Schwarzenegger is not just following a national trend to cut higher ed

Is the privatization of UC just part of a national trend beyond the control of UC leadership and Governor Schwarzenegger?

No.

In a September 27, 2009, New York Times interview UC President Mark Yudof was asked: “UC is facing a budget shortfall of at least $753 million, largely because of cuts in state financing. Do you blame Governor Schwarzenegger for your troubles?” Rather than holding Schwarzenegger accountable for the massive cuts he has imposed on UC and CSU, Yudoff responded: “I do not. This is a long-term secular trend across the entire country. Higher education is being squeezed out. It’s systemic.”

This is a commonly repeated trope, but is it true? No. The blue line in the chart below tracks the amount of money per student (FTE), adjusted for inflation that all of the states’ public higher education systems have spent over the last three decades: the line fluctuates a bit but does not descend. In contrast, the gold line, which represents the State of California’s real spending per UC student drops markedly after 2002. (The gold line is far above the blue line because UC is a Tier 1 four-year university; the blue line traces the national average for all public higher education, including two-year community colleges.) This chart shows the rapid decline in state support for UC students is not typical of a national trend.

appropriations
Sources: State Higher Education Executive Officers, California Legislative Analyst’s Office.

Since Arnold Schwarzenegger became Governor of California, state funding of UC, per student, has dropped 30 percent. The state contributes less than half of what it did a decade ago

As envisioned in the Compact for Higher Education  between the Governor and UC and CSU, UC has, for all practical purposes, abandoned the California Master Plan for Higher Education and is rapidly privatizing by dramatically shifting costs on to students. The chart below indicates that, adjusted for inflation, UC tuition (gold line) is well ahead of the rising curve of public four-year university tuitions (blue line) across the country. UC is not just following a national trend.

tution_and_fees
Sources: College Board, California Post Secondary Education Commission

This tuition chart also punctures the idea that UC tuition (and fees) is well below other public universities. While UC tuition tracked the average of other four year public colleges in the past, it increased dramatically faster in response to large cuts imposed by Republican Pete Wilson, recovered for a time under Democrat Gray Davis, then exploded after Gov. Schwarzenegger’s forced his Compact on UC and CSU in 2004-5. By 2008-9 UC cost students and parents 22 percent more than the national average. If the trend-line for all states continues in the 2009-10 and 2010-11 years, then UC tuition will be twice that of the average public university.

The red and blue bands demonstrate that gubernatorial party affiliation is not a strong predictor of support for higher education. Past Democrats have been both good and bad, as have past Republicans. In terms of cutting public support and transferring costs to UC families, however, Gov. Schwarzenegger is in a league of his own.

First meeting of the Gould Commission scheduled

UCOP’s press release:

The University of California Commission on the Future will meet for the first time on Tuesday, Sept. 8, at UC San Francisco’s Mission Bay Community Center. The commission was created by Board of Regents Chairman Russell S. Gould to help ensure excellence, innovation and access to opportunity across the UC system amid acute financial challenges. The commission is co-chaired by Gould and UC President Mark G. Yudof.; they will open the meeting at 1:30 p.m. and describe the charge to the commission. Jane V. Wellman, executive director of the Delta Project on Postsecondary Education Costs, Productivity and Accountability, will deliver the keynote speech following their remarks.

The commission and five working groups — focusing on the size and shape of UC, its education and curriculum, access and affordability, funding strategies and research strategies — will meet seven times through March 2010 to consider, among other issues:

  • What is the right size and shape of the university going forward? Where should it grow, or should it?
  • What educational delivery models will both maintain quality and improve efficiency for UC’s future?
  • How can UC maximize traditional and alternative revenue streams in support of the mission?

A live audio broadcast of the meeting will be accessible at california.granicus.com/ViewPublisher.php?view_id=2. The agenda is posted at www.universityofcalifornia.edu/regents/regmeet/commission.pdf.

  • WHEN: 1:30-5 p.m. PDT
    Tuesday, Sept. 8, 2009
  • WHERE: Fisher Banquet Room, Mission Bay Community Center
    1675 Owens St.
    University of California, San Francisco, Mission Bay Campus
  • RSVP: Media representatives planning to attend are encouraged to RSVP to Alfred White, UCOP Communications.

