How much will it cost us to restore public higher education in 2012-13?

This working paper has been superseded by an updated version:

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

Read “Financial Options for Restoring Quality and Access to Public Higher Education in California” below or download a PDF of it (November 2012, 7 pp.) If you’re really a policy wonk, download the spreadsheets behind this report.


WORKING PAPER

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

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

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

(November 10, 2012)
Council of UC Faculty Associations
1270 Farragut Circle
Davis, CA 95618
Phone: (888) 826-3623

 

EXECUTIVE SUMMARY

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

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

Answer: It would cost taxpayers $7.346 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 $11,680 (to a total of $24,910 per year), California State University fees would have to increase by $4,456 (to a total of $10,975 per year); California Community College fees would not have to increase.

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

Answer: It would cost the median California taxpayer about $55.


Introduction:

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

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

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

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

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

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

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

 

 

Answer No. 1: Returning quality and fees to the level of 2000-01 would cost taxpayers $7.346 billion.

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

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

Restoring full state funding for existing enrollments would cost a total of $5.618 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 $7.346 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 $11,680 (to a total of $24,910 per year), and CSU fees by $4,456 (to $10,975 per year). CCC fees would not have to increase.

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

 

 

Answer No. 3: Restoring public higher education while returning student fees to 2000-01 levels would cost the median California taxpayer an additional $55.

Table 3 outlines these calculations. We obtained the distribution of taxes paid by adjusted gross income per tax return from the Franchise Tax Board 2009 (for tax year 2008),[6] the most recent year available, then allocated the $7.346 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 $55 next April 15. For the two-thirds of state tax returns with taxable incomes below $60,000, it would cost $141 or less. Tax returns with the top 5% of adjusted gross income — $400,000 to $499,999 – would increase by $4,723.

It is also worth noting that our income tax distribution data lags our other data by several years and is just now falling into the deficit (2008 year data), which has an effect on the calculation of the median return. For comparison, using 2007 year data the median return would pay $45 to restore higher education in 2012-13. Certainly in 2012 the state’s economy looks a lot better than it did in 2008, so the actual cost to the median return is likely lower than $55.

Income taxes are presented as one option, simply to illustrate the cost for typical taxpayers. Personal and corporate income taxes are only 70 percent[7] of all state revenues; part of the $7.346 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 a 2009 report of tax year 2008, the most recent time for which data are available; this distribution will be different in 2012.

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

 


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

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

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

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

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

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

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

How much will it cost us to restore public higher education if Prop 30 fails

This post has been superseded by an updated version:

How much will it cost us to restore public higher education in 2012-13?.


Read “Financial Options for Restoring Quality and Access to Public Higher Education in California” below or download a PDF of it (September 2012, 8 pp.) If you’re really a policy wonk, download the spreadsheets behind this report.


WORKING PAPER

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

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

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

(September 26, 2012)
Council of UC Faculty Associations
1270 Farragut Circle
Davis, CA 95618
Phone: (888) 826-3623

 

EXECUTIVE SUMMARY

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

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

Answer: It would cost taxpayers $7.346 billion. If California’s Proposition 30 (which would increase taxes on wealthy Californians and sales taxes on everyone to provide funding for education and other state services) fails in November, 2012, the state’s higher education systems would receive additional major cuts in 2012-13, raising the cost of the reset to $8.162 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 $11,680 (to a total of $24,910 per year), California State University fees would have to increase by $4,456 (to a total of $10,975 per year); California Community College fees would not have to increase.

If Proposition 30 fails, UC fees would have to increase over the current year’s fees by $13,253 (to a total of $26,483 per year), CSU fees would have to increase by $4,605 (to a total of $11,124 per year), and CCC fees would have to increase $117 (to a total of $1,197 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 $55 (about $61 if Proposition 30 fails and 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 (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 $7.346 billion.

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

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

Restoring full state funding for existing enrollments would cost a total of $5.618 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 $7.346 billion.

