It’s bad enough to live through budget crises that go on for years at a time while paralyzing planning and development of every kind. We also have to deal with leadership problems, centering now on the fact that neither the Regents nor UCOP nor the campus chancellors have credible plans for reversing or coping with the relentless grinding away of the university’s public funding base. The failure of Jerry Brown’s doomed, misguided effort to exchange massive new cuts for a public vote on tax extensions means that UC and the state's other higher education segments will need to fight like dogs to avert a major budgetary meltdown. Brown is unfornately on track to undo in a couple of years what his father’s generation—among others--took decades to build.
But will UC fight? Its leaders won’t, if my conversation with a vocal senior UC offical reflects the wider thinking.
This official contacted me because he objected to a core claim in my recent posts about the Regents (here and here). I very much appreciated the outreach and dialgoue, and am not doing justice to the full range of our friendly conversation, but am focusing on the overriding theme.
He asked at the start, "what makes you think that there's money in Sacramento, and even if there were, that they would give any if it to UC"? He then ran through a detailed analysis of California’s liabilities, all very authoritatively done and no doubt correct. He emphasized how much higher the liabilities are when you use accrual accounting rather than cash accounting. He than asked me how I could suggest that UC could ever go back to the state.
I offered him three reasons.
First, that a much poorer California first built a great UC, and we can do this again in the face of our liabilities. I mentioned my depression era grandparents paying for a system whose expansion allowed my mother and father to be first-generation college students, and also cited stats about declining tax effort in relation to personal income, a declining share of the state budget as a percentage of aggregate income, lower business taxes as a share of the total (slide 7), etc. A relatively poor California built this great thing, and we can certainly do at least as well as they do. I called funding cuts a 20-year policy choice that now needs to be undone. He thought this was too simple, and asked if I had experience in Sacramento. I told him about a faculty group visit too various legislators in 2008. We agreed on the actual attitudes in Sacramento, but not on whether the attitudes could be changed.
Second, I made the point that UCOP and the Regents have been deflating state support by saying yes it's terrible that we are being cut but we can replace public with private funds. The legislature doesn't just "hate UC," as he put it, but thinks that it can cut UC without causing much damage. They think the kids from Simi Valley will pay $14k instead of $10.5 k, no big deal, UC will still be the greatest public university in the world as UCOP always says and we need the money for other stuff like healthcare. My conversation partner scoffed at this explanation, saying "you sound like that guy who came up to me at the Regents meeting and said if you just stopped talking in public about how we have other sources the legislature would stop cutting us." I said that guy was right.
I made the general point that you can't insert the word "just" into a sentence and get an accurate paraphrase of the faculty's position on this. We all know it's complicated and that we're undoing years of mixed messages, a process that will itself take years. But the first thing to do is to stop sending the mixed messages (we will cut but won't hurt the instructional program as Nathan Bostrom recently told a newspaper). The next thing to do is to just tell the truth: the cuts are radically downgrading the University. People really don't know the damage that these cuts do to the university. He thought they did . . . I said this brings us to my third argument, which is that the Regents don't have any choice but to change direction. They don't want to cut quality, of course, so they have to restore public funding. The alternative, if they don't, is tuition going to $40,000 in a few years. So either we say great, let's go there, or we go back to the state and say not restoring money is not an option. (UC President Mark Yudof has started gesturing in this direction.)
I honestly don't know whether he took this in or not. He talked about his son paying less for his semester at a UC campus than for his time at his regular Ivy League campus, and was it right that he, who could pay more, would be subsidized by the taxpayers? I said yes it is right, because it is the basis of a UC that serves the state as a whole, and it produces a UC with more class and race diversity than all of the Ivy League colleges put together or any other private, or any other semi-private public like Michigan, measured in Pell Grants among other things. I mentioned the principal of mutualization, which most Americans seem to have forgotten although Hollywood used to make widely popular movies on the subject. If you want to get people to actually use a service, you lower the price by sharing the cost across the widest percentage of the population, and this understanding-- service to the whole state-- needs to be rebuilt.
The most interesting part was near the end. I said it's Sacramento or 40,000 dollars, that has to be the Regents consistent message. He said that was just a rhetorical point. I said it's a quantitative point, and if my arithmetic is wrong somebody needs to fix it. It would also help the public to understand their real choice: they think the choice is between higher taxes or a great UC at $14,000 instead of $10,500, but they're wrong. Since they don't understand the real choice, how can we expect them to make a real decision? Since we've never said "hike your taxes or get UC B+ at $40,000," why should they have ever vote a hike? I asked him, Will you use the $40k number? No I won't he replied, it won't work. Why not at least try it, I asked? This isn't just hypothetical - a unit like Berkeley Law that made top quality defined by rankings as its only priority fought tirelessly to get its tuition to $40,000. This official like Regent Blum is pro high-tuition, but when I said "high tuition" = $40,000 he didn't want to go there. Food for thought is this: I don't think he doesn’t want to go there because he thinks the number is wrong. My hunch is that he doesn’t want to risk creating public opposition to continuous but not-too-shocking annual tuition increases, ones that will create UC B+ that we will call UC A- (except at Berkeley and UCLA), for a modest in-state price of $20,000. He invited me to start visiting Sacramento, and I said with pleasure. I added, I think you and I should go there together and do a joint presentation where we talk about tuition at $40,000. He certainly didn't go for this, and he wound the conversation down at this point.
My own views on this are simple.
First, the voters deserve to have numbers attached to the fatal choices they are in the process of making.