Electronic media should mention any special logistical needs as they RSVP.

Directions to the Mission Bay Community Center (1675 Owens St.): www.ucsf.edu/maps/directions-to-ucsf-mission-bay/

Parking is available, for a fee, in the Community Center parking garage.

UCSF shuttles run regularly from the 16th Street-Mission BART station to the community center. Shuttle timetables (red line) are available online.

Understanding the Crisis at UC (2 page handout)

(Download PDF for printing)

Why are student fees skyrocketing at the same time courses are being cut and faculty and staff furloughed, reducing classes and services to students?

Throughout his term in office, Governor Schwarzenegger has cut state support for higher education and sought to shift most of its costs to its immediate users: students and their families.

In 2004, California’s higher education leaders accepted the Governor’s framework.  The President of UC, Bob Dynes, and his counterpart at CSU, Charles Reed, signed the “Higher Education Compact: Agreement Between Governor Schwarzenegger, the University of California, and the California State University 2005-06 through 2010-11,” which represented a fundamental shift in the model for supporting higher education in California. This abandoned the view of higher education as a public good and redefined it as a private good.  The University accepted a $169 million budget cut (out of its $4.4 billion core budget) and committed to fundamentally shift financing away from the state general fund and onto private sources such as student fees and wealthy donors. The Schwarzenegger-Dynes-Reed Compact states, “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.”

The large annual fee increases over recent years are not short term responses to unanticipated fiscal problems, but are an implementation of the Compact’s plan to increase fees every year at least as fast as the rise in personal income, which is about twice the rate of inflation. Because incomes have increased mostly among the wealthy, this policy made higher education less affordable for most Californians.

The fee increases, while large, have not compensated for the cuts that UC and CSU accepted.  The result: a large drop in the money available to finance core functions. The net result has been a substantial and accelerating decline in the quality of our students’ educational experience — growing class sizes, fewer courses, greater difficulty enrolling in courses, fewer teaching assistants and less student access to labs.

If the Compact was so bad, why did UC and CSU leaders accept it?

The primary reason was that Governor Schwarzenegger was threatening even bigger cuts if UC and CSU leaders rejected the Compact. More importantly, cognizant UC (and, presumably CSU) budget officials knew that there would be a major budget crisis starting around 2008, and believed that the Compact would protect UC and CSU from large cuts at that time.  However, when the anticipated budget crisis came in 2008, Governor Schwarzenegger simply reneged on his own deal and imposed another massive $1.4 billion cut in 2008 and 2009.

Isn’t the University of Michigan a good model for UC in the face of inevitably declining state support?

When the University of Michigan moved to a semi-privatized model, it reduced access for residents to allow greater enrollment of non-residents who are charged much more for tuition. Admission standards were relaxed to increase out-of-state enrollment. Over half of Michigan’s 2003 freshman class came from families with six-figure incomes in a state where only 13% of families earn that much. The result has been significantly diminished access for the residents of Michigan, especially the most disadvantaged, and a reduction in the quality of the University as seen in its drop in rankings by U.S. News and World Report.

Why isn’t anyone in UC’s leadership effectively advocating for restoring the Master Plan and state funding?

The expectation at the UC Office of the President and among the Regents has been that state funding will continue to fall. The policy focus of the Regents and other leaders has been to accommodate UC to a privatized model, which will mean continuing declines in quality and access.

The debate over public higher education should not be framed as a debate over how to allocate scarce state resources during difficult times, but as what it actually is: An ideological debate over the public value of higher education.

The central policy document guiding higher education policy in California has been the 1960 Master Plan for Higher Education, which specified the coordinated roles of UC, CSU and the community colleges and established the system that promised every California student an affordable (initially free) seat at an appropriate institution of higher education. The Master Plan clearly established higher education as a public good provided by the state for its citizens.

While fees have increased over time since then, the Compact represents the first time that UC accepted the idea that the costs of higher education should be shifted from public onto private sources.

The real question is: Should higher education be treated as a public good (as envisioned in the Master Plan for Higher Education) or should it be viewed as a private good to be paid for by its customers (students and their families) and voluntary private donors?

It is time for those in positions of power and responsibility at UC to advocate for real restoration of the Master Plan for Higher Education in a strong and consistent way.  This is the necessary first step in changing the political environment and rebuilding higher education as a public good for all Californians.

