Monday, May 18, 2015

The Good, the Bad, and the Ugly Budget Deal

The deal between President Napolitano and Governor Brown is a mixed bag.   On the one hand, the plan brings more money to the system than many expected, and the governor does increase support for the UC pension plan. The deal also buys out the undergrad tuition increases for the next two years, but the graduate and professional schools fees are free to increase.  Finally, the plan allows for non-resident tuition to increase 8% each year, and the governor has promised that he will not block a legislative effort to add more money for enrollment growth.

On the bad side, the deal was negotiated by two leaders without any real effort at shared governance.  In fact, the university will still have to negotiate with unions and faculty over pension reform measures.  Like the fast-tracking of free trade agreements, this method of negotiation values secrecy over democracy.  As is often the case in the UC system, consultation occurs after a decision has been made, and this represents a fake form of democracy and shared governance.

The most threatening aspect of the plan is that it requires a new pension tier, but the details of the plan are not spelled out. A big concern is the talk of a defined contribution plan, which we have told the university is not only bad for the employees but also bad for the entire shared defined benefit plan.  History shows that once you allow employees to opt into a reduced benefit, the main benefit plan becomes destabilized.  

Attention now turns to the legislature where there are many competing plans for UC.  Just as UC employees are concerned about the lack of democracy in the Committee of Two, legislators are surely feeling squeezed out of the democratic process.

Tuesday, April 21, 2015

Does Instructional Quality Matter to the UC?

UC-AFT is currently bargaining with the UC administration over the terms and conditions of the contract regulating over 3,500 lecturers in the university system.  The majority of these lecturers are in their first six years, and according to the present contract, there is no obligation to review these faculty members.  In fact, in some programs, none of the faculty teaching the majority of required undergraduate courses have been reviewed in ten years.  The people representing the university at the table argue that lecturers should have no expectation of having a career until they pass their sixth-year review, and so it is not necessary to review their teaching and service before they come up for a continuing appointment.  Since most lecturers never make it to their sixth year, this means that the university does not think it is important to judge the quality of instruction for the majority of lecturers. 

When we have pushed the people at the bargaining table to explain why they do not think teachers should be evaluated, we are told that it would be too time consuming and costly to do the reviews.  In other words, instructional quality is such a low priority that the administration does not think it is worth the time or effort to review the effectiveness of instructors. 

As a union, we have been placed in the strange position of demanding that the university review our members as we insist on a high bar for quality instruction.  We have also been forced to develop a contract that can protect against the constant turnover of lecturers.  Since the administration does not think that these teachers in their first six years should have any expectation of continued employment, departments and programs have been able to replace experienced faculty with inexperienced teachers to prevent expert lecturers from gaining any job security.

The university also insists that lecturers working less than half time should have no benefits including social security and pension.   In fact, a majority of lecturers are now hired on a quarterly basis and have no way of knowing when and how much they will be teaching in the future.  Some of the quarterly appointments have been teaching in the UC for over twenty years and still they have no job security. 


We are proud that our contract is one of the best in the country for non-tenure-track faculty, but there are still majors problems with the way the administration views and treats the people teaching more than 35% of the undergraduate student credit hours and a majority of the required undergraduate courses. We need a contract that will protect the quality of undergraduate instruction by evaluating lecturers in an effective manner. 

Tuesday, March 31, 2015

The University for No One

In Kevin Carey’s The End of College, a liberal analysis leads to a neoliberal conservative solution:  higher education will increase access and affordability and quality by using online technology to make it virtually free to billions around the world.  Ironically, this reformation of education will be powered by high-tech billionaires and millionaires who will take control of the production of degrees from greedy public institutions.  Moreover, Carey’s “university of everywhere” would eliminate research universities, just like online media has destroyed most newspapers. In this high-tech fantasy scenario, most current academic jobs would be downsized as a single superstar professor teaches all biology students in the world over a shared online platform.

