Hello Everyone!

It’s beautiful to see so many of you here today. On four day’s notice, this is an incredible turnout. Let’s remember how much we can do in so little time.

I’m an English professor, and as some of you know, English professors spend a lot of our time talking about how to construct a “thesis” and how to defend it through argument. So today I’m going to model this way of thinking and writing by using it to discuss the university struggle. My remarks will consist of five theses, and I will defend these by presenting arguments to support them.

THESES

1. Tuition increases are the problem, not the solution.

2. Police brutality is an administrative tool to enforce tuition increases.

3. What we are struggling against is not the California legislature, but the upper administration of the UC system.

4. The university is the real world.

5. We are winning.

THESIS ONE: Tuition increases are the problem, not the solution.

In 2005 tuition was $6,312. Tuition is currently $13,218. What the Regents were supposed to be considering this week — before their meeting was cancelled due to student protest — was UC President Yudof’s plan to increase tuition by a further 81% over the next four years. On that plan, tuition would be over $23,000 by 2015-2016. If that plan goes forward, in ten years tuition would have risen from around $6,000 to around $23,000.

What happened?

The administration tells us that tuition increases are necessary because of cuts to state funding. According to this argument, cuts to state funding are the problem, and tuition increases are the solution. We have heard this argument from the administration and from others many times.

To argue against this administrative logic, I’m going to rely on the work of my colleague Bob Meister, a professor at UC Santa Cruz and the President of the UC Council of Faculty Associations. Professor Meister has written a series of important open letters to UC students, explaining why tuition increases are in fact the problem, not the solution to the budget crisis. What Meister explains is that the privatization of the university—the increasing reliance on tuition payments (your money) rather than state funding—is not a defensive measure on the part of the UC administration to make up for state cuts. Rather, it is an aggressive strategy of revenue growth: a way for the university to increase its revenue more than it would be able to through state funding.

This is the basic argument: privatization, through increased enrollments and constantly increasing tuition, is first and foremost an administrative strategy to bring in more revenue. It is not just a way to keep the university going during a time of state defunding. What is crucial to this argument is the way that different sources of funding can be used.

State funds are restricted funds. This means that a certain portion of those funds has to be used to fund the instructional budget of the university. The more money there is in the instructional budget, the more money is invested in student instruction, in the quality of your education. But private funds, tuition payments, are unrestricted funds. This means there are no restrictions on whether those funds are spent on student instruction, on administrative pay, or anything else.

What Professor Meister uncovered through his research into the restructuring of UC funding is that student tuition (your money) is being pledged as collateral to guarantee the university’s credit rating. What this allows the university to do is borrow money for lucrative investments, like building contracts or “capital projects” as they are called. These have no relation to the instructional quality of the institution. And the strong credit rating of the university is based on its pledge to continue raising tuition indefinitely.

Restricted state funds cannot be used for such purposes. Their use is restricted in such a way as to guarantee funding for the instructional budget. This restriction is a problem for any university administration whose main priority is not to sustain its instructional budget, but rather to increase its revenues and secure its credit rating for investment projects with private contractors.

So for an administration that wants to increase UC revenues and to invest in capital projects (rather than maintaining the quality of instruction) it is not cuts to public funding that are the problem; it is public funding itself that is the problem, because public funding is restricted.

What is happening as tuition increases is that money is being shifted out of instructional budgets and into private credit markets, as collateral for loans used for capital projects. Because of this, and because of increased enrollment, as university revenue increases the amount of money spent on instruction, per student, decreases. Meanwhile, students go deeper and deeper into debt to pay for their education. Using tuition payments as collateral, the university secures loans for capital projects. In order to pay their tuition, students borrow money in the form of student loans. The UC system thus makes a crucial wager: that students will be willing to borrow more and more money to pay higher and higher tuition.

Why would students do so? Because, the argument goes, a university education is an investment in your future—because it will “pay off” down the line. This logic entails an implicit social threat: if you do not take on massive debt to pay for a university degree, you will “fall behind”—you will be at a disadvantage on the job market, and you will ultimately make less money. The fear of “falling behind,” in the future, results in a willingness to pay more in the present, which is essentially a willingness to borrow more, to go further into debt in order to make more money later.

But is it actually true that a university degree continues to give students a substantial advantage on the job market? It is now the case that 50% of university students, after graduating, take jobs that do not require a university degree. It used to be the case that there was a substantial income gap between the top 20% of earners, who had university degrees, and the bottom 80% of earners, who did not. But since 1998, nearly all income growth has occurred in the top 1% of the population, while income has been stagnant for the bottom 99%. This is what it means to be “part of the 99%”: the wealth of a very small segment of the population increases, and you’re not in it.

What this means is that the advantage of a university degree is far less substantial than it used to be, though you pay far more for that degree. The harsh reality is that whether or not you have a university degree, you will probably still “fall behind.” We all fall behind together. The consequence is that students have recently become less willing to take out more and more debt to pay tuition. It is no longer at all clear that the logic of privatization will work, that it is sustainable. And what this means is that the very logic upon which the growth of the university is now based, the logic of privatization, is in crisis, or it will be. Student loan debt is a financial “bubble,” like the housing bubble, and it cannot continue to grow indefinitely.

To return to my thesis: what this means for our university—not just for students, but especially for students—is that increasing tuition is the problem, not the solution.

What we have to fight, then, is the logic of privatization. And that means fighting the upper administration of the UC system, which has enthusiastically taken up this logic, not as a defensive measure, but as an aggressive program to increase revenue while decreasing spending on instruction.