To learn more and get involved in the campaign to rebuild public higher education, visit www.keepcaliforniaspromise.org.

Accountability and Executive Compensation

The issue of executive compensation at UC and CSU is regularly in the news, with top salaries, “stipends,” and other perks for leaders increasing at the same time that student fees climb, quality erodes, and faculty and staff salaries backslide. Also the rate of growth of administrator ranks compared to the rate of growth of students and faculty (see our posting “Soon every faculty member will have a personal senior manager: Is this a good way to spend money?”)

Regents justify these compensation packages (e.g. this San Francisco Chronicle article) in the current environment, as in the past, on the basis of the complex “business of running a $19 billion, 180,000-employee enterprise — 10 campuses, five medical centers, research laboratories and a multitude of programs.” They say, “The University of California competes with the world’s premier institutions, both in terms of recruitment and retention. And top talent requires competitive compensation, an unavoidable fact of life.”

This view reflects a corporate mentality that sees the quality of higher education as determined by top executives, not students, faculty and staff.

More important, it is a symptom of the creeping privatization of higher education. As the governors reduce public support for UC and CSU, more and more of UC and CSU’s leaders’ time goes to private fundraising, less to administering higher education as a public trust. From this perspective, privatized universities have to pay private sector salaries to the people at the top.

An alternative view? The universities need to compete for the best people at the bottom.  Because fees for graduate students are increasing rapidly, and their departments and research programs have to pay those fees, UC no longer offers competitive support packages for the best graduate students at the heart of its research programs.  (For these students, a $2,000 difference in a fellowship offer is a lot of money.)  University teaching and research are both declining because of this inability to win the competition for the best graduate students (e.g. see this Competetive Graduate Student Financial Support Advisory Committee report).

The quality of the students has always been one reason that faculty and staff have been attracted to and stayed at UC, despite its historically low salaries.

The fact that UC and CSU are complex enterprises does not, by itself, justify the high executive salaries. For comparison, the California Secretary of Health and Human Services administers complex programs ranging from MediCal to preventing swine flu pandemics to patient privacy to tobacco prevention that had a state budget of $4.6 billion in 2007-08.   She is paid $170,000.

Restoring public support for higher education will require restoring a management compensation scheme consistent with a public institution (for more on this topic see also this San Francisco Chronicle editorial).

Privatization Is The Issue

George Lakoff

Distinguished Professor of Linguistics, UC Berkeley

A pdf version of this report is available.

I have been asked by colleagues to comment on the impending privatization of the University of California. Among the suggestions are that UC campuses should take more out-of-state students in order to get their higher tuitions, or that tuition should be raised to match those of private universities and that no state funds be used at all to support the UC system. I have specifically been asked to comment on the moral issues involved.

The California Master Plan speaks of “state-supported higher education.” There is a good reason.

Government has two moral missions: protection and empowerment for all its citizens. Protection goes beyond police and law enforcement to protections for consumers, workers, the environment, investors, retirees, and victims of disease, injury, and natural disasters. Empowerment includes public roads and buildings; and adequate systems for communication, energy, water; functioning banking and insurance systems, and of course, education.  No one makes a living in this state without protection and empowerment by the government.  And those who get more out of protection and empowerment by the state have a moral obligation to pay more to sustain them.

It appears that the top 1% of individual taxpayers pay about 45% of the state’s income taxes, and that the same top 1% own about 50% of the assets in the state. They are so rich that after paying all that they remain the top 1%. Have these folks amassed their wealth by working that many more hours than the average worker? No. They have amassed their wealth because the companies they own or invest in are empowered by having state-subsidized water, state-built freeways and public buildings, a state-protected environment, and state-based systems of protection of many kinds and especially state-educated employees and state supported university research.

The protection and empowerment that have come from our universities is staggering. There are obvious cases: Medical research and university hospitals and clinics; the computer industry and its spin-offs in media, film and the arts; environmental science that has led to the maintenance and improvement of our environment; the wine industry coming out of UC Davis; tens of thousands of people trained in business, law, and economics; our public health system; and on and on. The university is lot more than an economic engine: it is a quality of life engine. And when it is truly public, it is a moral engine.