It is unclear how the research that generated all of this technology will continue to be produced since the same institutions that generate most research are the ones that will be destroyed.  It is also unclear who will assess students or answer their questions since the new mega MOOCs will be operated without human intervention.    In fact, the only way to reduce the marginal cost of adding more students to zero is to simply eliminate human labor. 

Carey’s extreme representation of higher education celebrates every billionaire investor and denigrates every current professor.  Although, one can agree with many of his criticisms of their current state of undergraduate education, the medicine is far worse than the disease.  It is also unclear who will pay, train, and house the global online superstar professors.    After all, the great courses coming out of MIT, Stanford, and Harvard are being supported by the same hybrid universities Carey wants to eliminate.  

Like many higher ed reformers, Carey appears to be blissfully unaware of the casualization of the academic labor force and the adaptation of business-oriented management and budgeting.   From the billionaire high-tech innovator’s perspective, public institutions are inherently corrupt and ineffective, and so they must be replaced by platforms driven by speed and capital.   

In response to this vision, UC President, Janet Napolitano, offered a defense of public research universities in a book review she wrote for The Washington Post.  What is curious about her analysis of Carey’s book is that she fails to take on his sustained attack on the quality of undergraduate education at research universities.  One reason for this lapse might be that she did not actually read the whole book, but another may be that she has no response.  Like so many university administrators, she rarely talks about how to improve the quality of undergraduate instruction, and when she does discuss undergraduates, the topic is almost always about tuition, financial aid, and enrollments. 


Since research universities are not making the quality of undergraduate instruction a major priority, it is easy for outside groups and pundits to dismiss the value of the entire higher ed enterprise.  As the current debates over the funding of the University of California show, higher education institutions need to examine how they can support their research and teaching missions.  This means that calls for increased funding have to be coupled with clear indications of how the money will be spent.

Friday, February 20, 2015

Is the UC Spin Spinning Out of Control?

As the state begins to examine the UC budget, two different hearings have been held to determine how the university is using state funds.  It is clear that the legislature wants to increase funding for the university, but it is also clear that the governor and the legislature want to know how the UC is currently spending its money.  There is also a growing concern that the increase in nonresident students is enhancing the funding inequality among the campuses and that eligible students from California are being shut out of the UC system.   In fact, in a hearing reviewing the UC response to a state audit on campus funding imbalances, several legislators made it clear that they are bothered by the fact that the campuses with the highest number of under-represented minority students are the campuses receiving the lowest amount of funding. (For a detailed analysis of the campus funding imbalance, see here)

At the audit hearing, the UC argued that the funding imbalance among the campuses will be resolved by the new rebecnhing funding model, but as I have shown, rebenching is only redistributing $37 million per year, and the revenue generated from nonresident tuition far exceeds the money from rebenching. After calling this enhanced imbalance to the attention of the UC administration, I was told that the smaller campuses should be happy that Berkeley and UCLA receive more funding because these star campuses make the other less stellar campuses look good.  This seems to be a novel trickle-down theory of prestige, or is it just spin?

At the same time that I have been meeting with legislators and staff from the governor’s office to help increase UC funding, while making campus funding more equitable, I have been besieged by questions concerning why the UC budget is so hard to understand.  Many of these political officials have been waiting for UC’s response to AB94, a bill that requires the UC to report on the differences among the costs of educating undergraduates, graduates, and professional school education.  This report was due by October 1, 2014, and the final report was only released the day before the state hearing on UC finances. 