Second, the Senate should push for an extension of the Regents’ budget presentation that formalizes the real numbers on projected tuition increases that the student Regent had to coax apologetically out of Nathan Bostrom.
Third, faculty should demand and receive access to divisional-level campus budgets and planning scenarios so they can offer informed comment and make intelligent decisions about their own careers.
Finally, the financial brains on the Board of Regents, with their experience in creating and investing in large liabilities, should help the state solve its liability issues in a way that doesn't wreck its higher education system.
Faculty, staff, and students are going to need to mobilize themselves on budget policy like they never have before. I really don’t see any other way of avoiding acceleratign decline.
Thursday, March 31, 2011
Budget Matters (Part II)
As bad as the Governor's original proposal was, the budget situation is now worse. While it is possible that the collapse of the budget talks will turn out to be political theater that seems unlikely. Instead, we are faced with a situation where the already terrible cuts to education, health, work programs, and social services will become worse. Although Jerry Brown and the Democrats are talking about placing an initiative on the November ballot there is no certainty that they will be able to get the signatures, if they do it will compete with numerous republican backed initiatives including one on pensions, would then be considered a tax increase rather than an extension, and might not pass. And of course without revenues programs will be hit harder over the summer and fall--most likely falling most heavily on the poor, the elderly, the sick and the young.
For Higher Education the fallout has already begun. The Community College System now expect their cuts to double in size and have announced that they expect to slash enrollments by approximately 400,000. CSU had already announced that they were cutting faculty, staff, and enrollments--and this was before the collapse of the Budget talks. Neither the Regents or UCOP have issued any statements yet but given the recent Regents meeting there is little evidence that they have any compelling plans--either for the short or the long-term situation. UCOP had estimated that even on the best-case scenario there would be 500 million in cuts compounded by several hundred in rising costs. We are now far from a best case scenario.
We will keep you posted in case there are any new developments. But faculty and staff need to insist that they have a voice in whatever strategies are adopted. Please share campus news here.
For Higher Education the fallout has already begun. The Community College System now expect their cuts to double in size and have announced that they expect to slash enrollments by approximately 400,000. CSU had already announced that they were cutting faculty, staff, and enrollments--and this was before the collapse of the Budget talks. Neither the Regents or UCOP have issued any statements yet but given the recent Regents meeting there is little evidence that they have any compelling plans--either for the short or the long-term situation. UCOP had estimated that even on the best-case scenario there would be 500 million in cuts compounded by several hundred in rising costs. We are now far from a best case scenario.
We will keep you posted in case there are any new developments. But faculty and staff need to insist that they have a voice in whatever strategies are adopted. Please share campus news here.
Friday, March 25, 2011
Wisconsin Republican Party Attacks Academic Freedom
Updated Below: (1), (2)
William Cronon is a professor of History at the University of Wisconsin, Madison and the President-elect of the American Historical Association. For those of you who do not know his work he has been a major figure in the development of environmental history and a leading figure in the study of United States history. He recently began a blog "Scholar As Citizen" to engage public discussion and debates where he can bring his scholarly knowledge to bear. He is now a target of the Wisconsin Republican Party.
His "mistake," apparently was writing a blog entry on the efforts of Wisconsin Republicans to strip collective bargaining rights from public employees and the connections between those efforts and the work of the American Legislative Exchange Council. ALEC is an organization founded in the 1970s to help draft conservative legislation. Cronon subsequently published an op-ed in the NYT that showed what a radical departure the Walker Administration was from previous Wisconsin history and especially from the long history of Wisconsin's Republican Party. In the course of the opinion piece Cronon drew some pretty tentative comparisons between Walker's style and that of Joseph McCarthy in the 1950s.
The Wisconsin Republican Party apparently found Cronon's writing on the links between Walker's initiatives and ALEC unacceptable. In response they demanded--under Wisconsin's Open Records Law--copies of any of Cronon's University emails relating to a series of names and topics. Cronon has provided the request on his blog and I reproduce it here:
I won't belabor the issue here except to note as I have done before that Wisconsin's Republican party seems to be at the forefront of the assault on labor rights and public employees. But of course they are not alone in that. Nor are they alone in this effort either. In Virginia, the Attorney General has subpoenaed the records of a former professor who does research on climate change alleging fraud while in Illinois a prosecutor subpoenaed the records and notes of students who participated in a Journalism class connected to the Innocence Project. Each of these cases are ongoing. Combined with other recent cases concerning Academic Freedom they show a disturbing trend of trying to limit the critical speech of academics.
As Cronon himself notes, the use of Public Records Laws is a complex issue. We all, scholars and citizens (to use Cronon's pairing) benefit from the federal FOIA and the numerous state open records laws here in California and elsewhere. Individuals at UC and CSU have used these laws to pry open records relating to auxiliaries, investment decisions, budgetary allocations etc. The efforts by both the Bush and Obama administrations to eviscerate FOIA under an expanded claim of state secrets is a profound danger to our democracy.
But like the efforts to use shield laws to protect high government officials when they seek to mislead the public or damage the reputation of whistle-blowers, these efforts are something different than preserving governmental openness. Here, instead, is an effort by the politically powerful to use practices designed to protect citizens in order to harass them; here is an effort to deploy the rhetoric of free speech to stifle it; here is an effort to use tools designed to make government more open to make it make it harder to understand the forces shaping government. Sunshine laws in the interest of secrecy.
We all have our criticisms of the University as it really exists. But it is, at least at this point, still one of the spaces where the normal systems regulating thought and speech are held at bay. It would be a disaster for all if this space was lost entirely.
For other commentary you can see here, here, and here.