And it is especially a moral engine because it educates millions of Californians. Education is about more than making money. It is about coming to know the world, about learning to think critically, and about developing the capacity to create new knowledge, new social institutions, and new kinds of businesses. It is about each of millions of people becoming more of what they can be. That is the real promise of California. It is our system of higher education that delivers on that promise.

The reason that the Master Plan designates “state-supported higher education” is that higher education contributes a disproportionate amount to the protection and empowerment both of individuals and of corporations, and to the creation of a California civilization.

All discussion of moral issues must start there, with the systemic and moral effects of higher education.

From this perspective, the university-as-factory metaphor is not only inaccurate, but is immoral. It is both because it hides all that — all of what public universities are about.

The university-as-factory metaphor sees the university as a factory producing educations in the abstract and selling them to students and/or their parents. All discussion of raising tuition or taking more out-of-state students who pay more tuition is based on that metaphor. The central argument is that students (or their parents) should be paying what the product is worth, economically, over a lifetime, and that they shouldn’t be complaining about fee raises because they’re getting a relatively good deal.

The factory metaphor misses almost everything. It obviously misses the enormous contribution to the economy of the state as a whole. But it also misses all the other forms of protection and empowerment, as well as shaping California civilization.

The factory metaphor even misses on its own terms; it misses vital economic truths. Yes, if you have a university education, you have the opportunity to make more, perhaps more than a million dollars more over a lifetime, than if you don’t. But that also means you will pay a lot more taxes to the state, and the company you work for will make more money. Imagine taking all the extra money that the UC and CSU graduates make for themselves and their companies, and estimating how much more they pay in taxes than if they hadn’t gotten a higher education. Now imagine taking all that money that came from a state-supported higher education and using it to support higher education. I suspect there would be no budget shortfall in the universities and a lot left over in profit for everyone. That is what the Economic Engine metaphor claims, namely, that the knowledge and innovation coming from graduates of state-supported universities create far more wealth in the state than the educations cost.

How you look at public higher education is not just a matter of facts and figures, because the question is, which facts and figures do you count? Professor Stan Glantz of UCSF puts the question as one of ideology:

Should higher education be treated as a public good (as envisioned in the Master Plan for Higher Education) or should it be viewed as a private good to be paid for by its customers (students and their families) and voluntary private donors?

The moral issue at stake here is not just about higher education. The issues being played out at the University of California are ultimately the same moral issues being played out on the national stage, on health care, on the environment, on the economy, on foreign policy, and in just about every other issue area.  The questions are large. Is Democracy, as President Obama has said, based ultimately on empathy, on citizens caring about one another? Yes, he says, that is why we have principles like freedom and fairness for all, not just the rich and powerful — because we care about our fellow citizens. That is why government has the moral missions of protection and empowerment for all, equally.

But not everyone agrees, especially radical conservatives like Governor Schwarzenegger and many Republican legislators. They ignore the fact that no one makes it on his or her own — without protection and empowerment by the government. They think they did it all themselves and that everyone else should, that no one should pay for anyone else – for anyone else’s health care, for anyone else’s education. And they forget that we have all been paying for the roads they use, the energy grid they use, the educated workers they use, the California wines they drink, the public health services they depend on, the courts they depend on, the research that makes their profits rise, and much, much more.

The privatization issue goes well beyond public education. It is about whether we have a democracy that works for the common good, or a plutocracy that privileges the wealthy and powerful. Privatizing the world’s greatest public university is a giant step away from democracy.

What is especially scary is that many in the UC administration appear willing to go along with privatization, assuming it is inevitable. The attitude seems to be that if we make enough cuts, raise tuition enough, and reduce the number of students, we can still be a great university, though a smaller private one. It is an illusion. Democracy and greatness go hand-in-hand here. Many of our greatest talents were attracted to UC because it is a great public university. In the process of cutting and plutocracizing the university, that talent will be lost and not replenished for a long time. The administration should be taking every step possible to avoid privatization.

Let me now return to my colleague’s moral dilemma about letting in many more out-of-state students.  Here is his internal debate:

Pro: If we let many more out-of-state students in to get their higher tuition, it will not only provide a short-term fix to the lack of funds, but will also be “a brain-vacuuming scheme to get smart people to come here because (in our case) they tend to stay and create lots of value that spreads across the whole state society.”