In looking at the final product, one can only be shocked and amused.  Much of the report is a simple narrative discussion of all that UC does and how it is hard to determine the cost of its many activities.  When the UC finally gets to the discussion of the cost differences, the entire new methodology is explained in a single paragraph:  “First, graduate students are considered full-time when taking 12 units a term whereas undergraduates are full-time at 15 units per term. This is a standard practice in other institutions and is the basis for the ratio of 1.25 (15/12) used in the NACUBO report. Second, the University collects data on the proportion of student credit hours (SCH) offered by level and that data includes the type of instructor delivering the student credit hours. There is a substantial differential between undergraduate and graduate students in the proportion of SCH taught by ladder faculty. For graduate students, 79% of SCH are taught by ladder faculty compared to 49% for undergraduates. Since expenditures for ladder faculty are higher than for other types of faculty, expenditures by level of faculty can be used to estimate an overall differential between undergraduate and graduate expenditures. The estimate of the differential for 2012-13 is 1.33. Combining these two factors – 1.25 for the FTE calculation times 1.33 for faculty type – results in an estimate that graduate expenditures per FTE for instruction are on average at least 1.7 times greater than undergraduates." Really?!!  How in the world did they come up with such a reductive methodology and why did it take them over a year to produce it?

Although it is important to stress that graduate students are taught mostly by higher paid senate faculty, the report does not even try to say how much the different faculty groups are paid and how many courses they teach on average and what are the average size of the undergraduate and graduate and professional classes.   The university’s own rebenching formula estimates that doctoral students cost at least two and a half more than undergraduates and medical students cost five times more than undergraduates, but this report says that graduates only cost a third more and medical students cost ten times more. 

Actually, UC gives two different types of calculation for the cost of instruction: one which they call the narrow calculation and the other one is the broader calculation.  According to the narrow calculation, undergraduates cost $21,800 to educate each year, graduates cost $37,100, and health science students cost $216,000, and according to the broader definition, undergraduates cost $29,200, graduates cost $55,800, and health science students cost $342,500.  Yes, they claim it costs them a third of a million dollars to educate each medical student for a year. 

Before we try to understand how the UC generated these numbers, we should look at a few of UC’s disclaimers.  The first important claim is that they are unable to calculate the cost of educating professional school students:  “The University is unable to break out expenditures for graduate professional programs as requested in AB 94. These are programs that are authorized to charge Professional Degree Supplemental Tuition in addition to mandatory systemwide tuition and fees. Most of these programs are housed within larger departments where expenditures are not differentiated by program. There is no reliable method for delineating these expenditures on a systemwide basis, nor is there a suitable proxy to use to estimate them. Therefore, the University is unable to respond to this portion of the request.”  First of all, AB 94 does not focus on how much money the UC is bringing in per student, but how much UC is spending per student.  In fact, UC and the state Legislative Analyst keep on confusing the two issues.  For example, in the LAO’s report for the budget hearing, they have a chart called “UC Education Expenditures Per Student,” but as I have told them on several occasions, this should be called revenue per student and not spending per student, since this is just a calculation of how much tuition, state funds, and UC general funds are brought in per student: it does not actually look at how much the UC is spending on each student, and that is why AB 94 was needed.  However, UC once again repeats on page 4 of its response to AB 94 a chart entitled “Per-Student Average Core Funds Expenditures for Education (2012-13 dollars),” and they make the following standard claim, “In 2012-13, the average expenditure figures for students based on the actual expenditures for the general campus instructional program and its support activities totaled $16,890, composed of $8,360, or 49%, student fees; $2,340, or 14%, UC General Funds; and $6,190, or 37%, State General Funds.”  So how can the UC be spending $16,890 on each student, if they claim the average narrow rate is $24,157 and the average broader rate is $33,299? Is this going to help the state understand the UC budget and spending?

Confusing matters even more is the next disclaimer, which is the standard argument that all activities in the system are mixed, and so it is impossible to say how much anything really costs:  “the University’s accounting and information systems do not readily allow for the disaggregation of educational expenditures requested in the AB 94 language and funding is neither appropriated to the University of California by level of student nor by discipline, nor spent that way on the campuses. Faculty are paid to teach both undergraduate and graduate students as well as perform other functions related to the research and public service missions of the University and their salaries are not apportioned across these activities. Similarly, staff perform support functions affecting students of all levels and disciplines. These expenses are not categorized on the basis of what level of student may benefit or their field of study.”  The argument here appears to be that the university has never been asked to make this type of calculation, and they really do not know how to do it, so the whole response is just an impossible fiction.  When I have asked people at UCOP how they can make any decisions if they do not know how much anything costs, they tell me that they use historical estimates and incremental increases.