The Wisconsin Republican Party has responded to insist that they are victims of Cronon's attempt to intimidate them. Cronon has made that available here.
You can follow this story as it unfolds at Cronon's blog. It is an important moment to defend academic freedom--both Cronon's and everyone else's.
Update 1: New York Times Editorial
Update 2: Cronon Has a List of Links of Commentary on the Issue
William Cronon is a professor of History at the University of Wisconsin, Madison and the President-elect of the American Historical Association. For those of you who do not know his work he has been a major figure in the development of environmental history and a leading figure in the study of United States history. He recently began a blog "Scholar As Citizen" to engage public discussion and debates where he can bring his scholarly knowledge to bear. He is now a target of the Wisconsin Republican Party.
His "mistake," apparently was writing a blog entry on the efforts of Wisconsin Republicans to strip collective bargaining rights from public employees and the connections between those efforts and the work of the American Legislative Exchange Council. ALEC is an organization founded in the 1970s to help draft conservative legislation. Cronon subsequently published an op-ed in the NYT that showed what a radical departure the Walker Administration was from previous Wisconsin history and especially from the long history of Wisconsin's Republican Party. In the course of the opinion piece Cronon drew some pretty tentative comparisons between Walker's style and that of Joseph McCarthy in the 1950s.
The Wisconsin Republican Party apparently found Cronon's writing on the links between Walker's initiatives and ALEC unacceptable. In response they demanded--under Wisconsin's Open Records Law--copies of any of Cronon's University emails relating to a series of names and topics. Cronon has provided the request on his blog and I reproduce it here:
For those who have not followed the Wisconsin matter some of the names belong to Republican legislatures who are facing recall movements, other topics relate obviously to the history and practice of collective bargaining. It is hard to imagine the purpose of the request except to discredit or intimidate Cronon, or to suggest that he violated some term of employment.******************************************
From: Stephan Thompson [mailto:SThompson@wisgop.org]
Sent: Thursday, March 17, 2011 2:37 PM
To: Dowling, John
Subject: Open Records Request
Dear Mr. Dowling,
Under Wisconsin open records law, we are requesting copies of the following items:
Copies of all emails into and out of Prof. William Cronon’s state email account from January 1, 2011 to present which reference any of the following terms: Republican, Scott Walker, recall, collective bargaining, AFSCME, WEAC, rally, union, Alberta Darling, Randy Hopper, Dan Kapanke, Rob Cowles, Scott Fitzgerald, Sheila Harsdorf, Luther Olsen, Glenn Grothman, Mary Lazich, Jeff Fitzgerald, Marty Beil, or Mary Bell.
We are making this request under Chapter 19.32 of the Wisconsin state statutes, through the Open Records law. Specifically, we would like to cite the following section of Wis. Stat. 19.32 (2) that defines a public record as “anything recorded or preserved that has been created or is being kept by the agency. This includes tapes, films, charts, photographs, computer printouts, etc.”
Thank you for your prompt attention, and please make us aware of any costs in advance of preparation of this request.
Sincerely,
Stephan Thompson
Republican Party of Wisconsin
608-257-4765
******************************************
I won't belabor the issue here except to note as I have done before that Wisconsin's Republican party seems to be at the forefront of the assault on labor rights and public employees. But of course they are not alone in that. Nor are they alone in this effort either. In Virginia, the Attorney General has subpoenaed the records of a former professor who does research on climate change alleging fraud while in Illinois a prosecutor subpoenaed the records and notes of students who participated in a Journalism class connected to the Innocence Project. Each of these cases are ongoing. Combined with other recent cases concerning Academic Freedom they show a disturbing trend of trying to limit the critical speech of academics.
As Cronon himself notes, the use of Public Records Laws is a complex issue. We all, scholars and citizens (to use Cronon's pairing) benefit from the federal FOIA and the numerous state open records laws here in California and elsewhere. Individuals at UC and CSU have used these laws to pry open records relating to auxiliaries, investment decisions, budgetary allocations etc. The efforts by both the Bush and Obama administrations to eviscerate FOIA under an expanded claim of state secrets is a profound danger to our democracy.
But like the efforts to use shield laws to protect high government officials when they seek to mislead the public or damage the reputation of whistle-blowers, these efforts are something different than preserving governmental openness. Here, instead, is an effort by the politically powerful to use practices designed to protect citizens in order to harass them; here is an effort to deploy the rhetoric of free speech to stifle it; here is an effort to use tools designed to make government more open to make it make it harder to understand the forces shaping government. Sunshine laws in the interest of secrecy.
We all have our criticisms of the University as it really exists. But it is, at least at this point, still one of the spaces where the normal systems regulating thought and speech are held at bay. It would be a disaster for all if this space was lost entirely.
For other commentary you can see here, here, and here.
The Wisconsin Republican Party has responded to insist that they are victims of Cronon's attempt to intimidate them. Cronon has made that available here.
You can follow this story as it unfolds at Cronon's blog. It is an important moment to defend academic freedom--both Cronon's and everyone else's.
Update 1: New York Times Editorial
Update 2: Cronon Has a List of Links of Commentary on the Issue
Saturday, March 19, 2011
Regent Blum Wants to Raise In-State UC Tuition to $40,000
No, Richard Blum didn't actually say that. But that's where the plan he mentioned at a Wednesday Regents' session ends up. Let me explain.