THESIS TWO: Police brutality is an administrative tool to enforce tuition increases.

What happened at UC Berkeley on November 9? Students, workers, and faculty showed up en masse to protest tuition increases. In solidarity with the national occupation movement, they set up tents on the grass beside Sproul Hall, the birthplace of the Free Speech Movement. The administration would not tolerate the establishment of an encampment on the Berkeley campus. So the Berkeley administration, as it has done so many times over the past two years, sent in UC police, in this case to clear these tents. Faculty, workers, and students linked arms between the police and the tents, and they held their ground. They did so in the tradition of the most disciplined civil disobedience.

What happened?

Without provocation, UC police bludgeoned faculty, workers, and students. They drove their batons into stomachs and ribcages, they beat people with overhand blows, they grabbed students and faculty by their hair, threw them on the ground, and arrested them. Numerous people were injured. A graduate student was rushed to the hospital and put into urgent care.

Why did this happen? Because tuition increases have to be enforced. It is now registered in the internal papers of the Regents that student protests are an obstacle to further tuition increases, to the program of privatization. This obstacle has to be removed by force. Students are starting to realize that they can no longer afford to pay for an “educational premium” by taking on more and more debt to pay higher tuition. So when they say: we refuse to pay more, we refuse to fall further into debt, they have to be disciplined. The form this discipline takes is police brutality, continually invited and sanctioned by UC Chancellors and senior administrators over the past two years.

Police brutality against students, workers, and faculty is not an accident—just like it has not been an accident for decades in black and brown communities. Like privatization, and as an essential part of privatization, police brutality is a program, an implicit policy. It is a method used by UC administrators to discipline students into paying more, to beat them into taking on more debt, to crush dissent and to suppress free speech. Police brutality is the essence of the administrative logic of privatization.

THESIS THREE: What we are struggling against is not the California legislature, but the upper administration of the UC system.

It is not the legislature, but the UC Office of the President, which increases tuition in excess of what would be necessary to offset state cuts. Again, tuition increases are an aggressive strategy of privatization, not a defensive compensation for state cuts. When we protest those tuition increases, it is the Chancellors of our campuses, not the state legislature, who authorize police to crush our dissent through physical force. This is why our struggle, immediately, is against the upper administration of the UC system, not against “Sacramento.”

This struggle against the administration is not about attacking individuals—or not primarily. It is about the administrative logic of privatization, and the manner in which that logic is enforced. We need to hold administrators accountable for this logic—and especially for sending police to brutalize students, workers, and faculty. But more importantly we need to understand and intervene against the logic of privatization itself: a logic which requires tuition increases, which requires police brutality, in order to function.

This is why the point is not to talk to administrators. When we occupy university buildings, when we disrupt university business as usual, the administration attempts to defer and displace our direct action by inviting us into “dialogue”—usually the next day, or just…some other time. What these invitations mean, and all they mean, is that the administration wants to get us out of the place where we are now and put us in a situation where we have to speak on their terms, rather than ours. It is the job of the upper administration to push through tuition increases by deferring, displacing, and, if necessary, brutally repressing dissent. The program of privatization depends upon this.

The capacity of administrators to privatize the university depends on their capacity to keep the university running smoothly while doing so: their capacity to suppress any dissent that disrupts university operations. The task, then, of students, faculty, and workers, is to challenge this logic directly. The task is to make it clear that the university will not be able to run smoothly if privatization does not stop. In many different ways, since the fall of 2009, we have been making this clear.

THESIS FOUR: The university is the real world.

The university is not a place “cut off” from the rest of the world or from other political situations. The university is one situation among many in which we struggle against debt, exploitation, and austerity. The university struggle is part of this larger struggle. And as part of this larger struggle, the university struggle is also an anti-capitalist struggle.

Within the university struggle, this has been a controversial position. Rather than linking the university struggle to other, larger struggles, many have argued that we need to focus only on university reform without addressing the larger economic and social structures in which the university is included—in which the logic of privatization and austerity is included, and in which the student struggle is included. But to say that the university struggle is an anti-capitalist struggle should now be much less controversial, and it should now be much easier to insist on linking the struggle against the privatization of the university to other anti-capitalist struggles.

The Occupy Wall Street movement, which has become a national occupation movement, makes this clear. All across the country, from New York to Oakland to Davis, in hundreds of cities and towns, people who have been crushed by debt are rising up against austerity measures that impoverish them further. The national occupation movement and the UC student struggle are parts of the same struggle, which is global. It is articulated across political movements in Greece, in Spain, in Chilé, in the UK, in Tunisia, in Egypt, etc. This is a struggle against the destruction of our future, in the present, by an economic system that can now only survive by creating financial bubbles (the housing bubble, the student loan bubble) which eventually have to pop.

Two years ago, positioning the UC struggle as an anti-capitalist struggle was seen as divisive. The argument was that such a position was alienating and that it would inhibit mass participation. But now we see that there is a mass, national movement which is explicitly anti-capitalist, which positions itself explicitly as a class struggle, and, in doing so, struggles against debt and austerity as the interlinking financial logics of a collapsing American economy. Given this context, the only way the university struggle can isolate itself is by failing or refusing to acknowledge that it is also an anti-capitalist struggle, that it is also a class struggle.

This struggle concerns all of us, faculty as well as students and workers, because the economic logic of privatization, the logic of capitalism, destroys the very texture of social life in our country and around the world, just as it destroys our public universities.