In the response to AB 94, the basic methodology for this impossible report is defined in the following manner:  “The University’s method for calculating instructional expenditures by all the categories requested is based on reasonable assumptions and proxies for actual data, which are delineated below.”  In other words, this report is based on “proxies” and “assumptions” and not on any real research, but isn’t this a research university?  After all, I and others have suggested to UCOP several different methodologies that the UC could have used to make these calculations, but they refused to listen to my advice and the advice of others.  

Driving much of this problem is the fact that the UC does not believe that the state or students want to pay for the cost of departmental research, and so they have to hide this cost by including it in the cost of instruction.   This hiding is evident by comparing three statements from the same document. The first statement clearly says that research is not part of the cost of instruction:  “These calculations leverage functional expense categories reported in published financial statements and identify expenditures that can be considered direct expenditures on education (e.g., instruction, academic support) as well as indirect expenses (e.g., institutional support, maintenance, depreciation).” Nowhere is research mentioned in this part of the report, and in fact, research is later explicitly excluded “the figure represents the estimated total funding from core funds on a per-student basis that is available to support instruction (faculty salaries and benefits, instructional support, instructional equipment and technology) and other activities such as libraries, student services, administration, and operation and maintenance of facilities. It excludes financial aid, which is treated in the standard CPEC methodology as an expenditure to support access, not as an expenditure to provide the instructional program. Health sciences instruction, research, and public service expenditures, as well as related expenses for support activities, are excluded."  But later on they say you cannot separate the cost of instruction from the cost of research: "Historically, the instruction category in the budget includes most of the direct instructional resources associated with the schools and colleges located on the general campuses, encompassing classroom and laboratory instruction, instructional technology, and joint scholarly research activities of students and faculty."  In other words, according to the same document, you have to separate research from instruction, and it is impossible to separate research from instruction.  


All of this confusion came to a head at the recent hearing on UC finances that you can watch here.  A good summary of the hearing was presented by a KQED report that looked at the following questions:  1. Why Has UC Spending Gone Up So Much?; 2. Are out-of-state students crowding out California kids? 3. What should be considered a “competitive salary” for a UC employee? 4. Are students paying for teaching … or research? 5. Why shouldn’t state lawmakers impose more rules on UC’s use of taxpayer dollars? Of course, this story was buried underneath several reports that UC has decided to freeze summer tuition. Was it just a coincidence that UC made this announcement on the same day as the hearing on UC finances was held? And was it a coincidence that UC waited until the day before the hearing to release its response to AB 94?    

Friday, January 9, 2015

The UC-AFT Plan for Enhancing Affordability, Access, and Quality at the University of California


The University of California has been a leader in providing students with a high-quality education that is affordable and accessible, but the funding structure of the university is showing signs of breaking down.  The following plan describes how this great system can be saved by increasing financial aid to many students who are now forced to go into debt in order to afford their education.  We call for a tuition freeze, an additional 6% increase in state funding (2% beyond the governor’s proposed 4% increase), an increase in UC budget transparency, and the use of internal UC funds for financial aid and increased funding for instruction.

Moderate Tuition/High Aid
A central part of this plan is to use the current Moderate Tuition/High Aid model in a more equitable manner.  In 2014-15, the UC will not only receive $2.6 billion in direct funding from the state, but state financial aid will be over $1 billion due to increases in CAL Grants and the new Middle Class Scholarship.[1]  UC students will also receive over $450 million in federal Pell Grants next year, and many families qualify for federal tax breaks related to higher education.  This large amount of aid allows over half of UC students to pay no tuition, and the system enrolls a large number of low-income students: however, many low- and middle-class students still have to pay a large amount to cover the total cost of attendance (rooms, board, books, and living expenses).  While in 2014-15, tuition for undergraduates is just over $12,000, total cost of attendance is over $32,000.[2]  Students then are forced to take out loans and work in order to make up for the growing difference between their grant aid and the total cost of attendance.     
            