Con: “One of the reasons I like to go to work in the morning here is the number of students I have who are the first in their families to ever go to college, and I know a hard-ass loan-only scheme will discourage a lot of them even if it shouldn’t.”

The Pro argument neglects the fact that the out-of-state students attracted to a high-tuition UC campus will be those who can afford it, the more wealthy students. And for each such additional wealthy student (who could get a good education elsewhere), a relatively poor or struggling middle-class student will be denied a chance at a great education (as well as a chance to get wealthier). I say the Con argument wins overwhelmingly on moral grounds. It is ultimately the argument for democracy over plutocracy.

The issues at UC cannot be considered in a vacuum. The Governor’s determination to privatize UC is part of a larger radical conservative agenda, statewide as well as nationwide.

We have been plunged into political waters. To save this university, we will have to swim in them.

Stan Glantz suggests that the faculty do everything possible to inject the privatization issue (democracy vs. plutocracy) into the gubernatorial campaign. Governors matter, since a Governor has a line-item veto and can cut the university at will.

Right now, the 2/3 majority needed to raise revenue or pass a budget, allows for a 1/3 plus 1 Republican minority to override a significant Democratic legislative majority chosen by the voters.  I am working to get a one-sentence ballot initiative on the November 2010 ballot: All legislative actions on revenue and budget shall be determined by majority rule.

Both are needed. If you feel powerless, you aren’t. There are many things, great and small, you can do to help.

Meanwhile, we should be clear: privatization the main issue. It will take work to stop it.

Moving Forward from the 2009 Budget

Stanton Glantz
Professor of Medicine, UCSF
Former Chair, UC Committee on Planning and Budget
August 7, 2009

A PDF version of this report is available.

The primary focus of budget policymaking is the Governor, not the Legislature.

The University of California Office of the President’s (UCOP) strategy for setting the budget has been to cut the best deal that it could with the Governor (through the Department of Finance), then defend this deal in the Legislature. The primary motivation for this strategy is the fact that the Governor has a line item veto, which allows him to cut anything that the Legislature includes in the budget that he does not support. (There are always skirmishes in the Legislature over a few issues that are highly partisan, such as funding for labor research or outreach, but the bulk of the budget is negotiated with the Governor.)

At the same time, UCOP blames the Legislature for budget problems.

This behavior allows them to protect the Governor and the deals cut with the Governor. At the same time, defending the deal with the Governor in the Legislature makes it difficult to argue for increased support in the Legislature (which UCOP thinks that the Governor would line-item veto anyway). This strategy also makes it more difficult to use Legislature mechanisms such as hearings as a way to raise the profile of higher education funding as a public policy issue.

The current deal with the Governor, the 2004 “HIGHER EDUCATION COMPACT: Agreement Between Governor Schwarzenegger, the University of California, and the California State University 2005-06 through 2010-11,” represents a fundamental shift in the model for supporting higher education in California, away from viewing higher education as a public good towards a private good.

While UCOP has a history of reaching multi-year funding plans with the Governor (generally called “compacts”), the agreement with Governor Schwarzenegger contained a commitment to fundamentally shift financing away from the state general fund onto private sources: student fees and other private sources. It states, “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.” (Compact, [1] page 2; emphasis added) Until this point, the state was viewed as the primary source of support for “basic programs” with private sources being used for additional initiatives.

The Compact commits UC and CSU to increasing reliance on (private) student fees for base support.

The shift to using fees to finance UC (and CSU) is also explicit: the Compact states, “The student fee policy contained in this Compact assumes that UC and CSU will retain student fee revenue without a corresponding reduction in State funds which, together with State funds provided each year, will be used to help meet their budgetary needs as well as help the segments recover from the current fiscal crisis” (page 3). While, on its face, this statement sounds like an increase in funding for higher education, the Compact linked these fee increases to even larger reductions (about one-third [2]) in state support for basic operations.

In addition, the Compact committed UC and CSU to increase fees at least as fast as the rise in personal income, which is about twice the rate of inflation. Because incomes have increased most rapidly among the wealthy, this policy made higher education less affordable for most people.

The fee increases, while very large, have not been large enough to compensate for the loss in state support.