“We are all debtors,” said a student at Berkeley as she called for this strike. That is a powerful basis of solidarity.

THESIS FIVE: We are winning.

Yes, it is true that tuition continues to rise. I am not saying that we have won. But it is also the case that last year state funding was partially restored. This was due to student resistance on our campuses, not in Sacramento. It was due to our struggle against the administrative logic of privatization. Meanwhile, privatization is becoming more and more unsustainable, less and less viable. In the fall of 2009, student resistance became a powerful obstacle to perpetually increasing tuition. It is because of that obstacle that the Regents meeting was cancelled this week.

But even more important than these immediate gains is the fact that we have built the largest and most significant student movement in this country since the 1960s. UC Davis has played an important role in building that movement. The 2009 student/faculty walkout was initiated by people on this campus. The occupations of Mrak Hall in November 2009 and the courageous march on the freeway on March 4 2010 have been tremendously inspirational to students struggling on other campuses. Actions like these are the very material of which the student movement consists. Without them it would not exist.

So we have built a historically important student movement, and now that movement is linked to largest anti-capitalist movement in the United States since 1930s. Students now have the support of a struggle that can be waged on two fronts, on and off campus.
To put it mildly, we have many more allies than we did two years ago.

At the same time, the UC student movement has had a global impact. The tactic of occupation that was crucial to the movement in the fall of 2009, which spread from campus to campus that November, has now also spread across the country. The occupation of university buildings is a time-honored tactic in student struggles. But by many it was also viewed as a “divisive” or “vanguardist” tactic two years ago. Now, thanks largely to the example of the Egyptian revolution, the occupation of public space has become the primary tactic in a national protest movement supported by some 60% of the American people. The mass adoption of this tactic, the manner in which it has grown beyond the university struggle, is a huge victory for our movement.

Here is a passage from an influential student pamphlet written in 2009, Communiqué from an Absent Future: On the Terminus of Student Life, which was read by people across the US and translated into six different languages:

Occupation will be a critical tactic in our struggle…and we intend to use this tactic until it becomes generalized. In 2001 the Argentine piqueteros suggested the form the people’s struggle there should take: road blockades which brought to a halt the circulation of goods from place to place. Within months this tactic spread across the country without any formal coordination between groups. In the same way repetition can establish occupation as an instinctive and immediate method of revolt taken up both inside and outside the university.

People at Adbusters, the Canadian magazine which initially organized the Occupy Wall Street protests, read that student pamphlet and wrote about it in 2009. The tactic that pamphlet called for was put into practice across the UC system, under the slogan “Occupy Everything,” and the goal of spreading that tactic has been unequivocally achieved. Its achievement has had huge political implications for the whole country. So this is also a way in which we are winning.

Occupation has been and continues to be such an important tactic because it is not limited to the university, but linked to occupations of squares and plazas in cities, and linked to struggles to begin occupying foreclosed properties on a mass scale. The resonance of university occupations with the national occupation movement means that our struggle is growing and expanding. That means we are winning. And the fact that the university struggle can no longer plausibly be considered in isolation from anti-capitalist struggle broadly conceived is itself a huge victory.

We cannot simply change “the university” while leaving “the world” as it is, because the university is the real world. By changing the university, we change the world. And we have to change the world in order to change the university.

Read “Financial Options for Restoring Quality and Access to Public Higher Education in California” below or download a PDF of it (October 2011, 8 pp.) If you’re really a policy wonk, download the spreadsheets behind this report.

540 Calculator: What restoring the system will cost you.

WORKING PAPER

FINANCIAL OPTIONS FOR RESTORING QUALITY AND ACCESS TO PUBLIC HIGHER EDUCATION IN CALIFORNIA: 2011-12

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
Director of Research, Council of UC Faculty Associations
info@cucfa.org

(October 3, 2011)
Council of UC Faculty Associations
15 Shattuck Square, #200
Berkeley, CA 94704
Phone: (800) 431-3348

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 $6.671 billion. If the budget trigger is pulled in December 2011, taxpayer support for public higher education would drop by another $302 million, so the cost of the reset would rise to $6.973 billion.

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

Answer: University of California fees would have to increase over the current year’s fees by $9,230 (to a total of $22,448 per year), California State University fees would have to increase by $3,018 (to a total of $9,490 per year);  California Community College fees would not have to increase. If the budget trigger is pulled, UC fees would have to increase over the current year’s fees by $9,904 (to a total of $23,122 per year), CSU fees would have to increase by $3,457 (to a total of $9,929 per year), and CCC fees would have to increase $52 (to a total of $1,132 per year).

#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 $49, about $51 if the budget trigger has been pulled.

 
Introduction

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

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

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

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

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

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

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

Answer No. 1: Returning quality and fees to the level of 2000-01 would cost taxpayers $6.671 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 $5,095 (from $13,218), for CSU to $2,364 (from $6,472) and CCC to $424 (from $1,080).

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 2011-12 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 $4.903 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 $6.671 billion.

Part of the 2011 budget deal between Governor Jerry Brown and the legislature was a promise to the state’s creditors that if, as of December 15, state tax revenue is significantly below those assumed in the budget specific cuts would be triggered. These cuts include $100 million to UC and CSU and $102 million to the CCCs.[5] Thus, if the trigger gets pulled, the cost to restore higher education funding to 2000-01 levels would be $6.973 billion.