On Wednesday afternoon, the Regents were treated to a helpful budgetary presentation by senior UCOP budget officials Patrick Lenz and Nathan Bostrom - helpful because it looked at the next five years, was frank about the acute shortfalls that UC faces, and and quantified a range of options for dealing with these shortfalls. Everyone involved with UC should give each slide in the deck their undivided attention. The whole exercise will take you about half an hour. You can't understand the meaning of Regent Blum's call for high tuition unless you understand the slides that came before.
Display 4 shows what has been happening to tuition: gross tuition has tripled over the past decade, and what you see here is that net tuition, the yield to the university's budget after financial aid has been deducted, has doubled. The lesson here is that tuition increases produce less money than most people assume. In November 2009, I estimated that the massive 32% tuition increase would add about 2% to two years of UC's core budget. This should remind us of how gigantic the state funding cuts are, how dependent core campus operations are on state funds, and how hard it is to replace public with private funds. Even if you like privatization of funding sources, you have to start from the fact that the scales don't match.
Displays 8 and 9 identify the 1 year 2011-12 funding gap. The Jerry Brown cut is $500 million for UC, but mandated cost increases bring the total gap to $862.5 million. The campuses have been asked to plan for cuts of this scope, which is about 30% of UC's current general fund provision. President Yudof's position prior to this week has been that there would be no tuition increase for 2011-12 beyond the 8% already voted. The current default policy is "pay more to get less," since tuition goes up at 2-4 times the rate of annual inflation even as educational services (things like a place in a course) continue to decline.
A strong point of the UCOP presentation is that it identifies the damage done. Display 11 quantifies the damage in terms of layoffs: 4400 UC employees have already lost their jobs (or about 2.5% of the 2009 workforce), and another 3700 positions have been left unfilled. Displays 32-33 note the financial sacrifices made by employees who remain, Display 34 invokes the suffering of buildings and grounds (they can't appreciate having had their maintenance abandoned by the state in the early part of the decade). Displays 30-31 and 39 actually do dip their toes in the scalding water of declining educational quality at the University of California, which they call "cost avoidance." This is a valuable encounter with campus reality, since normally UC officials insist that this decline is being avoided, or is anticipated but has not yet actually occurred.
The real action begins with Display 36. With the only new revenues coming from tuition from 1% annual enrollment growth, UC's core revenues stay around $5 billion per year but expenses grow to about $7.5 billion, creating a deficit in 2015-16 of $2.4 billion. In other words, if the state refuses to increase general funds while UC refuses to raise tuition, UC rapidly becomes insolvent.
The next set of slides (Displays 38-44) chip away at the funding gap. They offer conservative assumptions about cost increases (Display 38), meaning that costs could easily rise more quickly than assumed here. The next slides propose a series of cost reductions. They reduce the 2015-16 deficit by $500 million (that legendary recurring $500 million in systemwide efficiencies). Improving indirect cost recovery, raising more unrestricted private funds, adding out-of-state students (a quite small gain there), and professional school tuition increases double the savings, reducing the 2015-16 gap to $1.5 billion without adding state funds or increasing tuition.
It's best to think of Display 45 as a best case scenario. If we use Jane Wellman of the Delta Project's rule of thumb of 2% annual efficiency savings (on $5 billion), and cut the other savings in half, $500 million is $100 million in the first year, $200 m in the second and could get to $500 m in year five with heroic effort. The other $500 million becomes $250 million. Instead of saving $900 million we've saved $750 million. Any slippage and we have a $2 billion problem rather than a $1.5 billion problem. And that excludes greater-than-expected cost increases. In other words, $1.5 billion is a minimum shortfall in 2015-16.
My favorite slides are 46 and 47.
46 gives a series of combinations of state general fund and tuition increases which 47 simplifies into 4 alternatives. Note that the more one goes up, the less the other one does. The logic here bears spelling out. UC officials have never admitted that annual tuition increases have helped reduce state funding because they teach the state that UC has other revenues options. But this is admitted in the logic of this slide. It also reflects Jerry Brown's January statement that state funding at level of 2010-11 minus $500 million would not be forthcoming in the case that UC decides to raise tuition again.
Here's the even worse news.
The alternative that closes the gap, Alternative A, proposes an 8% annual state funding increase, matched by an 8% annual tuition increase. The first half of this doesn't seem likely. The semi-plausible alternative D imagines the state cutting $500 million this year and then increasing general funds each year by 4%. Tuition rises by "only" 10% a year, increasing tuition by another 50%, bringing it to somewhere between $18,000 and $20,000 per year for in-state students by 2015-16. But there's still a gap of $350 million remaining of the (minimal) gap of $1.5 billion. In other words, UCOP sees no solution to the budget shortfall, even under its best case scenario.
One can hear in the discussion that the Regents are grasping what this all means. The tape I'm using begins at about Display 30, and almost exactly an hour later, Regent Alfredo Mireles, the student Regent-designate, says the following:
Nathan Bostrom replies, "In rough terms, 18% compounded over 4 years, almost doubles tuition."
The committee chair says, "just a reminder, we're just laying out the extremes, so, ok?"
Actually it's not that extreme. Say the state cuts UC $500 million for 2011-12, and then freezes general funds at that level, perhaps in response to UC freezing overenrollments plus a Hoovernomics-induced non-recovery. In that case, an in-state UC undergraduate would be paying about $25,000 per year in 2015-16.