Using the campus financial aid calculators, we can see how the parents of UC students are often asked to pay a quarter of their yearly income to support their children’s education.  For example, here are some specific aid scenarios: 1) if a student comes from a family of two parents with a combined annual income of $50,000, the student will be asked to contribute $8,600 through work study, and the family will be asked to take out a loan for $3,912 each year.  If the student does not take a work study position, the gap between the aid and the total cost of attendance equals close to 25% of the annual family income; 2) in the case of a family with total earnings of $79,000, the student and the family are expected to cover $18,301; and 3) in the case of two parents earning $90,000, the annual cost is $23,198.[3]  These situations show that in a state with a very high cost of living, free tuition often means a financial aid gap of close to 25% of parental income.

Increasing Graduation Rates
The UC financial aid is better than most universities, but it still has major problems.  One related issue is that the more students have to rely on loans and work study to support their own education, the longer it takes them to graduate.[4]  The inverse of this situation is that if students did not have to take out loans or work while in school, UC could increase its current four-year graduation rate of 63% and provide more places for new students without spending more funds or building more dorms and classrooms.[5]  It is clear that this desire to move students through the system in a more efficient and cost-effective manner is a major desire of the governor, but the state often thinks this can be accomplished though the use of online classes, streamlined degrees, and a downsizing of the university’s research mission.[6]  However, all of these strategies outlined in the governor’s new initiative will only serve to lower the quality of education in the UC system.

Investments for Aid
To expand financial aid to students, our plan recommends using investment returns from its endowments and working capital funds – the Short Term Investment Pool (STIP) and the Total Return Investment Pool (TRIP) - for educational purposes.  In 2014, the combined UC endowments contained over $13.2 billion and had a 10-year investment rate of return of 7.7%.   If the university used 3% of the endowments each year for financial aid, $300 million of additional funds could be used so that thousands of students would no longer have to take out loans or work while in school to afford the total cost of attendance.[7]  Meanwhile, the university also invests its working capital (unused grant money, state money, tuition, medical center revenue) in two funds called TRIP and STIP, and these funds now hold over $14 billion.[8]  If the UC used 5% of these funds for educational purposes ($700 million), the quality of education could be enhanced as more students from California could gain admissions and students could graduate at a faster rate leaving room for more transfer students from community colleges. [9]

At the September 2014 Regents meeting, the possibility of using these funds to prevent a tuition increase was discussed, but it was quickly rejected because the university did not want the state to think that it had enough funds.[10]  President Napolitano argued that these investment funds cannot be relied upon, and several regents said that if the word got out that the UC was sitting on so much cash, the state would not increase its funding for the university.  Of course, there is a risk that investment returns will decrease; however, what good is it to have an endowment or investment pool if it cannot be used for educational purposes? Although much of the endowment is restricted by the donors of the gifts, the investment returns are not necessarily restricted, and their average returns are well above 7%.  Moreover, UC could develop a policy that all new gifts set aside a certain percentage for the general fund. The idea here is to use the financialization of the university in a progressive way by directing investment profits towards core educational functions.