Answer No. 2: Restoring the public higher education system for all students only by increasing student fees would require raising UC fees an additional $9,230 (to a total of $22,448 per year), and CSU fees by $3,018 (to $9,490 per year). CCC fees would not have to increase. If the budget trigger described above gets pulled, UC fees would have to increase over the current year’s fees by $9,904 (to a total of $23,122 per year), CSU fees would have to increase by $3,457 (to a total of $9,929 per year), and CCC fees would need to increase $52 (to a total of $1,132 per year).

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.[6]  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.

Answer No. 3: Restoring public higher education while returning student fees to 2000-01 levels would cost the median California taxpayer an additional $49.

Table 3 outlines these calculations. We obtained the distribution of taxes paid by adjusted gross income per tax return from the Franchise Tax Board for 2009,[7] the most recent year available, then allocated the $6.671 billion it would cost to restore public higher education to 2000-01 proportionately across all taxpayers.  Note that the categories are for tax returns, not individuals, so the results are for joint returns (families), individual returns, partnerships and Subchapter S corporations, as well as corporations that pay income taxes.  Thus, the numbers per taxpayer (as opposed to tax return) for joint returns would be half the numbers in Table 3.

For the median personal income tax return, restoring California’s entire higher education system while rolling back student fees to what they were a decade ago (adjusted for inflation) would cost $49 next April 15.  For the two-thirds of state tax returns with taxable incomes below $60,000, it would cost $125 or less.  Tax returns with the top 5% of adjusted gross income — $400,000 to $499,999 – would increase by $4,184.

Income taxes are presented as one option, simply to illustrate the cost for typical taxpayers.  Personal and corporate income taxes are only 65 percent[8] of all state revenues; part of the $6.671 billion could be allocated to other taxes, which would lower the effect on individual income tax payers. We also assume that the costs would be distributed uniformly across all tax categories. If the cost were allocated more or less progressively, that would also affect impact on individual taxpayers.

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 2009, the most recent time for which data are available; this distribution will be slightly different in 2011.

These calculations will be updated and subsequent versions of this Working Paper will be released as better data become available. This paper is an update of the paper we published in 2010.

I wondered if the data would show how the “Working Smarter Initiative” and much talked about cuts of $80 million to the UC Office of the President, had combined with promises to first and foremost “preserve excellence in instruction, research and public service… which it cannot do without continuing to attract and retain top-flight faculty” (see, http://www.universityofcalifornia.edu/news/article/25580) to reverse that trend.

Well, it turns out faculty ranks have declined by 2.3 percent since the 2009 post, at a time when student enrollment increased by 3.6 percent. (I would hope the UC administration wouldn’t try to spin a continuing erosion of a major measure of academic quality such as the student faculty ratio as increased efficiency.)

But we all know the budget cuts have been tough. Even an administration striving to preserve the education and research missions of the University by directing as many of the cuts as possible at administrative overhead might have to make painful cuts to the employees responsible for education and research in such an environment. The cuts to senior administrators must be even steeper, right? At least as steep?

Somehow the ranks of managers have continued to grow right through this difficult period – up 4.2% between April, 2009 and April, 2011. In fact, the dismal prediction of our 2009 post has now come to pass: UC now has more senior managers (8,822 FTE) than ladder rank faculty (8,669 FTE).

Data source: http://www.ucop.edu/ucophome/uwnews/stat/

Russ: As Governor would you roll back all of the funding cuts to the UC, CSU and CC systems, why or why not.

Brown: Would I roll all the fees back Not my first year, with a 19 billion dollar deficit; we have to be realistic here. I certainly wouldn’t want to see fees go up. I went to UC, so did my mother. And when she went tuition was $22 per semester. And when I went 30 years later it was $120, and now it is astronomically higher than that. I care about this university. It is the key to our future; not only our technological future but our intellectual and civic future. So, I am going to do everything I can to protect the University and advance its cause. And I am going to do that by being tough on the budget, getting real with these legislators, living within our means and building up this surplus. And certainly no driving a hole in the general fund of $5 billion giving this tax break to the very wealthy, because the university derives all of its state support from the general fund. In fact, the University support is about 2.5 billion which is a significant part of the 5 billion. So, yes, I care about the University, I’ll try to hold down fees as best I can, but we are in a tough bind and we are all going to have to sacrifice. But I’d say those at the top, those at the commanding heights of our economy, should tuck in their belts first.

Russ: So, just to clarify, are you pledging to hold the line on further tuition increases?

Brown: I’d do the best I can. As you know, I’d have one vote as the chairman, and in the past I used to have a few disagreements with the Regents. Look, I’d love to roll back the fees, I’d love to have a freeze, but that would require either the university becoming a lot more efficient than it is or the state finding billions of dollars that it doesn’t yet have. One way or another, we are going to protect UC.

Russ: Ms. Whitman, what’s your take on the funding cuts for the Universities and colleges?

Whitman: It breaks my heart. Every day I talk to children who are at UC who have had to take a semester off. I ran in to a young man the other day who couldn’t go back to UCB because fees had gone up by 32 percent and his father had lost his job. So here is my plan for the UC system, and the CSU system by the way. Higher education is one of the gems of our education system in California. Of the top 15 public universities in the county, we have 6 of them. So, while we are fixing K-12 education, which I’m sure we’ll talk about in a minute, we can not lose our innovation edge, with UC and CSU. So, I want to reduce costs of this government and take a billion dollars and put it back in the UC system. So I want to streamline the size of government. We’ve got to get back to an employee count of where we were just five years ago. The state now has more bureaucrats then active duty personnel in the US Navy. We have to reform our pension program as we’ve talked about, we have got to reform our welfare program. Today we have 12 percent of the population of the US and 32 percent of the welfare cases. We have 5 times the welfare cases of New York and only twice the population. And frankly, it’s a budget issue but also a strength of our community issue. We’ve got to put Californians back to work. Welfare can’t become a way of life. So I’ve got some very specific plans to reform welfare, take some of that savings and put it back into higher education. And then, last, we have got to run the government more efficiently. You know what is ironic: we have the most dysfunctional state government, and yet I come from a part of the state where we have the most innovative companies in the world. We have to take some of that managerial expertise and innovation and say how do we run the government more efficiently; how we can invest in the things we really care about, of which the UC and CSU system are at the top of the list.