The fee increases in the Compact were limited to 10% a year, probably because that was the most that was politically possible. This amount was not related to the size of the cuts that UC and CSU accepted, resulting in a large drop in the money available to finance core functions, which would not be restored over the life of the Compact. The net result has been a substantial drop in quality of the educational experience, which has accelerated over time.

If the Compact was so bad, why did UC and CSU accept it?

The first reason was that Governor Schwarzenegger was threatening even bigger cuts if UC and CSU did not accept the Compact. More important, cognizant UC (and, presumably CSU) budget officials knew that there would be a major budget crisis starting around 2008, and believed that the Compact would protect UC and CSU from large cuts at that time.

Of course, when the budget crisis came in 2008, Governor Schwarzenegger simply walked away from the deal. Other than one comment at the July 2009 Regents’ meeting from Regent Blum, there has been no effort to exact a political price for failing to honor his commitment.

Thus, the debate over higher education should not be framed as a debate over how to allocate scarce state resources during difficult times, but as what it actually is: an ideological debate over the nature of higher education.

The central policy document guiding higher education policy in California has been the 1960 Master Plan for Higher Education [3], which specified the coordinated roles of UC, CSU and the community colleges and established the system that guaranteed every California student an affordable (initially free) seat at an appropriate institution of higher education. The Master Plan clearly established higher education as a public good provided by the state for its citizens.

While fees have increased over time since then, the Compact represents the first time that UC accepted the idea that the costs of higher education should be shifted from public onto private sources.

The real question is: Should higher education be treated as a public good (as envisioned in the Master Plan for Higher Education) or should it be viewed as a private good to be paid for by its customers (students and their families) and voluntary private donors?

The Master Plan model has served California well.

It led to a large, highly educated population and workforce that supported the development of the knowledge economy. In recent years, the rate of college attendance has dropped in California, making it 18th in the country, below Missouri.

The only way to maintain quality and access is to restore state funding.

As the Futures Report notes, the only alternative to public funding as a way to finance UC (and, presumably, CSU) is student fees. Private philanthropy and sponsored projects finance specific activities, not the core budget. To replace the (reduced) state support with fees in 2008 would have required raising fees to around $23,000 a year [4]. To restore the quality (level of funding per student) to 2001 levels would have required fees of over $27,000. Doing so will continue to price students out of the market.

Increases in fees have reduced the quality of academic graduate programs, contributing to the overall decline in quality of UC.

The top graduate academic programs compete nationally (and internationally) for the best graduate students. An important element of this competition is the support package (payment of fees plus a stipend) UC can offer potential students. As fees have increased, the ability of UC campuses, departments and programs, which have to pay these fees from departmental funds or individual faculty research grants, have not been able to offer competitive stipends, making it more difficult to recruit the highest quality graduate students to UC [5].

Grants and partnerships with business cannot replace core state funding and, in the current environment, actually aggravate the problems associated with declining core support.

Extramural funds for research and other projects allow the university to expand specific activities, but these funds are rarely available for general support of core educational activities. More important, because such contracts and grants almost never cover the full (and real) indirect costs associated with the projects that they support, the more extramural funding the university (or a specific campus) receives, the more it has to divert discretionary funds (mostly fees and state general fund support) away from other activities to pay the unreimbursed indirect costs.

While this use of discretionary funds to subsidize such specific projects makes sense when the University is in good financial health – because it allows expansion of research and other academic and service activities that create opportunities for students and faculty – extramural funds are not a way to replace declining general fund support when it is inadequate to support core University functions.

This situation is unlikely to change because almost all funding agencies expect some level of cost sharing from the University on the grounds that the extramural funding supports the University’s mission. The subsidy through unreimbursed indirect costs is generally much larger for private sources (both foundations and business) than the federal government because they provide no or very low indirect cost support.

In other words, seeking to replace lost core funding with extramural funding is like a business trying to make up for the fact that it loses money on every unit by increasing volume.

Transforming UC based on the University of Michigan model will result in fragmentation of the system and a substantial decline in quality.

The Futures report discusses this option in detail:

The 1980s “deindustrialization” of the Michigan economy forced major cuts in state funding on universities in that state. The University of Michigan at Ann Arbor responded by deciding it would have to increase non-state funding sources. UM deliberately turned itself into what one of its presidents called a “privately-supported public university.” In addition to major fundraising efforts, effective use of its very large and venerable alumni base and of its professional schools, UM was also able to take advantage of its perennial top-5 position in federal contracts and grants to develop that important revenue stream.