The icing on this poison cake is that the 2015-16 student, perhaps Regent Mireles' little sister, will be paying $25,000 per year for UC's impaired 2011-12 condition. That $25,000 doesn't get the university back even to 2007-08, to saying nothing of this blog's regulative baseline of 2001-02. So the option that includes no major increases in state funding means paying more -- double -- for less. Let's call it "UC Minus," our 2010-2011 version (see Display 48, which typically pushes this into the future). One of the presenters mentioned the Regents' quality goals, normal annual improvements in a University that lives in a world where the competition is not standing still. In the Cuts Report, UCPB priced these priorities at about $1 billion a year beyond existing funding levels (Figure 7). "UC Plus," that is, UC that keeps up with the rest of the world, cannot be bought at even $25,000 per year.
We are now finally ready to appreciate the intervention of Regent Richard Blum, appearing on this tape at 1:11 (excerpted):
Regent Blum focused on "high aid," but we are still left with the "high tuition" component of the program. Given UC's needs in a "post-public" phase that some key Regents believe is inevitable, $25,000 a year is not high tuition: it is merely the tuition that fills in the minimum likely funding gap for "UC Minus" in 2015-16. How do we get the billion dollars on top of that to produce "UC 2007-08," or $2 billion to create some approximate version of UC 2001? A 6.4% increase in tuition (on the current base of $12,150) yields $100 million net of aid (Display 50). We would need ten of those units to get UC 2007, or $7776. This would come on top of 1015-16's $25,000, bringing us to $32,776 for an in-state student in that year.
But if it's Stanford that we're competing with, then we need funding for small seminars, interactive lab work, directed study, undergraduate research opportunities, and many more graduate students to reduce overall PhD candidate teaching loads. Add another billion to recreate UC Plus (or UC 2001). That is, add another $7776, which gets tuition to $40,000 - $40,552 to be exact.
I think these hikes would be a terrible idea, and am opposed to them. My point here is that when we start taking with real numbers, even the rough estimates of this post, we can see that giving up on public funding is simply not a financial possibility. The Regents at some point will need to refocus their attention on rebuilding the revenues UC gets from the state.
On Wednesday afternoon, the Regents were treated to a helpful budgetary presentation by senior UCOP budget officials Patrick Lenz and Nathan Bostrom - helpful because it looked at the next five years, was frank about the acute shortfalls that UC faces, and and quantified a range of options for dealing with these shortfalls. Everyone involved with UC should give each slide in the deck their undivided attention. The whole exercise will take you about half an hour. You can't understand the meaning of Regent Blum's call for high tuition unless you understand the slides that came before.
Display 4 shows what has been happening to tuition: gross tuition has tripled over the past decade, and what you see here is that net tuition, the yield to the university's budget after financial aid has been deducted, has doubled. The lesson here is that tuition increases produce less money than most people assume. In November 2009, I estimated that the massive 32% tuition increase would add about 2% to two years of UC's core budget. This should remind us of how gigantic the state funding cuts are, how dependent core campus operations are on state funds, and how hard it is to replace public with private funds. Even if you like privatization of funding sources, you have to start from the fact that the scales don't match.
Displays 8 and 9 identify the 1 year 2011-12 funding gap. The Jerry Brown cut is $500 million for UC, but mandated cost increases bring the total gap to $862.5 million. The campuses have been asked to plan for cuts of this scope, which is about 30% of UC's current general fund provision. President Yudof's position prior to this week has been that there would be no tuition increase for 2011-12 beyond the 8% already voted. The current default policy is "pay more to get less," since tuition goes up at 2-4 times the rate of annual inflation even as educational services (things like a place in a course) continue to decline.
A strong point of the UCOP presentation is that it identifies the damage done. Display 11 quantifies the damage in terms of layoffs: 4400 UC employees have already lost their jobs (or about 2.5% of the 2009 workforce), and another 3700 positions have been left unfilled. Displays 32-33 note the financial sacrifices made by employees who remain, Display 34 invokes the suffering of buildings and grounds (they can't appreciate having had their maintenance abandoned by the state in the early part of the decade). Displays 30-31 and 39 actually do dip their toes in the scalding water of declining educational quality at the University of California, which they call "cost avoidance." This is a valuable encounter with campus reality, since normally UC officials insist that this decline is being avoided, or is anticipated but has not yet actually occurred.
The real action begins with Display 36. With the only new revenues coming from tuition from 1% annual enrollment growth, UC's core revenues stay around $5 billion per year but expenses grow to about $7.5 billion, creating a deficit in 2015-16 of $2.4 billion. In other words, if the state refuses to increase general funds while UC refuses to raise tuition, UC rapidly becomes insolvent.
The next set of slides (Displays 38-44) chip away at the funding gap. They offer conservative assumptions about cost increases (Display 38), meaning that costs could easily rise more quickly than assumed here. The next slides propose a series of cost reductions. They reduce the 2015-16 deficit by $500 million (that legendary recurring $500 million in systemwide efficiencies). Improving indirect cost recovery, raising more unrestricted private funds, adding out-of-state students (a quite small gain there), and professional school tuition increases double the savings, reducing the 2015-16 gap to $1.5 billion without adding state funds or increasing tuition.
It's best to think of Display 45 as a best case scenario. If we use Jane Wellman of the Delta Project's rule of thumb of 2% annual efficiency savings (on $5 billion), and cut the other savings in half, $500 million is $100 million in the first year, $200 m in the second and could get to $500 m in year five with heroic effort. The other $500 million becomes $250 million. Instead of saving $900 million we've saved $750 million. Any slippage and we have a $2 billion problem rather than a $1.5 billion problem. And that excludes greater-than-expected cost increases. In other words, $1.5 billion is a minimum shortfall in 2015-16.
My favorite slides are 46 and 47.