Russ: What about the fee hikes themselves? Would you use the money to hold the line on future tuition hikes, or roll them back?

Whitman: I would, actually, put it to the chancellors and say “how do you think we should best use this money? If we can give you back $1 billion over the next two or three years, would you want to invest that in research and faculty? Reduced fees? What’s the best way to make your campuses great for every child?” So I’d actually ask them what they thought since they are battling the challenges in the budget every single day.

Data in the first column represents student debt that is administered by colleges. The data was collected by The Project on Student Debt; these numbers understate the level of debt because they do not include private debt that students incur, debt incurred by students who do not graduate, or debt that students take with them when they transfer.  Data from a national study of college student debt conducted by the Gallup Organization for Sallie Mae suggests that total student debt is about twice the amounts administered by colleges; this fact is used to estimate the amounts in the second column based on the debt levels reported by the colleges.

The Wall Street Journal describes the long-term problems college debt causes for students after they graduate, which could be the next subprime debt bubble to burst.

The University of California and California State University systems are two of our state’s greatest resources. UC is the best public university system in the world, but it has been forced to endure significant cutbacks in recent years due to the state’s budget crisis.

UC student fees increased by 40 percent last year, and the amount of per-student funding in the UC system has dropped from 78 percent of the total cost of education in 1990 to 58 percent today. Meg will invest $1 billion of the savings from her welfare and other budgetary reforms into the UC and CSU systems. (Page 33)

Even with this $1 billion, restoring quality and providing places for all qualified students being turned away from UC, CSU and the Community Colleges would require raising UC tuition another $2,393 (to $13,943), CSU another $338 (to $5,231) and Community College another $484 (to $1,264).

For comparison, we could push the “reset” button on California higher education to roll fees back to 2000-01 levels while restoring quality and access for just $32 for the median California taxpayer next April 15.

Click here for a spreadsheet that details the calculations.

This post has been superseded by an updated version available here.

Raising revenue has become such a taboo subject in California politics, nobody has gone to the trouble of actually answering that question — until now.

For the median California tax return (individual or joint), restoring the entire system while rolling back student fees to what they were a decade ago would cost less than $32 next April 15.

Surprised? So were we. Read “Financial Options for Restoring Quality and Access to Public Higher Education in California” below or download a PDF of it (March 2010, 9 pp.) If you’re really a policy wonk, download the spreadsheets behind this report.

540 Calculator: What restoring the system will cost you.

WORKING PAPER

FINANCIAL OPTIONS FOR RESTORING QUALITY AND ACCESS TO PUBLIC HIGHER EDUCATION IN CALIFORNIA

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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
Director of Research, Council of UC Faculty Associations
info@cucfa.org

(Version 2 — March 18, 2010)
Council of UC Faculty Associations
15 Shattuck Square, #200
Berkeley, CA 94704
Phone: (800) 431-3348

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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. But, until now, no one has  estimated 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 $4.643 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 and accommodate all eligible students?

Answer: UC fees would have to increase above currently approved levels by $5,514 (to a total of $17,064), CSU fees by $2,075 (to $6,968) and CCC fees by $484 (to $1,264).

#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 less than $32.

Introduction

It is widely recognized that beginning with Governor Gray Davis’ 2001-2 budget year and accelerating with Governor Arnold Schwarzenegger’s Compact for Higher Education,[1] higher education in California has suffered large reductions in state funding.  These reductions have effectively abandoned the California Master Plan for Higher Education[2] promise of high quality, low cost public higher education for all, through an articulated system consisting of the University of California, California State University and California Community Colleges. Funding has fallen more quickly in California than in the United States as a whole (Figure 1a).

At the same time, fees in all three sectors have increased much faster in California than in the US as a whole (Figure 1b). While these fee increases have generally been framed as responses to the State’s immediate budgetary problems, they are also congruent with an explicit public policy choice, purportedly based on free market principles, 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.

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Figure 1. State funding and fees per student in California compared to the rest of the United States. State support of higher education in California has been below the national average. Support has fallen more rapidly and fees have increased more quickly than in the rest of the United States. California is not simply following national trends. (Sources: State Higher Education Executive Officers http://www.sheeo.org/finance/shef-home.htm, California Legislative Analyst’s Office http://lao.ca.gov/sections/econ_fiscal/Historical_Expenditures_Pivot.xls, College Board http://www.trends-collegeboard.com/college_pricing/, and California Post Secondary Education Commission http://www.cpec.ca.gov/OnLineData/SelectFirstOptions.ASP?ReportType=Enroll.)

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

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

1. How much would it cost taxpayers to push the “reset” button for public higher education, restoring access and quality (measured as per-student state support) while rolling back student fees to 2000-01 levels, adjusted for inflation?
2. Absent restoration of taxpayer support for public higher education, how much more would student fees need to be increased to restore the level of per-student resources available in 2000-01, and accommodate all eligible students?
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 $4.643 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 $4,924 (from $11,550), for CSU to $2,284 (from $4,893) and CCC to $410 (from $780).

