How much would it cost to eliminate tuition in 2015-16

This article updates our earlier paper “Financial Options for Restoring Quality and Access to Public Higher Education in California: 2015-16” to add a calculation for the cost to eliminate tuition in California’s public higher education systems while restoring access and quality. The earlier paper calculated the cost to fund higher education at the levels it was funded at for many decades in the past, levels that helped avoid student debt.

California has intended higher education to be tuition free since the creation of the University of California in 1868: “as the income of the University shall permit, admission and tuition shall be free to all residents of the state,” (“The Organic Act–Chapter 244 of the Statutes of 1867-1868” section 14) and reaffirmed this desire in their “A 1960 Master Plan for Higher Education in California” (“The two governing boards reaffirm the long established principle that state colleges and the University of California shall be tuition free to all residents of the state.” A Master Plan for Higher Education in California, page 14). For some time it became somewhat ridiculed to talk of free higher education, but the most recent president election has reintroduced the idea. The leading Democrat running for president, Hilary Clinton, plans for debt free college, and her major Democrat opponent, Bernie Sanders, has a plan for free public higher education to be paid for by a federal financial transactions tax.

How much would it cost – through restored taxpayer funding – to restore the three segment system’s historic quality while accommodating the thousands of qualified students excluded by recent budget cuts? As a second calculation, how much would it cost to eliminate tuition and fees, as the Master Plan had originally intended? Table 1, below, shows the calculations that produced these numbers. We begin by assigning a base year set to the last time the state funded higher education at the historic level, which was 2000-01. As explained in the article linked to above, 2000-01 was the most recent time funding for the three segments was similar to its multi-decade levels from at least the mid-1960’s through the 1990’s.

Starting with state funding numbers and enrollment numbers for this base year, we divide one by the other to obtain the state funding per student FTE (FTE data comes from the individual higher education systems, state expenditure data comes from the Legislative Analyst’s Office). 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.

table1-10-2015

Restoring full state funding for existing enrollments would cost an additional $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. The total revenue from students in 2015-16 was about $1.5 billion. If we use state funding to cover that money, the total cost to eliminate tuition would be $7.2 billion.

If a federal funding solution is not available, what do these total costs mean to the individual California tax payer? Tables 2 and 3 outline calculations that answer that question. We obtained the distribution of taxes paid by adjusted gross income from the Franchise Tax Board for 2013, the most recent year available (state income tax revenue by adjusted gross income class and corporate income tax revenue). In table 2 we allocate 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 tax payer (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.

table2-10-2015

Table 3 repeats the process of distributing costs proportionately across all taxpayers, this time the cost to eliminate tuition across all three segments. For the median income tax payer this would be $40.

table3-10-2015

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 (Governor’s Budget Revenue Estimates) of all state revenue in 2015-16; part of the cost 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.

Reclaim California’s Higher Education Conference

Below, please find the handout that we prepared for the September 26, 2015, Reclaim Higher Education Strategic Planning Conference. It is also attached as a PDF. Professor Stanton Glantz presented the information in the handout. His slides are available as well.


Restoring the Promise of California’s Master Plan for Higher Education

“The University of California is struggling with budget woes that have deeply affected campus life. Yet the system’s nine colleges still lead the nation in providing top-flight college education to the masses… And yet American society seems to be making less of this broad effort than it once did. California, rather than making another push to bring college to the masses, is taking small steps in reverse. With state funding declining, the University of California has been enrolling fewer in-state students (even as the population keeps growing) and a greater number of affluent students from other countries and states.” — New York Times September 16, 2015[i]