46 gives a series of combinations of state general fund and tuition increases which 47 simplifies into 4 alternatives. Note that the more one goes up, the less the other one does. The logic here bears spelling out. UC officials have never admitted that annual tuition increases have helped reduce state funding because they teach the state that UC has other revenues options. But this is admitted in the logic of this slide. It also reflects Jerry Brown's January statement that state funding at level of 2010-11 minus $500 million would not be forthcoming in the case that UC decides to raise tuition again.
Here's the even worse news.
One can hear in the discussion that the Regents are grasping what this all means. The tape I'm using begins at about Display 30, and almost exactly an hour later, Regent Alfredo Mireles, the student Regent-designate, says the following:
This may be a bit morbid but on Display 46, we have a scenario where I think Nathan said tuition is increased by 18% a year unti l15-16. Do we know what that number would be? How much would students pay if that were to be the case?There is stricken silence, and Regent Mireles feels compelled to add, "just so we know understand how much."
Nathan Bostrom replies, "In rough terms, 18% compounded over 4 years, almost doubles tuition."
The committee chair says, "just a reminder, we're just laying out the extremes, so, ok?"
Actually it's not that extreme. Say the state cuts UC $500 million for 2011-12, and then freezes general funds at that level, perhaps in response to UC freezing overenrollments plus a Hoovernomics-induced non-recovery. In that case, an in-state UC undergraduate would be paying about $25,000 per year in 2015-16.
The icing on this poison cake is that the 2015-16 student, perhaps Regent Mireles' little sister, will be paying $25,000 per year for UC's impaired 2011-12 condition. That $25,000 doesn't get the university back even to 2007-08, to saying nothing of this blog's regulative baseline of 2001-02. So the option that includes no major increases in state funding means paying more -- double -- for less. Let's call it "UC Minus," our 2010-2011 version (see Display 48, which typically pushes this into the future). One of the presenters mentioned the Regents' quality goals, normal annual improvements in a University that lives in a world where the competition is not standing still. In the Cuts Report, UCPB priced these priorities at about $1 billion a year beyond existing funding levels (Figure 7). "UC Plus," that is, UC that keeps up with the rest of the world, cannot be bought at even $25,000 per year.
We are now finally ready to appreciate the intervention of Regent Richard Blum, appearing on this tape at 1:11 (excerpted):
I don't really think we've done a very good job of letting the people of California know what our problem is and of trying to raise money to get us through this, now and in the future. . . . There is a way out of this, and let me get through my entire statement before you come over and decide to lynch me. There is really only one way out of this problem, and a lot of other universities, particularly that ones that we compete with have adopted this. and that is higher tuition, and higher amount of scholarship money [sic]. . .. I actually believe, if we took the top 500 companies in California, and we divided them up and said look we want money not for this project for that project, we want it for scholarship funds, so that we can say to our students, whatever we increase this by, if you come from a family that makes less than, pick some number, $150,000, you're not going to have to pay for it. if you look at who the campuses - Berkeley, UCLA, the others, compete with, the cost is triple what we charge. if you go to Stanford it'll cost 58,000.and if you can't afford it, they may pay for the whole thing. . . you [could] go out and raise several billion dollars. Maybe you get to the point where you have a pool of money where you can add an additional $500 million dollars a year to pay for whatever those increases are. . . . a few years ago michigan went out and did this and raised in excess of $3 billion dollars. if michigan can raise $3 billion dollars for this kind of funding, we sure as hell can raise more. . . I think you have to go out, divide this up. Major corporations. I have discussed this with the governor. he is willing to help us . . .it is not the kind of marketing that is going on now. it's not that it's bad, it just isn't good enough. . ..Regent Blum is quite right that private universities have these kinds of scholarship programs - he's thinking of Harvard rather than Michigan. But the rest of the framework doesn't hold together. I assume he is referring to the Michigan Difference Campaign, which raised $3.2 Billion over a period of 8 years. This was the gross total, and it included $545 million for student support. This was arguably the most successful funding campaign in the history of public universities, and about 17% of its yield was for students - which is a great number. But at a 5% payout this yields less than $30 million per year to support student tuition, which as the above discussion shows will pay for at most 1200 of UC's 175,000 undergraduates at 2015-16 rates.
Regent Blum focused on "high aid," but we are still left with the "high tuition" component of the program. Given UC's needs in a "post-public" phase that some key Regents believe is inevitable, $25,000 a year is not high tuition: it is merely the tuition that fills in the minimum likely funding gap for "UC Minus" in 2015-16. How do we get the billion dollars on top of that to produce "UC 2007-08," or $2 billion to create some approximate version of UC 2001? A 6.4% increase in tuition (on the current base of $12,150) yields $100 million net of aid (Display 50). We would need ten of those units to get UC 2007, or $7776. This would come on top of 1015-16's $25,000, bringing us to $32,776 for an in-state student in that year.
But if it's Stanford that we're competing with, then we need funding for small seminars, interactive lab work, directed study, undergraduate research opportunities, and many more graduate students to reduce overall PhD candidate teaching loads. Add another billion to recreate UC Plus (or UC 2001). That is, add another $7776, which gets tuition to $40,000 - $40,552 to be exact.
I think these hikes would be a terrible idea, and am opposed to them. My point here is that when we start taking with real numbers, even the rough estimates of this post, we can see that giving up on public funding is simply not a financial possibility. The Regents at some point will need to refocus their attention on rebuilding the revenues UC gets from the state.