Fixing the Campus Funding Problem
The UC-AFT plan also confronts a growing problem in the UC system, which is the inequitable distribution of funds among the campuses.[11]  As a state audit showed, the university has been for decades secretly redistributing state funds and tuition dollars from the smaller campuses with a high number of under-represented students to the larger, wealthier campuses.[12]  Although the UC has recently stopped this system of redistribution, the problem has been made worse by the fact that the wealthier campuses are bringing in a higher percentage of high paying non-resident students.  Our plan calls for 50% of all nonresident tuition to go into a pool to be redistributed to help rebalance the funding among the campuses.  We also believe that UC should cap the total number of nonresident students at 15%, and proceed with its plan to increase state enrollments by at least 1,000 each year.  Furthermore, the UC should rethink its admissions referral system.  Last year 11,200 qualified Calfornian students who did not apply to UC Merced were admitted only to Merced, but only 2% of these students decided to enroll at the campus.[13] The UC is clearly using the Merced referral system to comply with its obligation to accept all qualified California students, but since UC knows most students will reject the referral, this practice has to be modified. 

The university has claimed that the historical underfunding of particular campuses will be corrected by the new rebenching model, but this model is highly flawed and only redistributes $37 million a year of $2.6 billion state general funds.[14] Moreover, the rebenching model relies on augmenting the funding to campuses that increase their doctoral students, but according to its own logic, these students cost at least three and a half times more than undergraduates to educate.   Of course, the reality of the situation is that UC does not know how much it costs to educate different types of students because it has thus far resisted making this calculation even though AB 94 now requires the system to report on the different costs of educating undergraduate, graduate, and professional students.

Transparency for the Core Mission
The UC-AFT plan calls for the university to comply with the state’s reporting requirements, and this new transparency will be used to make sure that state funds and tuition dollars find their way into the core education mission.  In order to help this process, our plan pushes the university to increase the number of small undergraduate courses and decrease the use of ineffective large lecture classes.  This transformation can be a key to increasing graduation rates and educational quality.  Following UC’s own long-term budget plan, the university should document how it is using $60 million of new funding next year toward “improving the student-faculty ratio; funding for startup packages for new faculty (a major obstacle for many campuses seeking to hire new faculty); augmenting graduate student support to ensure that the level of support offered by UC is sufficient to attract the best graduate students; enhancing undergraduate instructional support (including instructional technology, libraries, instructional equipment replacement, and building maintenance); and reducing faculty and staff salary gaps.”[15]Instead of the state, students, and concerned citizens being told what the UC would like to do with new funds, the UC should prove that it is actually using this money to improve the quality of education.   

The UC budget has also asked for $32 million to continue the academic merit program and $55 million of permanent deferred maintenance funding.  The state should include these costs in its general fund appropriations with the provision that UC documents how these funds will be used to improve the performance of the core mission.  UC would like to see its total funding increase next year by $459 million.  Besides the above mentioned support for the academic merit program, deferred maintenance, and educational enhancements, the UC argues it needs $50 million to fund the state part of the pension plan,  $125 million for additional compensation costs, $22 million for resident enrollment growth, $28 million for non-salary price increase, and $73 million for financial aid.  The UC desires these additional costs to be funded through a combination of a 5% tuition increase ($137 million), a state funding increase of 4% ($120 million), tuition and fees for financial aid ($73 million), non-resident tuition ($50 million), and other alternative revenue ($80 million).[16] Since we believe that tuition should be frozen, we ask for the state to increase its support for UC by 6% (the planned 4% plus an additional 2%). The 6% increase would bring the state increase to $180 million and would buy down close to 40% of the 5% tuition increase. The other $279 million would come from the investment profits from STIP and TRIP, nonresident tuition, and alternative revenue sources.     