  • The Master Plan was created to reduce duplication between three higher education sectors by providing specialization of missions to increase efficiency and expand opportunities for students
  • The key principles behind the Master Plan are still valid today
    • Access
    • Affordability
    • Quality
  • The Master Plan succeeded
    • California has the reputation of having the best public higher education system in the world[ii]
    • California universities emphasize upward mobility[iii]
    • California has the most effective pathway from the Community Colleges to UC and CSU[iv]
    • The efficiency created by the Master Plan’s specialization saves money[v]
    • Public higher education costs taxpayers less than subsidizing private higher ed[vi]
  • The fact that the Master Plan is embedded in state policy provides a coherent conceptual view of what public higher education should be
  • The Master Plan is still relevant today as people rediscover its principles. We know we can implement this in California, since we did it for decades
  • The crisis in higher ed is not due to the failure of the principles in the Master Plan, it is due to political decisions by politicians (mostly governors) to abandon it
    • Schwarzenegger implemented far-reaching privatization
    • Brown is cheap and offended by UC’s arrogance
    • Double hypocrisy: Politicians want higher ed to be public and accountable but don’t want to pay for it; higher ed leaders want the money but not the accountability
  • The central problem is the political decision to deprioritize higher ed and shift it from a public to a private good
    • Higher education is consistently cut more than any other major general fund program area (from 15.9% of state general fund in 1984-85 to 11.6% in 2014-15)[vii]
    • Brown’s legacy will be even weaker higher ed infrastructure
  • Reduced Access
    • In 2000 all three segment had sufficient capacity to accommodate all students[viii]
    • UC is now short capacity for 20,000 students, CSU 25,000 students, and Community colleges 450,000 students[ix]
    • California employers will face a workforce shortage of 1 million graduates within 10 years[x]
    • Private colleges cannot match the scale of public universities[xi]
    • Community Colleges’ focus on transfers to UC and CSU, combined with limited resources, means disenfranchising vocational and other programs[xii]
    • With UC and CSU enrollment constrained, increased use of community colleges for first two years, meaning increased 3rd and 4th years students at UC and CSU, will reduce access to UC and CSU for freshmen
  • Reduced Affordability
    • Fees dramatically increase
    • Dramatic increase in student debt
Funding per full time equivalent student (2015 dollars)
  UC CSU Community Colleges
  Tuition/fees State Funds Total Tuition/fees State Funds Total Tuition/fees State Funds Total
2000-01 $5,364 $23,627 $27,221 $2,488 $11,514 $13,181 $298 $3,641 $3,938
2015-16 $13,200 $12,848 $21,692 $5,472 $8,093 $11,759 $920 $4,214 $5,134
% change +146% -46% -20% +120% -30% -11% +209% +16% +30%
  • Falling Quality
    • Fee increases not large enough to cover the cuts in state funding at CSU and UC (table)
    • Students face more large lecture classes, less interaction with faculty, more scheduling difficulties
    • Lack of class capacity leads to longer times to graduation
    • California now funding higher ed at levels 20% below average of other states[xiii]
    • The legislature has asked UC to add 5,000 new students for $5,000 in state funding per student (just over 1/3 the 2015-16 or 1/5 the 2000-01 per student funding)
    • Reduced support for graduate and professional programs
  • Coping strategies have made the problem worse
    • Higher tuition
    • Reducing the number of students
    • More out of state students
    • Unrealistic efficiencies
    • More part-time adjuncts and fewer tenured faculty
    • Priorities of donor class (fancy stadiums, art museums, conference centers)
    • Cuts to state-funded public interest research
    • Money losing public-private partnerships
  • Creates a downward spiral of breaking the bond between the public and public higher ed
  • Students (especially those who used to be served by Community Colleges) have been pushed into high cost, low quality for profit schools
    • Many have been charged with deceptive or fraudulent practices or have gone bankrupt, preventing students from completing degrees[xiv]
    • Most of the increase in student loan defaults is from for-profit schools[xv]
  • Problems of reduced access and affordability have been recognized in national policy discussions
    • President Obama[xvi]
    • Democratic candidates Hillary Clinton[xvii] and Bernie Sanders[xviii]
    • Tennessee Republican Governor Bill Haslam[xix]
    • These proposals still frame higher education as a private good that some people need help purchasing rather than a public good that should be available to all
    • Not addressing quality
  • Restoring the Master Plan has been aggravated by fragmentation of higher ed advocates
    • Three sectors competition for shrinking pie
    • Students (and families) are transient, mostly interested in tuition
    • This situation is starting to change (as evidenced by this conference)
  • Solution is to restore the promise of public higher education
    • Roll back tuition and fees to 2000-1
    • Return per student funding to 2000-1
    • Fund seats for all qualified students in all three sectors
    • Return out-of-state admissions to 2000-1 levels
    • Not expensive
    • If done as an increment on the income tax, would cost the median family $31[xx]

For more information, contact Eric Hays, CUCFA Executive Director (info@cucfa.org), or Stanton Glantz, CUCFA President (glantz@medicine.ucsf.edu).