 

Higher education funding in the upcoming year depends on the outcome of the November vote on Proposition 30, a proposed temporary income and sales tax increase to fund education and other state services. If voters reject Proposition 30, there would be additional “trigger cuts” to higher education of  $250 million to UC, $250 million to CSU and $549 million to the CCCs.[5]  The CCCs would be allowed to cut enrollment by 63,000 students. The effects of these changes are shown in Table 1b. The total cost to restore higher education funding and access to 2000-01 levels would then be $8.162 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 $11,680 (to a total of $24,910 per year), and CSU fees by $4,456 (to $10,975 per year). CCC fees would not have to increase. If Proposition 30 fails, UC fees would have to increase over the current year’s fees by $13,253 (to a total of $26,483 per year), CSU fees would have to increase by $4,605 (to a total of $11,124 per year), and CCC fees would need to increase $117 (to a total of $1,197 per year).

Tables 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 $55.

Table 3 outlines these calculations. We obtained the distribution of taxes paid by adjusted gross income per tax return from the Franchise Tax Board 2009 (for tax year 2008),[7] the most recent year available, then allocated the $7.346 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 $55 next April 15.  For the two-thirds of state tax returns with taxable incomes below $60,000, it would cost $141 or less.  Tax returns with the top 5% of adjusted gross income — $400,000 to $499,999 – would increase by $4,723.

It is also worth noting that our income tax distribution data lags our other data by several years and is just now falling into the deficit (2008 year data), which has an effect on the calculation of the median return. For comparison, using 2007 year data the median return would pay $45 to restore higher education in 2012-13. Certainly in 2012 the state’s economy looks a lot better than it did in 2008, so the actual cost to the median return is likely lower than $55.

Income taxes are presented as one option, simply to illustrate the cost for typical taxpayers.  Personal and corporate income taxes are only 70 percent[8] of all state revenues; part of the $7.346 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 a 2009 report of tax year 2008, the most recent time for which data are available; this distribution will be different in 2011.

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

 


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

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

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

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

[5] Trigger information is available online at http://lao.ca.gov/reports/2012/bud/spending_plan/spending-plan-091312.pdf

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

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

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

March 1 – 5 Mobilization for Higher Education

A major mobilization is coming March 1 – 5, 2012, to put pressure on the Governor and legislature to renew support for public education in California and for raising taxes to restore the state funding that UC, the CSUs, the CCs, and K-12 to meet the needs of our people for high quality, affordable education. There will be a variety of marches, rallies and other activities around the state, peaking with a protest on the Capitol grounds in Sacramento on Monday, March 5th. A key part of the action is a “99-mile March for Public Education & Social Justice,” starting in Oakland/Berkeley on March 1 and going to Sacramento.

If you can, please attend one of the marches, rallies, or other events being planned for March 1. A list is available at Occupy Education CA. Bus and carpool transit to many of these events is also available.

Also, if you can, please join the demonstration at the Capitol on Monday, March 5th. A signup form for bus transit from around the state is available here.

If you would like more background information about the state fiscal crisis, what can be done to solve it, and the movement for refunding the state budget and supporting public education, please check out the information on this site or at the following sites:

Brown and Whitman Debate Public Higher Ed

At California’s gubernatorial debate on September 28, 2010 Capital Public Radio’s Marianne Russ asked the question we (and others, apparently, as she attributed the question to a UC student) asked her to ask during yesterday’s debate: “As Governor would you roll back all of the funding cuts to the UC, CSU and CC systems, why or why not.” I have not been able to find a transcript of the debate, but I typed up what the two candidates said:

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.

Meg Whitman’s $1 billion proposal for higher ed will require continuing large fee increases

Ms. Whitman’s “Policy Agenda for a New California” recognizes the importance of higher education to California’s future and identifies the problems of declining quality in the face of escalating fees:

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.

Schwarzenegger’s Higher Ed Constitutional Amendment: All PR

On January 6, 2010, Governor Arnold Schwarzenegger lamented the disastrous condition of public higher education in California and decried the fact that California now spends more on prisons than higher education.  He called for a constitutional amendment to reverse this situation and commit at least 10% of the state budget to higher ed (UC and CSU) and limit prison funding to 7%.

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.