It pioneered the pursuit of non-resident tuition income: by 2005-06, UM charged non-residents about $14,500 $27,500 per year (exclusive of other fees, housing, etc.), or $6500 $18,000 more than residents [corrections made by Keep California’s Promise based on a comment from Kenneth Pomeranz]; 40% of its 2006 entering freshmen class are nonresidents.

Student fees constitute 59% of UM’s “core” operating budget. Although the University of Michigan remains one of the world’s great universities, this shift to private funds has had its costs. The university’s quality has declined, at least judging by U.S. News & World Report rankings, where it fell from 8th to 25th between 1987 and 2003. Its dependence on tuition revenue has not helped its selectivity: over 50% of all undergraduate applicants were admitted, which would put UM in the middle range of selectively among UC campuses. UM’s high proportion of out-of-state students is not the reason why Michigan remains well below the national average in the percentage of the state’s population that receives bachelors or advanced degrees, but it has not helped. While UM has done an effective job of protecting its one major campus at Ann Arbor, it has not done the same for the UM system, for Michigan higher education overall, or for the residents of the state.

Something similar can be said about the composition of UM’s student body. It lost African-American enrollments during the first wave of fiscal crises in the 1980s, and has only slowly gotten most of them back (African American enrollments in the freshman class of 2005 comprise 7.2% of the total). After strenuous efforts in the 1990s, the University of Michigan still has a Pell Grant rate half that of UC Santa Barbara’s; at the other end of the income spectrum, over half of Michigan’s 2003 freshman class came from families with six-figure incomes in a state where only 13% of families earn that much [6].

Those advocating this model have not addressed these realities.

No one in UC’s leadership is effectively advocating for restoring the Master Plan and state funding.

The unspoken policy at UCOP and the Regents has been that state funding will continue to fall. (This is not an unreasonable assumption if one passively accepts the current environment in which UCOP budget planning focuses on keeping the Governor happy, a governor who sees higher education as a private good and opposes new taxes and where these is additionally a requirement for a 2/3 vote to pass tax increases.) The problem is that no one has even raised the issue in a consistent and powerful way, which is the necessary first step in changing the political environment.

Indeed, indications are that the policy focus of the Regents and other leaders is to accommodate UC to a privatized model, which, as experienced in Michigan, will probably mean continuing declines in quality and fragmentation of the system.

What about UCOP’s public relations activities about the value of UC to the people of California?

UCOP is accelerating public relations activities directed at informing the public about UC’s contribution to California. While the details are not known, it is unlikely that this campaign will starkly highlight the policy choice made by the Governor to shift from the Master Plan to a privatized model for higher education.

It is also possible that this campaign could even be counterproductive, if the public comes away with a feeling that UC is continuing to make important contributions to California despite reductions in funding (which would mean that the reductions did not actually create serious problems).

Another problem has been the fragmented response of people concerned about the future of public higher education in California.

There has been little coordination between UC and CSU (much less the community colleges) in an integrated campaign to reinstate the Master Plan. UC faculty response has been largely through the Academic Senate, which has generally supported the Administration and not been an independent public voice. Students have been largely concerned with annual fee increases, without considering the long-term policy change embodied in the Compact. UC has not sought to make common cause with the unions representing its employees. CUCFA has not yet become an effective central advocate on these issues.

The requirement for a 2/3 vote to pass the state budget and tax increases makes it more difficult to fund public programs, including higher education, but public higher education could be restored even with the 2/3 rule.

There is no question that the requirement of a 2/3 vote for passing tax increases gives the anti-tax, anti-public sector Republicans in the Legislature tremendous power in budget decisions in California and has strengthened the Governor’s ability to pursue his vision of privatized higher education. Indeed, the 2/3 rule makes California a blue state with red state budgeting policies and priorities being enforced by the Republican minority. Supporting repeal of the 2/3 rule should be a priority for anyone concerned about restoring quality and access to higher education (and the quality of California’s state infrastructure generally).

As noted below, however, the amount of money it would take to restore higher education to 2001 levels of funding is small compared to the entire state budget and within what would be possible to accommodate if the political will was there. If the public demanded it, the governor could propose and push a budget that restored higher education if it was a priority for him or her even with the 2/3 rule.