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 2009-10 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 $3.543 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. UC has reduced enrollment by 2,300 students,[5] CSU has reduced enrollment by 40,000 students;[6] and the CCCs have reduced enrollment by 186,000 FTE students.[7] We assume that providing funding for these students, in addition to current enrollments, would restore full access to each segment of California’s public higher education system. The cost to support full enrollment at 2000-01 levels of state per-student support would be $4.643 billion.

Student fees would return to their 2000-01 levels, adjusted for inflation: $4,924 for UC, $2,284 for CSU and $410 for CCC.

Answer No. 2: Restoring the public higher education system for all students who meet the standards outlined in the Master Plan only by increasing student fees would require raising UC fees an additional $5,514 (to a total of $17,064), CSU fees by $2,075 (to $6,968) and CCC fees by $484 (to $1,264).

Table 2 outlines the calculations that led to these numbers.[8] 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.[9] 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.

These calculations assume no further cuts in state support for higher education. For each additional 10 percent cut in state support, tuition and fees at UC would have to be increased by $1,645, CSU by $812 and CCC by $268 in order to maintain quality at current enrollment levels.

Answer No.3: Restoring public higher education while returning student fees to 2000-01 levels would cost the median California taxpayer an additional $32.

Table 3 outlines these calculations. We obtained the distribution of taxes paid by adjusted gross income from the Franchise Tax Board for 2006,[10] the most recent year available, then allocated the $4.643 billion it would cost to restore public higher education to 2000-01 proportionately to the amount that each taxpayer now pays across all taxpayers.  Note that the categories are for tax returns, not individuals, so the results are for joint returns (families), individual returns, partnerships and Subchapter S corporations, as well as corporations that pay income taxes.

For the median personal income taxpayer, restoring the entire system while rolling back student fees to what they were a decade ago would cost less than $32 next April 15.[11] For the two-thirds of state taxpayers with taxable incomes below $60,000, it would cost $86 or less. For the 12 million state taxpayers with AGI below $100,000 (81 percent), it would be $242 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[12] of all state revenues; part of the $4.643 billion could be allocated to other taxes, which would lower the effect on individual income tax payers. We also assume that the costs would be distributed uniformly across all tax categories. If the cost were allocated more or less progressively, that would also affect impact on individual taxpayers.

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. We assume that there would be no change in enrollment between Fall 2009 and Fall 2010 under our base case. 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 increasing UC enrollment by 2,300, CSU by 40,000 and CCCs by 186,000 would allow every interested student to attend an appropriate institution of public higher education in California. As a result, the $4.643 billion estimated total cost (and the corresponding $32 median tax increase) may be an upper bound estimate of the actual cost. At the same time, the $3.543 billion shortfall based on current enrollments (Table 1), which corresponds to a median tax increase of $24, probably underestimates the cost. The true cost — and impact on taxpayers — is likely to be between these two estimates: $24-32.

Finally, the distribution of taxes is based on 2006, the most recent time for which data are available; this distribution will be slightly different in 2010.

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

FOOTNOTES:

[1] The full text of the Compact is at http://budget.ucop.edu/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.

[4] FTE data comes from the California Postsecondary Education Commission available at http://www.cpec.ca.gov/OnLineData/SelectFirstOptions.ASP?ReportType=Enroll, state expenditure data comes from the Legislative Analyst’s Office available at http://lao.ca.gov/sections/econ_fiscal/Historical_Expenditures_Pivot.xls.

[5] UC cut enrollment 2,300 in 2009-10 and plans to cut enrollment a further 2,300 in 2010-11, see: http://www.universityofcalifornia.edu/regents/regmeet/nov09/f3.pdf)

[6] According to http://www.calstate.edu/PA/News/2009/enrollment-budget.shtml CSU is curtailing enrollments by “more than 40,000 students.”

[7] According to http://www.cpec.ca.gov/Agendas/Agenda0909/Item_07.pdf CCC enrollment has been reduced by 186,000 FTE students. The estimated increases in state funding or fees that are computed based on this estimate are higher than would be necessary to the extent that some of these students are the 2,300 denied admission at UC or the 40,000 denied admission at CSU. Restoring access to UC and CSU would reduce the demands placed on CCC.

[8] Table 2 of the December, 2009, version of this report calculated the fees required to restore higher education quality, but did not include the costs to accommodate eligible students who are currently being denied admission. This version of the report updates Table 2 and the relevant discussion to calculate the fees required to restore quality and enrollment.

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

[10] State income tax revenue by adjusted gross income class: http://www.ftb.ca.gov/aboutftb/Tax_Statistics/AGIC.shtml and state income tax revenue from corporations: http://www.ftb.ca.gov/aboutftb/Tax_Statistics/Corporations.shtml.

[11] For comparison, in 2007 the statewide median income for all personal income tax returns rose to $35,646, while the median income listed on joint returns was $68,797. Source: Franchise Tax Board, available at http://www.ftb.ca.gov/aboutftb/press/2009/release_25.shtml.

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

Surprised? So were we. Read “Financial Options for Restoring Quality and Access to Public Higher Education in California” below or download PDF

This is just the kind of “ballot box budgeting” that the Governor used to condemn.  Moreover, since the Governor makes the budget, Schwarzenegger could just have proposed these allocations in the budget he produced a few days later.  He didn’t.