Why Not Eliminate Tuition?
In response to our plan, some might ask why don’t we propose simply eliminating tuition and make the UC free again.  The problem with this solution is that tuition is only a part of the reason for a student’s financial burden.  Moreover, if the UC eliminates tuition, it cannot utilize Cal Grants, Pell Grants, and federal higher ed tax breaks.  Furthermore, if done correctly, the Moderate Tuition, High Aid model serves as a progressive tax since wealthier parents pay more to support the education for non-wealthy students.  Unless UC wants to get behind a new tax that would dedicate funding for the UC system, it is unclear how the system can force the government to increase funding for the university.  However, central to this plan is that the state increases its support by 6% each year in return for a tuition freeze. We are also asking that the state agrees that it is responsible for its share of the employer contributions to the pension, once the UC clarifies which employees are supported by state funds.[17]
For far too long, the UC has increased it core mission budget without spending more funds on its core mission. According to the UC 2014-15 budget report, a lack of support for the core mission in recent years has had the following effects: “Another aspect of the fiscal uncertainty is how students and their families in recent years have been hit with large, frequent, and unpredictable tuition and fee increases, while also feeling the effects of budget cuts on the instructional program through reduced course offerings, increased class sizes, and curtailed student services. Instability of the University’s budget promotes uneasiness among students and their families about whether the high-quality education to which students work hard to gain access will be available in future years.”[18] From the university’s perspective, the reduction in funding from the state has resulted in a decrease in the quality of undergraduate education. Our plan will reverse this situation and return the university back to its core mission.








[1] For the increase in Cal Grants and the middle-class scholarship, see:
[2] For the total cost of attendance, see: http://admission.universityofcalifornia.edu/paying-for-uc/tuition-and-cost/

[3] The cost calculator can be found at: https://students.ucsd.edu/finances/financial-aid/forms/calculator.html

[4] The UC four-year graduation rate goes down 10% if a student works more than 20 hours a week, see http://accountability.universityofcalifornia.edu/index.php?in=3.4.2&source=uw.

[5] UC four-year graduation rates: http://accountability.universityofcalifornia.edu/index.php?in=4.1.1&source=uw.

[6] The governor’s plan can be found at: http://gov.ca.gov/docs/Regents_Select_Committee_Agenda_Request.pdf

[7] Information on UC endowments and working capital funds can be found at http://regents.universityofcalifornia.edu/regmeet/sept14/i2attach2.pdf.  The ten-year average return rate for the $8.2 billion shared endowment (GEP) is 7.7% (p. 16).  The shared endowment does not include $4 billion in campus endowments.  For the campus endowments, see http://regents.universityofcalifornia.edu/regmeet/sept14/i3attach.pdf.

[8] The STIP account held $8.3 billion in June 2014 http://regents.universityofcalifornia.edu/regmeet/sept14/i2attach2.pdf (p. 20) and the TRIP account held $7.5 billion (p. 21).  During the last five year period when STIP was returning 2.2% and TRIP was returning 11%, over $2 billion was transferred from these accounts into the pension, which earned 12.7%.  It therefore would be possible to spend 5% each year of these combined funds to pay for increased financial aid without decreasing the principle in these accounts.  Meanwhile, the pension is now funded at 86%, and if it continues to increase its funding ratio, the state and the system might be tempted to call for another contribution holiday. 

[9] Currently, the UC graduates 63% of students in four years (http://accountability.universityofcalifornia.edu/index/4.1.1).  If the UC could increase this rate to 80%, the system could educate 5,000 students with no additional cost and the cost for each student would go down significantly since students would be paying for four years instead of five or six.

[10] The discussion of the UC investments can be found at minutes 34-37,  42-47 of: http://lecture.ucsf.edu/ets/Play/d02bc147971844f7b5514225b33842291d?catalog=333992fe-1405-4d6b-ae39-512a30188f34

[11] For a discussion of the funding imbalances, see http://changinguniversities.blogspot.com/2014/09/the-uc-campus-funding-imbalance.html

[12] The state audit is at: https://www.bsa.ca.gov/pdfs/reports/2010-105.pdf
[13] http://touch.latimes.com/#section/-1/article/p2p-82390956/

[14] The rebenching model can be found at: http://senate.universityofcalifornia.edu/Rebenchingreviewpacket.pdf

[17] If the state supports 50% of the core budget, and UC spends $400 million on pension contributions each year for core mission employees, then the state should commit to dedicating $200 million next year as part of the total general fund appropriation.