 


 

[i] http://www.nytimes.com/2015/09/17/upshot/californias-university-system-an-upward-mobility-machine.html

[ii] US News rankings are still, controversially, the standard for this type of general statement, and 6 of the 12 “Top Public Schools,” including the top 2, are California institutions: http://colleges.usnews.rankingsandreviews.com/best-colleges/rankings/national-universities/top-public

[iii] 8 of the 9 undergraduate UC campuses and 11 of the 23 CSU campuses appear on National Public Radio’s Top 50 colleges that “Emphasize Upward Mobility.” http://www.npr.org/sections/ed/2015/09/21/441417608/the-new-college-scorecard-npr-does-some-math

[iv] California utilizes all of the current best practices defined by the National Conference of State Legislatures http://www.ncsl.org/documents/educ/student-transfer.pdf

[v] Since the 1960s when the Master Plan was created, California spent less on higher education than other states. Between 1989 and 2007, California had a strong accessible higher education system despite spending an average $909 per student (in 2014 dollars) less than the US average in total state and local funding plus tuition and fees. This is according to the national association of State Higher Education Executive Officers (http://www.sheeo.org/sites/default/files/publications/All%20States%20Wavechart%202014.xlsx) who go on to estimate that 5.5% of the cost savings in California is due to the higher education mix we have, the higher community college enrollment that was designed by the Master Plan. http://www.sheeo.org/sites/default/files/SHEEO002_2014AdtlDocs_TechB_Rd2.pdf

[vi] Because the endowment earnings are not taxed, the public subsidizes students at private universities. When this tax subsidy is included in calculations of the cost to taxpayers of each higher education student, Stanford costs taxpayers 6 times as much as UC and 15 times as much as CSU. (http://nexusresearch.org/wp-content/uploads/2015/06/Rich_Schools_Poor_Students.pdf)

[vii] http://www.lao.ca.gov/sections/econ_fiscal/Historical_Expenditures_Source.xlsx

[viii] http://www.cpec.ca.gov/completereports/2000reports/00-01.pdf

[ix] The California Postsecondary Education Commission, which had the responsibility for long-range planning for California’s public higher education, was defunded by Governor Brown and closed its doors at the end of 2011. The latest CPEC enrollment forecast is at: http://www.cpec.ca.gov/completereports/2010reports/10-08.pdf

[x] http://www.ppic.org/main/publication.asp?i=835

[xi] http://www.sfgate.com/opinion/openforum/article/California-needs-to-reinvest-in-public-higher-5888598.php

[xii] During the recession, “course sections (classes) were reduced by approximately 25 percent due to state funding reductions. Non-credit course sections saw a bigger decrease of approximately 38 percent.” http://www.californiacommunitycolleges.cccco.edu/PolicyInAction/KeyFacts.aspx

[xiii] http://www.sheeo.org/sites/default/files/publications/All%20States%20Wavechart%202014.xlsx

[xiv] http://www.law360.com/articles/669162/the-for-profit-school-a-bankruptcy-trend-worth-watching

[xv] http://www.brookings.edu/~/media/projects/bpea/fall-2015_embargoed/conferencedraft_looneyyannelis_studentloandefaults.pdf

[xvi] Obama’s plan (as described by the NYT): http://www.nytimes.com/2015/08/15/your-money/revised-program-will-reduce-student-loan-repayments.html

[xvii] https://www.hillaryclinton.com/p/briefing/factsheets/2015/08/10/college-compact/

[xviii] http://www.sanders.senate.gov/download/collegeforallsummary/?inline=file

[xix] http://driveto55.org/initiatives/tennessee-promise/

[xx] http://keepcaliforniaspromise.org/473424/reset-2015-16

Restoring the Promise of Higher Education: A Problem California Can Solve Now

By Stanton A. Glantz, Professor of Medicine, UCSF

Once, California had abundant water and few foresaw the challenge of global warming. Governor Brown, recognizing that it is impossible to simply roll back the clock on these problems, is leading California to confront this changed reality with enormous efforts that have uncertain outcomes. But there is one problem in which the governor could roll back the clock to when California worked better: higher education.

Once, California’s three sector system of higher education – its Community Colleges, California State University, and the University of California – formed a high quality integrated system of accessible opportunity in which any California student could find an appropriate seat to advance their dreams. California had the best higher education system in the world, while it cost the state less, per student, than other states spent on higher education. And the system’s graduates built California.

Now, after years of budget cuts and privatization, students are paying more for less. The combination of high costs, increasing out-of-state students, and muddled Legislative policy is forcing students out of UC into CSU and the Community Colleges, which are, in turn, forcing the Community Colleges’ traditional students into for-profit “colleges” that cost taxpayers billions and leave students with nothing but debt.

Unlike the drought and global warming, we could roll back the clock and solve this problem overnight if Governor Brown provided the leadership to do it.