Wednesday, March 16, 2011
An Odd Regental Duet this Morning
I came in late on the webcast of the UC Regents Committee on Finance meeting. I missed the three chancellors presenting their campus pictures. I'd wanted to hear this because their last presentation, at the infamous furlough meeting of July 2009 was a devastating picture of declining quality, and clearly came as new information to the Regents. The first voice I heard today was Berkeley Chancellor Bob Birgeaneau saying a couple of interesting things:
But this was drowned out by a superogatory blast from Regent Chair Russ Gould, who seconded David Crane in saying that all the new dollars were going to go to things other than higher ed. Everybody loves higher ed, no one puts it first, so UC needs to build self-reliance, and that's the end of it. His speech made it clear that, at least in Regents meetings that he chaired, the idea of increased public funding is dead.
The meeting then turned to a range of "balance sheet initiatives" These are perfectly reasonable changes that, in the best case scenario, were said to be able to raise $62 million in near-term revenues plus, more ambiguously, $300 million for FY 2010-11 through debt restructuring and what will probably be a one-time purchase of very cheap municipal bonds that had just been dumped in a temporary panic in January. The Regental praise for Peter Taylor and these strategies was extravagant, a genuine love fest. These ideas are terrific, Regent Gould exclaimed. The pursuit of the "big picture" dollars in the public domain was forgotten in the enthusiasm for investor strategies that will yield far less than would a successful public strategy.
- the $1.4 billion cuts to California higher ed could still get worse. He has gone to Sacremento and can't find a single legislator that is willing to say that higher education is just too important and these cuts are unacceptable.
- compared to his experience at MIT, the level of corporate support for UC is very dissappointing. Silicon Valley leaders complain to him that UC isn't producing enough graduates for them, so they keep on stealing each others' employees. I said to them, Birgeneau continued, that we need better funding to produce them. Silicon Valley leaders just don't step up to support public universities. A bit later, Birgeneau remarked, frankly, they owe us, because we educated the people that are making them, that are providing them with resources.
This might have been an opportunity for the Regents to focus on increasing support for restored public funding, which scholars of higher education myself included have shown repeatedly is the only source large enough to fund high-quality public education for all who can take advantage of it. Birgeneau rightly focused on one of California's wealthiest business sectors that has been largely missing in action. Before anything like this could get underway, Unconfirmed Regent David Crane launched into one of the most relentlessly negative assessments of state funding that I've ever heard in public. Here is my inexact paraphrase of his comment:
There were two dissents. One came from Superintendent of Schools Torkalson, an ex-officio Regent, who said (more approximate paraphrase)
The second dissent was Irvine Chancellor Drake reminding the Regents of the slide he described from A+ to A to A-, noting that maybe A- would sound pretty good to the legislature, and that it was the Regents' job to keep the legislature from accepting that decline.I’m very familiar with the state budget. We ain’t seen nothing yet. You’re going to look back in 5 years and say these are the good old days. Even if we had legislators that like higher ed, and we don’t-- for some reason they are again raising spending on corrections . . . -- the state faces a wave of expense that is inexorable: increasing health care costs, and increased spending on unfunded benefits, not because workers are earning excessive pensions but because politicians are not funding promises made. I see a customer that is paying 13% of our revenues, and I see that customer going away entirely . .. We are a public university in name only. We must remain true to why we are all here - access and so on. And yet that customer is going away.Obviously Crane is right about sizable liabilities, but he completely ignored revenue solutions, and the rhetorical effect was to make any suggestion of restored state funding impossible, unrealistic, not tough minded, and simply not playing in the big leagues. His bombastic certainty has no doubt intimidated many an audience in the past.
There were two dissents. One came from Superintendent of Schools Torkalson, an ex-officio Regent, who said (more approximate paraphrase)
we should maintain faith in the california voters and legislature. We have to have a strong educational system – it’s embedded in our constitution as a top priority. Remember that I recently declared for K-12 a state of financial emergency. We had 38-40 students per class but the lights were still on. The public wasn’t aware of what was happening until we got out there on the road about the situation we’re in. Also note that we’re collecting $5-8 B less per year in taxes than we did 10 years ago. California and its great wealth has more to give and more to invest. We have to talk bluntly about new revenues, taxes, whatever we want to call it. The immediate big dollars are to get the tax extension measure on the ballot. We all need to the members who are critical to get the 2/3 majority we need. The $12b on the ballot is the big big picture and we need to focus on that. We need to do that for all the students that are coming that deserve to have this great education and we want them to have it. Should we declare a state of financial emergency for the University of California? We’ll get the votes and then have the great California conversation: are we going to have great education or not?
But this was drowned out by a superogatory blast from Regent Chair Russ Gould, who seconded David Crane in saying that all the new dollars were going to go to things other than higher ed. Everybody loves higher ed, no one puts it first, so UC needs to build self-reliance, and that's the end of it. His speech made it clear that, at least in Regents meetings that he chaired, the idea of increased public funding is dead.
The meeting then turned to a range of "balance sheet initiatives" These are perfectly reasonable changes that, in the best case scenario, were said to be able to raise $62 million in near-term revenues plus, more ambiguously, $300 million for FY 2010-11 through debt restructuring and what will probably be a one-time purchase of very cheap municipal bonds that had just been dumped in a temporary panic in January. The Regental praise for Peter Taylor and these strategies was extravagant, a genuine love fest. These ideas are terrific, Regent Gould exclaimed. The pursuit of the "big picture" dollars in the public domain was forgotten in the enthusiasm for investor strategies that will yield far less than would a successful public strategy.
