and subsequent versions of this Working Paper will be released as better data become available.

 


[1] The full text of the Compact has now been removed from the budget.ucop.edu site, but we have a copy of it at http://clearsighted.com/keepcaliforniaspromise.org/wp-content/uploads/2012/09/2005-11compactagreement1.pdf.

[2] The full text of the Master Plan is at http://www.ucop.edu/acadinit/mastplan/MasterPlan1960.pdf. For a discussion of the history and current status of the Master Plan, see Legislative Analyst Office, “The Master Plan at 50: Assessing California’s Vision for Higher Education,” November, 2009, available at http://www.lao.ca.gov/laoapp/PubDetails.aspx?id=2141.

[3] The spreadsheet used to obtain all the results in this working paper is available at http://keepcaliforniaspromise.org/

[4] Student FTE data comes from the individual higher education systems, state expenditure data comes from the Legislative Analyst’s Office available at http://lao.ca.gov/laoapp/LAOMenus/lao_menu_economics.aspx and supplemented for recent years by the Governor’s 2012 budget: http://www.ebudget.ca.gov/StateAgencyBudgets/6013/agency.html

[5] See page 16 of http://www.assembly.ca.gov/acs/committee/c2/hearing/2005/april%2020%20%202005-uc%20csu-%20public-%20cm.doc.

[6]State income tax revenue by adjusted gross income class and state income tax revenue from corporations: http://www.ftb.ca.gov/aboutFTB/Tax_Statistics/2009.shtml

[7] Governor’s Budget Revenue Estimates: http://www.ebudget.ca.gov/pdf/BudgetSummary/RevenueEstimates.pdf

Where's UC Online Now and How Will We Get Our $7 Million Back?

by Wendy Brown, Outgoing Co-Chair, Berkeley Faculty Association

On July 16th and 17th, The New York Times featured stories on the launching of Coursera, a blockbuster online higher education project emerging from a spectacularly successful Stanford experiment two years ago.

Still in the early stages of development but already reaching hundreds of thousands of learners, Coursera promises to disseminate academic knowledge for free to anyone with access to a computer. The courses are not offered for credit although certification of completion is available. This “impediment” (which reminds us that online learning is not a direct substitute for classroom learning) does not seem to be one. Millions around the world are registering for fall 2012 Coursera courses.Many elite universities have signed on to Coursera, including Princeton, Stanford, Penn, Duke, Hopkins and a range of publics, among them Illinois, Michigan and Virginia. The University of California (with the exception of UCSF) is notably missing from the list of participating universities.

Where is UC? As you will recall, last year Berkeley Law School Dean Edley borrowed $7 million from UCOP to launch a UC for-profit online higher ed project, one that he promised would lead the way in the elite higher ed market, reap hundreds of millions of dollars for the university AND produce social justice as it extended a UC education to those who could not afford to leave home. Many of us were skeptical at the time, though our concerns were largely brushed aside. Edley also promised to raise private funds for the pilot exploration of this project. When this fundraising effort failed, he turned to the depleted coffers of UCOP to finance the pilot, claiming that it was a loan which would easily and quickly be repaid. (Why, one might ask, would UCOP fund something that major foundations, with their fingers on the pulse of online higher ed, would not?)

As Coursera and other elite online endeavors sailed the winds of open sourcing and brought ever more universities and constituencies on board, the UC online project kept shifting course. Would it provide a wholly online UC degree as Edley initially hoped? Or would it provide UC lower division courses to UC students so the University could enroll more students without expanding physical campuses or hiring more faculty? Or would it sell UC-branded courses to non-UC students (as the pilot project has done)? Would it be a substitute for, a supplement to, or a commercialized knock-off of a UC on-campus education? Would it sell the courses at the price of on-campus tuition or at a substantial discount? If the former, how would it compete with cheaper or free courses and if the latter, how would it make money? The question of when and how campus Senate committees would be involved in authorizing courses and credits was also constantly shifting and deferred.

Fast forward to the present. Dean Edley is not out front on this project any more. In fact, his leadership role appears nowhere on the UCOP website devoted to the project; he is listed only as a member of a faculty oversight committee. And UCOP Vice Provost Daniel Greenstein, Dean Edley’s partner in developing and promoting the project, has left UC for a position at the Gates Foundation.

Now in charge of UC Online is Keith Williams, a lecturer in Physical Education and Biology at UC Davis whose office is at the Hickey Gym.

So, who is responsible for repaying the $7 million loan that Edley and Greenstein got from UCOP to fund the pilot? When students renege on their loan payments, the Federal government garnishes their wages, should they be lucky enough to have any. When a department overspends its annual budget, available funds for the following year are reduced, and heads may also roll. But when an online pilot project doesn’t make its payments, what happens? Who is responsible? Who or what pays?

Shouldn’t we be able to see the loan repayment schedule for UC Online? And is it possible that we should stop throwing good money after bad, fold UC Online, sign on to Coursera, and get back to the important business of protecting what remains of UC on-campus instruction?