Governor Brown appropriately has recognized that high tuition is a problem, but his response is actually making the situation worse. He has started his Multi-Year Stable Funding Plan for higher education at the depths of the Great Recession when the schools were already terribly wounded. Then he has promised state funding increases for UC that are so small that when they are combined with tuition freezes they are actually further cuts, relative to inflation. Rather than gradually rebuilding California higher education, this plan is a guaranteed slow bleeding to death of California’s public higher education systems.

Rather than exacerbate the problem, Governor Brown should press the “reset” button on all of California higher education and restore what California had in 2000-1, the last time that our higher education system was healthy.

· Return fees to 2000 levels (adjusted for inflation), for example cutting fees from $13,200 to $5,300 at UC

· Return state funding per student to where it was

· Fund seats for the thousands of California students who have been pushed out of the system

· Roll out-of-state UC admissions back to where they were (a 2/3 cut)

· Roll back spending on administration to where it was before privatization stated (which would be an 8% cut in total cost of UC’s senior leadership)

Doing so would restore quality, affordability and opportunity to California’s students, wipe out almost all new student debt, and stop forcing students out of the community colleges into predatory private schools.

Pushing the reset button is affordable. If done as an income tax surcharge, it would cost half of California’s families less than $31 a year and 40% of them under $10 a year. (And it would only cost millionaires $5000.)

A coalition of stakeholder organizations representing students and employees across all three systems has come together to press not only for full funding but also for a re-commitment to the California Master Plan for Higher Education. Reclaim California Higher Education

(www.reclaimcahighered.org/) advocates for a return to the vision of higher education affordability, accessibility, and quality for all Californians.

This spring, its members are talking to legislators across the state, urging them to restore adequate state funding to higher education, starting with the pending 2015-16 state budget. Now is the time to implement both increased state investment and institutional reforms. As the group stated in a letter to Gov. Brown in early March, “Tuition and administrative costs are skyrocketing, while enrollment of in-state students is not keeping pace with the needs of our economy. Our institutions of higher learning should, once again, be engines of economic growth and good jobs in our communities.”

Restoring the promise of California higher education is something that we can and should do. And, unlike the drought and global warming, it is something we can accomplish right now.

Stanton A. Glantz, PhD, is Professor of Medicine and American Legacy Foundation Distinguished Professor of Tobacco Control at UCSF, vice president of the Council of UC Faculty Associations, and past chair of the UC Systemwide Committee on Planning and Budget

Return out-of-state admits to UC to 10-12% of freshmen

UC has dramatically increased admissions of non-resident students since 2009, from the historical 10 to 12 percent system-wide up to 30% in 2014.

The University has argued that the extra $24,000 in non-resident tuition these students pay is used to pay for more seats for California resident students. UC ignores the fact that about half the non-resident students come from other states and can pay in-state tuition after their first year.

California families are, of course, worried that the increase in non-resident admissions have reduced the availability of UC to their children.[1] UC claims that it has not curtailed enrollment of California students, that it has added seats to accommodate these extra non-resident students.

UC has indeed added more seats to accommodate out-of-state students. Even as non-resident admits have shot up in recent years, the percent of California high school student admits has stayed around 15% – well above the 12.5% of California high school graduates that UC is supposed to admit under the terms of the California Master Plan for Higher Education.[2]

resident-and-non-resident-admissions

But increased non-resident enrollments are not without harm. The harm has not been done to accessibility to the University, but to the quality of the education UC provides. UC has been increasing the number of students without increasing investment in teaching them. Enrolling more students without hiring more faculty has caused the ratio of students per faculty to rise 12% above its historic norm, and UC has eliminated much of its building maintenance.[3] This forces students to spend more time in giant, poorly maintained lecture halls or in online courses that provide less individual attention.

Resetting California Higher Ed to 2000-1 levels of tuition and taxpayer support[4] should include cutting out-of-state freshman admissions by two-thirds (back to 10-12% of admissions) to restore historic quality to a California higher education.


[1] “…parents fear that out-of-state students are cutting into slots that could go to Californians, and, as Assembly Speaker Toni Atkins, D-San Diego, said Tuesday, “UC’s job is to educate California students, not wait-list them.”” Source: http://www.sacbee.com/opinion/editorials/article12342239.html

[2] Data source: http://dq.cde.ca.gov/dataquest/dataquest.asp. Accessed March 8, 2015.

[3] “Budget for Current Operations: 2014-15.” http://regents.universityofcalifornia.edu/regmeet/nov13/f6attach.pdf. Accessed March 8. 2015.

[4] “Financial Options For Restoring Quality And Access To Public Higher Education In California: 2015-16.” http://keepcaliforniaspromise.org/473424/reset-2015-16. Accessed March 8. 2015.

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.