Sunday, March 13, 2011
Some Links From the UK
In lieu of longer commentary I wanted to provide some of the latest news and commentary on the UK situation for those interested:
A Manifesto in Defense of the Arts and Humanities (in multiple parts)
Attacks on Job Security and Academic Freedom
Government Issues its Guidelines on Fees
Government Reforms More Costly for Students with More Regulations for Universities
Willetts Wants to Open UK Education to For-Profits
A Manifesto in Defense of the Arts and Humanities (in multiple parts)
Attacks on Job Security and Academic Freedom
Government Issues its Guidelines on Fees
Government Reforms More Costly for Students with More Regulations for Universities
Willetts Wants to Open UK Education to For-Profits
Saturday, March 5, 2011
Opposition Grows to Arnold's Last Regental Nominee
Updated Below (1), (2)
Opposition is growing to the confirmation of David Crane, Arnold's last nominee to sit on the Board of Regents. Crane, a Democrat who served as a Schwarzenegger economic adviser, made his career in the financial sector. He recently wrote an op-ed attacking collective bargaining rights for public employees.
In response, Senators Yee and Lieu have come out in opposition to Crane's confirmation. Lieu in particular has called out Crane for perpetuating myths about the responsibility of public employees and their unions for the current budget crisis. Crane has since tried to walk back some of his comments--claiming that they did not apply to UC.
Of course, none of this activity speaks to the question of why Jerry Brown has not withdrawn Crane's nomination, a nomination that at the very least will further entrench the corporate and financial sector's dominance on the Board of Regents. One would think that Brown, at a point when he is asking tremendous sacrifice of those throughout the University would want to broaden the perspective of the Board.
There is a petition to Brown calling for him to withdraw Crane's nomination. You can find it here.
Update: Video of the Rally Against Crane's nomination included speakers from CUCFA
Update 2: "Is David Crane Just Another Kochhead?"
Opposition is growing to the confirmation of David Crane, Arnold's last nominee to sit on the Board of Regents. Crane, a Democrat who served as a Schwarzenegger economic adviser, made his career in the financial sector. He recently wrote an op-ed attacking collective bargaining rights for public employees.
In response, Senators Yee and Lieu have come out in opposition to Crane's confirmation. Lieu in particular has called out Crane for perpetuating myths about the responsibility of public employees and their unions for the current budget crisis. Crane has since tried to walk back some of his comments--claiming that they did not apply to UC.
Of course, none of this activity speaks to the question of why Jerry Brown has not withdrawn Crane's nomination, a nomination that at the very least will further entrench the corporate and financial sector's dominance on the Board of Regents. One would think that Brown, at a point when he is asking tremendous sacrifice of those throughout the University would want to broaden the perspective of the Board.
There is a petition to Brown calling for him to withdraw Crane's nomination. You can find it here.
Update: Video of the Rally Against Crane's nomination included speakers from CUCFA
Update 2: "Is David Crane Just Another Kochhead?"
Friday, March 4, 2011
Day of Action Against Cuts
Here are some links (hat tip to Bob S) to coverage of the National Day of Action to defend higher education against rampant and constant cuts.
UCLA protests
Santa Cruz
Berkeley
Irvine
Dail Cal coverage of other protests
The small size of the UC protests may flow from UC President Mark Yudof's repeated assurances that UC students will not see another tuition increase of the 32% variety that provoked much larger protests in November of 2009.
Given the approaching end of the federal stimulus money, cost increases in areas like employer pension contributions, and the long series of cuts that have already been made, the $500 million Jerry Brown cuts will logically create the worst course access and worst student: instructor ratios in living memory.
UCOP's calculations (slide 16) show that $500 million is the amount a new 32% tuition increase would raise. The same amount of damage is being done to students that was done in 2009. Their payment is just taking a different form.
Graduation delays and massively reduced instructor feedback are only the most obvious damage being done to quality. Public university students need to compete against private school students who can improve their skills through individualized monitoring while creating coherent sequences of courses that lead to a recognizable expertise. UC is not enabling its students to compete with private university graduates in feedback, coherence, sequencing, or most other ingredients of intellectual development.
In comparing the careers of equally talented and motivated people, will we have to start talking about the "public university disadvantage"? Will we be needing job affirmative action for all public university graduates?
Mark Yudof's demobilization of students has neutralized one of his big political problems. But it would be smarter to allow justifiably outraged students to help him pressure Sacramento to support higher education rather than continue to wreck it.
UCLA protests
Santa Cruz
Berkeley
Irvine
Dail Cal coverage of other protests
The small size of the UC protests may flow from UC President Mark Yudof's repeated assurances that UC students will not see another tuition increase of the 32% variety that provoked much larger protests in November of 2009.
Given the approaching end of the federal stimulus money, cost increases in areas like employer pension contributions, and the long series of cuts that have already been made, the $500 million Jerry Brown cuts will logically create the worst course access and worst student: instructor ratios in living memory.
UCOP's calculations (slide 16) show that $500 million is the amount a new 32% tuition increase would raise. The same amount of damage is being done to students that was done in 2009. Their payment is just taking a different form.
Graduation delays and massively reduced instructor feedback are only the most obvious damage being done to quality. Public university students need to compete against private school students who can improve their skills through individualized monitoring while creating coherent sequences of courses that lead to a recognizable expertise. UC is not enabling its students to compete with private university graduates in feedback, coherence, sequencing, or most other ingredients of intellectual development.
In comparing the careers of equally talented and motivated people, will we have to start talking about the "public university disadvantage"? Will we be needing job affirmative action for all public university graduates?
Mark Yudof's demobilization of students has neutralized one of his big political problems. But it would be smarter to allow justifiably outraged students to help him pressure Sacramento to support higher education rather than continue to wreck it.
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