Brown and Yudof Bail on the Master Plan

By Bob Meister, President of CUCFA (Professor of Political and Social Thought, UCSC)

On June 27, Governor Jerry Brown vetoed language inserted by both houses of the legislature that would have tied UC funding to admitting a minimum number of students (the same enrollment target as in previous budgets). His veto message says as follows:

“Deletes provision 15 of item 6440-001-0001 from AB 1497, because the requirement contained in this provision that the University achieve an enrollment target of 209,977 resident full-time equivalent students creates unnecessary cost pressures on this item and is unnecessarily restrictive.”

Is such language no longer necessary? In the Schwarzenegger years the state budget set an enrollment target for UC and required that funds be “reverted” to the state if UC did not meet that target. Jerry Brown’s first budget maintained the goal of a minimum expected enrollment but explicitly rejected the reversion penalty. This year, the enrollment target itself was missing from the Governor’s January budget and from the May revise. After the LAO noticed its absence, the state legislature put it back.

Governor Brown’s veto means that, although Master Plan eligibility still exists on paper, the state will no longer monitor UC’s compliance with Master Plan expectations. The Governor’s veto should thus be read as a symbolic repudiation of the Master Plan’s link between UC’s state funding and its commitment to admit all eligible Californians. Maybe UC will keep its in-state enrollments constant for next year. But if you want a sense of where things are headed, just listen to President Yudof crow: “[The] bill included California resident enrollment target language that is not consistent with funding levels provided from the State… In accordance with my request the Governor vetoed the budget provisions on the enrollment target ….” (Yudof to Regents, June 29, 2012)

On Friday, June 30, Eric Hays (The Council of UC Faculty Association’s Executive Director) and Joe Kiskis (CUCFA’s VP for External Relations) attended a meeting at UCOP in which the likely outlines of the Governor’s compact with Yudof were revealed. Joe reports as follows:

In the event that Brown’s ballot initiative does pass, the governor has promised to dust off the multi-year (4-year? 5-year?) UC funding agreement that was apparently worked out between OP and the Governor during the spring and has since been on hold. The present version of this has a 6%/yr increase in state support for UC. That is the 4% previously rumored plus 2% for UCRP. In that eventuality, OP would likely ask the Regents for a 6%/yr tuition increase. (You read that right.) In the event that the ballot initiative does not pass, OP will probably ask the Regents for a tuition increase sufficient to make up for the $250M trigger, the lost $125M tuition buy out, and some other increasing fixed costs for a total increase of 20.3% to be effective Jan. 1, 2013. Yes, mid-year.

So here’s the deal. Jerry Brown will allow UC’s in-state tuition to compound, even in his best-case scenario, and has agreed with Yudof that UC will no longer be accountable for replacing California students with non-residents, each of whom yields a surplus revenue of c.$22,000. The UC campuses that displace California students, moreover, will be allowed to keep all the extra money this brings in, thereby increasing their budgetary advantage over campuses that meet what were once regarded as Master Plan expectations. (See http://cucfa.org/news/2012_jun24.php) But from now on there will be no Master Plan targets stated in the budget, and thus no official reason for the Governor or his Department of Finance to keep track of whether the UC system and its individual campuses are complying with the Master Plan’s commitment to find a place for all eligible Californians. If they don’t, who will? The California Post-Secondary Education Commission, which was created for this purpose, was abolished in last year’s budget. When the Legislature tried to fulfill this Master Plan role, the Governor used his line-item to block this at Yudof’s request.

Eric Hays has kept track of how far the Governor Brown has moved away from Master Plan language in the Schwarzenegger budgets:

  • 2010-11 (Schwarzenegger’s last year): “The Legislature expects the University of California to enroll a total of 209,977 state-supported FTES during the 2010–11 academic year. This enrollment target does not include nonresident students and students enrolled in non-state-supported summer programs. The University of California shall report to the Legislature by March 15, 2011, on whether it has met the 2010–11 academic year enrollment goal. For purposes of this provision, enrollment totals shall only include state-supported students. If the University of California does not meet its total state supported enrollment goal by at least 512 FTES, the Director of Finance shall revert to the General Fund by April 1, 2011, the total amount of enrollment funding associated with the total share of the enrollment goal that was not met.” (page 604-605 of http://www.documents.dgs.ca.gov/osp/GovernorsBudget/pdf/fbudsum_1011.pdf)
  • 2012-13 (language inserted by the Legislature and vetoed by Governor Brown): “The Legislature [emphasis added] expects the University of California to enroll a total of 209,977 state-support-ed full time equivalent students during the 2012–13 academic year. This enrollment target does not include nonresident students and students enrolled in nonstate supported summer programs. The University of California shall report to the Legislature [emphasis added] by May 1, 2013, on whether it has met the 2012–13 academic year enrollment goal.”