The fine print is even more cynical:

• The provisions would not take effect until 2014, long after he left office.
• The amendment could be suspended by the governor by declaring a “fiscal emergency.”
• The amendment could be waived by a 2/3 vote of the Legislature, the same vote it takes to pass the budget.

And there is more:

• The amendment is tied to privatizing prisons and allowing the prison employees to be exempt from civil service.
• The amendment prohibits early release programs to reduce prison costs.

Finally, the amendment includes an unusual “non-severability clause,” which says that if any part of the amendment is found to be illegal, the whole amendment is killed.

The bottom line: This is a PR proposal to take pressure off Governor Schwarzenegger and the UC and CSU leadership to restore the promise of public higher education without changing anything.

(A PDF version of this article is available.)

UC feels free to use Educational Fees however it pleases without accountability. That’s why it can pledge “ed fees” as collateral for construction bonds and use them to pay debt service.[1] In the past week, I have discovered another, equally disturbing, consequence of UC’s refusal to be accountable for its use of “ed fees:” It has allowed (or perhaps more accurately used) the rapid growth in “ed fees” to dramatically increase the disparities in the per student funds it provides to each campus. As tuition rises, students are not getting what they think they are paying for on their own campuses, and the entity they are paying has not been transparent about where the money goes.

Why was this discovery so shocking? I knew that UC distributes enrollment-generated revenue unequally among the campuses. But this was so, I believed, for purely historical reasons. Over twenty years ago, when state funds far exceeded “ed fees,” UC let the more established campuses lock in a higher base budget (justified by a higher proportion of grad students) while requiring that all future budget increases be funded across the system on an equal per student basis. Although state funds are still distributed unequally under this formula, it was natural to assume that the principle of funding all UC students equally across the system would apply not only to new state funds, but also to any increase in tuition that was charged uniformly across the system. But UC has not held itself to any principle governing its use of tuition. As “ed fee” revenue tripled over the past twenty years—it now exceeds UC’s total state funding—UC reintroduced differential rates of per student funding on the tuition side, which meant that the campus funding differentials increased as system-wide tuition went higher. By funding campuses unequally out of tuition, UC implicitly reneged on the principle of equal distribution that it would have applied if UC revenue growth had occurred primarily through state funding, rather than through “ed fee” increases. Someone in UC’s Office of the President made this decision in secret. Until this year there was no consultation with the Academic Senate (even some Chancellors were kept in the dark) about the formula for returning “ed fees” to the campuses.[2]

The bar graphs below (made public by UCSC Chancellor Blumenthal) show that UC’s present policy is to return to seven campuses as little 80% of the annual “ed fees” generated by them so that it can return considerably more to three campuses. UC provides no explanation for this disparity—“ed fees” are distributed at its discretion. It should be noted, moreover, that the dollar-effect of the “ed fee” return gap becomes greater as tuition grows, and that undergraduate tuition will have risen by 76% from 2007-2008 (the basis for the graph) if the proposed November fee increases take full effect in 2010-2011.[3] UC’s intended distribution of “ed fee” increases will make campus funding even more unequal without apparent justification. This is another example of UC’s ability to do whatever it wants with “ed fees,” and provides yet another reason to oppose further “ed fee” increases until UC makes itself accountable for how these funds are actually used.

UC typically deflects demands for actual accountability by telling stories about why it needs to do the things being questioned. It might, for example, say that it needs flexibility to help research-heavy campuses with lots of grad students. But it rarely provides an evidence supported, principled justification for engaging in practices that appear inequitable on their face. This leaves its critics wondering whether to simply take its reasons on faith or to look for other explanations. It’s possible, for example, that UC jiggers the return of “ed fees” to campuses in response to pressure from administrators with the strongest personal UCOP connections, or in response to political pressure from external constituencies who favor a particular campus or discipline or professional school field.  Or perhaps UC is diverting “ed fees” to more favored campuses to help them finance construction. Or maybe it is using “ed fees” to invest in medical centers that make money, or to subsidize medical centers that lose money.  Or it might simply be following old formulas for distributing “ed fees” that are so out of alignment with current conditions that they are unintentionally depriving some campuses of desperately needed funding that is unfairly going to others. UC may be making ad hoc or poorly considered changes in the allocation of the flows precisely because this is unrestricted money for which it is not held accountable.

President Yudof, who is new to the UC system, has not tried to rationalize the graphs that appear above. Here’s what he told the Daily Cal:

I think [UCSC Chancellor] George [Blumenthal] is on to something here. What happens is the state money for grad students comes in as a block to the system and then we distribute it out to the campuses. We have some formulas for doing that that have been there for a very long time. ….It’s broken. I promised George, and you have my word and faith of honor, and this predates me, that we’re gonna try to fix it and make the formulas more transparent and fairer. …I think those are valid points–the formula is old and it’s not transparent. …We actually have teams of people looking at that, I suspect we’re gonna be changing those formulas.[4]

President Yudof ‘s response runs together the still-unequal distribution of UC’s shrinking state funds and the increasingly unequal distribution of UC’s growing tuition funds, but he clearly recognizes that both formulae are unfair. Yet he still wants a 32% tuition increase that will make the distribution even more unfair. Why? All UC’s leaders insist that “[e]very fee increase since 1990-91, with one exception (in 2007-08), has been levied to make up for inadequate state funding.”[5] There are also, however, many UC tuition comparison studies demonstrating that ours is too low on the assumption that the price that students will pay for higher education is independent of the subsidy their university happens to receive from the state or an endowment. It seems that UC planned to raise tuition regardless of the level of state funding, and timed the largest increases to coincide with large state budget cuts.