What are the key strategic steps to change the public debate?

Because of the central role of the governor in setting higher education policy and the need for a high profile public debate on the future of the Master Plan and higher education in California, we need to find a way to inject the issue into the political campaign for governor.

UC and CSU leadership also need to be honest with the public and public policy makers about the true nature of the choice before California in terms of the future of higher education, rather than continuing to allow the system to slide into an inadequately funded privatized model without any explicit decision being made to do so.

Doing so would require presenting a direct contrast of three possible outcomes:

1. The status quo: There are continuing declines in quality with continuing rapid fee increases that are not adequate to replace state funds that have been cut because of the view that higher education should be a private not a public good. This situation will probably result in a fracturing of the UC system into a few high quality (and probably more expensive) campuses with a strong research base with the others coming to represent CSU. Except for a few centers that attract substantial private funding, high quality faculty and students will abandon the system. This is probably the worst outcome.

2. Privatization while maintaining quality: Priority is given to providing a quality educational experience for substantially fewer students that UC (and CSU) can afford to educate while maintaining the system as a whole. Implementing this model would require substantial reductions in enrollment (probably around 30%) tied with very large fee increases.

3. Reinstatement of California’s historic commitment to the Master Plan: Such an option should be framed as restoring UC, CSU and the community colleges to levels of funding per student that were available in 2001 at the same real fees students and their families paid in 2001, the last year that the systems were in reasonable health financially and in terms of quality (see Futures Report). Doing so would only cost $2.7 billion [7], which is only a few percent of the state budget and only about half the forgone revenues due to cutting the Vehicle License Fee [8]. It is not impossible to obtain these funds (despite such assumptions by the Regents and UC leadership), but it would require a change in fiscal (and probably tax) policy by the state, which would represent a major shift away from the current ideological positions.

FOOTNOTES

[1] The full text of the Compact is at  http://budget.ucop.edu/2005-11compactagreement.pdf. For how UC and CSU presented the Compact to the public, see http://www.universityofcalifornia.edu/news/compact/factsheet.html and http://www.calstate.edu/PA/news/2004/compact.shtml.

[2] The UC Academic Senate “Futures” report reads: “Budget cuts began mid-year in 2001-02, and continued through 2004-05. Overall the State appropriation to the University of California fell by 15% while enrollment grew by 19%. This means that state funding per UC student fell by approximately one-third in three years.” According the Senate’s later “Cuts” report, the state budgeted $2.8 billion in 2003-04 and $2.6 billion in 2004-05 (the budget being discussed at the time the Compact was signed), a 7% reduction.  The Futures report is available at http://www.universityofcalifornia.edu/senate/reports/AC.Futures.Report.0107.pdf and the Cuts report is available at http://www.universityofcalifornia.edu/senate/reports/cuts.report.04.08.pdf .

[3] The Master Plan is available at http://www.ucop.edu/acadinit/mastplan/MasterPlan1960.pdf .

[4] In 2008 UC received $3,250,348,000 in state general support (http://www.lao.ca.gov/laoapp/LAOMenus/lao_menu_economics.aspx) divided by 2008 UC FTE enrollment of 220,034 (UCOP 2009-10 Budget Detail) = $13,958 per student.  Student fees in 2008 were $8,014 (http://www.ucop.edu/budget/fees/200809/0809genfees.html)  So, total undergraduate fees would rise to about $22,000.  To restore the inflation adjusted per student funding level of 2001-02 would cost an additional $5,180, yielding a total of over $27,000.

[5] Competitive Graduate Student Financial Support Advisory Committee,  June 2006.  http://www.ucop.edu/sas/sfs/docs/gradcommittee2006.pdf.

[6] http://www.universityofcalifornia.edu/senate/reports/AC.Futures.Report.0107.pdf , Pages 31-32.  Citations are deleted from quote.

[7] To return real UC per student funding to 2001 levels would require an additional $1.2 billion in state support; doing so and also returning fees to 2001 levels would cost $1.8 billion.  The comparable numbers for CSU are $390 and $940 million.

[8] There were $5 billion in forgone revenues for the Vehicle License Fee in 2007; see  http://www.californiacityfinance.com/VLFfacts06.pdf .