Based on publicly available data we can say only a limited amount more about the link between the most recent tuition increases and state budget cuts. It’s clear that the enrollment funding UC receives from the state is now $5K per student less than in 2006-2007; but, even in that year, the most advantaged campuses received twice what the least advantaged campuses received from the growing pot of student fee funds that UC gets from both tuition and the state.[6]

We do know that tuition increases exacerbate the disparities in inter-campus funding. As the disparities increase, the painful cry that students are paying more for less becomes louder on the disadvantaged campuses.  Can the inter-campus differentials be justified? Should students be asked to pay tuition increases that will go disproportionately to other campuses? The answer depends partly on whether UC’s internal funding policies can be justified, and whether it holds itself accountable for following its own policies. Thus far it has provided neither justifications nor accountability.

Further tuition increases should be stopped until UC accounts for where this money has gone and will go. It must produce a principle based, evidence supported explanation for how it is distributing ed fees. The money involved is not an abstract flow of dollars moving from students to UC’s bank accounts and back to the campuses. Some of this money has been scraped together by low and middle income families who must take out second and third mortgages to send their children to UC.  Does it make sense, from the perspective of the UC system as a whole, to ask the parents of children attending UC Merced, Irvine, Riverside, Santa Cruz, and Santa Barbara (and even Berkeley) to subsidize the favored campuses without disclosing that subsidy, or how it is actually used by the campus receiving it?  Such subsidies might have been tolerable in an earlier time, when tuition was lower. But at this point, they appear as an increasingly unfair shift of the financial burden to students who may not benefit from the tuition dollars they believe they are putting toward their educations.

November 10, 2009

FOOTNOTES

[1] Meister, “They Pledged Your Tuition” I-III, http://www.cucfa.org/news/tuition_bonds.php

[2] The most recent “ed fee” return figures for UCSC are attached to illustrate the systemwide problem.

[3] Source: http://budget.ucsf.edu/downloads/student-fees-1960-present.xls

[4] http://www.dailycal.org/article/107121/uc_president_discusses_systemwide_financial_crisis

[5] http://www.universityofcalifornia.edu/news/article/22164

[6] http://www.universityofcalifornia.edu/finreports/index.php?file=/07-08/finschd.html; http://www.ucop.edu/budget/enroll/2007-08.pdf

(A PDF version of this article is available.)

In a letter to the UC Davis community, Chancellor Katehi and Provost Lavernia declared that we should work collectively “to address today’s major budget cuts, which come as a consequence of the state’s decade-long disinvestment in higher education.” I think there is a more immediate target for constructive change that would balance the UC budget.

It’s true that UC’s share of the state’s general fund has been declining (from 7.5 percent in 1967-68 to as low as 3 percent in recent years, according to the California Postsecondary Education Commission[1]), but that has been a steady trend. The more immediate reason for the current enormous increases in student fees, and for the sudden need for employee furloughs, is the startling recent growth of UC’s senior management. Data available from the UC Office of the President shows that there were 2.5 faculty members for each senior manager in the UC system in 1993. Now there are as many senior managers as faculty.[2] Just think: Each professor could have his or her personal senior manager.

In the decade beginning in 1997, while faculty increased by 24 percent and student enrollment increased 39 percent, senior management grew by 118 percent. This past year, with the budget crisis in full swing, senior management has grown at twice the rate of faculty. That comes at a high price, because many managers are very well compensated for their work. A report on administrative growth by the UCLA Faculty Association[3] estimated that UC would have $800 million more each year if senior management had grown at the same rate as the rest of the university since 1997, instead of four times faster.

What could we do with $800 million? That is the total amount of the state funding cuts for 2008-09 and 2009-10, and four times the savings of the employee furloughs.[4] Consider this: UC revenue from student fees has tripled in the last eight years. The ratio of state general fund revenue to student fee revenue in 1997 was 3.6:1. Last year it was 1.9:1. If we used that $800 million to reduce student fees, the ratio would go back to the 1997 value.[5] To put another way, it could pay the educational fees for 100,000 resident undergraduates.

Of course the budget crisis is more complex than this. Of course we must try to convince the state government and the public of the wisdom of investment in our university system. But changing attitudes about public investment is a large task that involves far more than just UC. I’m not sure that those who are reluctant to increase UC support will be swayed by arguments presented by a UC president whose 2008 compensation was $828,000. Or by a new UC Davis chancellor whose salary (27 percent greater than that of her predecessor) equals that of the US president.

Our effort to solve the budget problems has a greater chance for success if we first aim at something we have direct control over. UC has shared governance (in theory), and does its own hiring. I suggest that we — administrators, faculty, staff and students — review the justification, costs, and benefits related to the explosive growth in senior management. If we could reduce management costs by $800 million, we could eliminate much of the financial hardship on students and staff. We could argue convincingly to the governor and state legislature that a well-run UC deserves full support. Perhaps most impressive, we could present a model for turning back a nationwide trend in university hiring.

FOOTNOTES

[1] Source: http://www.cpec.ca.gov/completereports/2008reports/FiscalProfiles2008.asp

[2] Source: http://www.ucop.edu/ucophome/uwnews/stat/

[3] Source: http://www.uclafaculty.org/FASite/Admin._Growth.html

[4] Source: http://www.dateline.ucdavis.edu/dl_detail.lasso?id=11822

[5] Source: http://www.cpec.ca.gov/FiscalData/FundingOptions.asp