Monday, March 15, 2010

Fact-Checking the UC’s Financial Myths

UC faculty and students are still being manipulated by the administration to blame all of the university’s problems on state funding, but as I have previously shown, most of the UC’s budget issues are internal. While I have argued that we still need to fight to increase the state allocation for higher education, we have to pressure UC administrators to provide truthful information regarding the university’s finances. Moreover, the solution to our current inability to provide access, affordability, and quality higher education in the California is to increase enrollments and make sure that the enhanced revenue finds its way into the classroom. While many people will argue that we cannot afford to have more students, I will show below why we cannot afford not to have increased enrollments. To make this argument, I will refute several of the standard myths that the UC circulates about its own finances.

Myth 1. UC does not get enough money from the state and student fees to cover the total cost of instruction.

Fact #1: I have calculated that while the University of California receives $15,000 from the state for each student, and student fees and tuition brings in another $10,000 per student, it only costs about $3,000 to educate each student. This means that most of the money that students and the state pay goes to fund external research, administration, and extracurricular activities. Furthermore, the main reason why the cost for instruction is so low is that research universities rely on large classes and inexpensive non-tenured faculty and graduate students to teach most of their undergraduate courses.

To determine the basic educational cost at any university, you simply need to take the average salary of the people who teach the courses and then divide that salary by the average number of courses to get the per course cost. In the case of the University of California, the average salary for a professor teaching undergraduate courses is $100,000, and the average course load is 5, which means the per course cost is $20,000. However, half of the undergraduate courses in the UC system are taught by non-tenurable lecturers and grad students, and their average per course cost is $6,000. If we average these two costs together, the combined average cost per class is $13,000. The next thing to do is to determine the average class size, and the best way to do this is to look at the size of the classes that the average student takes in an average year. In the UC campuses using the quarter system, students average 8 large classes and 2 small classes per year, and the large classes average 200 students, and the small classes average 20 students. This means that the average per student cost for a large class is $65, and the average per student cost for a small class is $650. Now, we can add up the cost of the ten courses a student takes in a year, and we get $1,820 ($1,300 for 2 small classes + $520 for 8 large classes).

One thing that I have left out of this calculation is the cost for small sections taught by graduate students that often accompany large lecture classes. In the UC system, this additional cost adds another $1,000 to each undergraduate’s yearly bill, and if we now multiply the whole total by the cost of providing healthcare for all of the instructors (15%), our new total is $3,243. We are still a long way from the $25,000 that the UC claims it costs to educate each undergraduate student per year. More importantly, it is clear that if the UC increased enrollments, it would have more money for all of its other activities.

Myth 2: The state now only pays half as much per student as compared to 1990.

Fact #2: If you actually crunch the numbers, as I have done, the UC got $13,000 per student in 1990, and in 2008-09, they got over $15,000. UC argues that if you use a special inflation index, a calculation that they have never revealed, you see that in terms of “real dollars,” state support has been cut in half; however, the truth is that state support has gone up, and the UC cannot account for how state funds are spent. Moreover, the UC does not tell students or parents that the UC Office of the President redistributes state funds and student fees to the campuses according to some secret formula. By claiming that the state has cut its funding in half, the UC is able to blame the state for all of the university’s problems, and then after attacking the state, the administration expects lawmakers to turn around and increase their funding for the UC system.

Myth #3: The UC had its budget cut by $800 million during the 2008-09 fiscal year.

Fact #3: According to its own audited financial statements, the UC’s funding from the state went up $300 million in 2008-09. It turns out that when President Yudof and other UC officials sought to justify the raising of student fees and the furloughing of employees, they constantly hid the fact that the state’s funding reductions for 2008-09 were erased by the federal recovery money and additional state funding. While, it is true that for 2009-10, state funding was actually cut, the problem is that we do not know by how much and if any federal recovery money has been used to reduce the total loss of state funding.

Myth #4: Most of the UC’s funding is restricted, so you cannot use money from a grant to study laser technology to pay the salary of an English professor.

Fact #4: According to its own audited statements, only about a third of UC’s budget of over $20 billion is restricted by law. The UC likes to pretend that it cannot move money around, but that is what it always does. For instance, when a professor gets a grant to study laser technology, he uses part of the grant to buy himself out of his teaching duties. His department then takes this buyout money from the external grant to hire a grad student or lecturer to teach the professor’s course. The strict line between the restricted external grant funds and the state-supported unrestricted instructional funds has now been broken.

Another proof that restricted and unrestricted funds are combined is by the fact that many administrators have their salaries paid out of a combination of state funds, student fees, endowment funds, and external grant indirect costs. Moreover, even when an outside donor gives money to the university to support an endowed chair in History, this means that the university does not have to use its own unrestricted funds to pay for the position. In short, the strict border between restricted and unrestricted funds is constantly being crossed in the UC system.


Myth #5: UC has a budget crisis.

Fact #5: In 2008-09, the UC had a record year of revenue, and it looks like revenue in 2009-10 will be even higher. In almost every category of the UC budget, we see that the UC has been able to bring in more money as it raises student fees and furloughs and layoffs employees. Last year, due to the federal stimulus, the university received a large increase of research money, and the one-year augmentation of student fees by over 23% helped the system to recoup any losses caused by the 2009-10 state reductions. Also, while the UC claims that it will bring in an additional $195 million from the furloughs, it is possible that the salary reductions saved at least twice that amount.

Myth #6: UC has to spend more money on administrators.

Fact #6: While the UC has tried to justify its constant expansion of the administration, we have shown that not only are these increases unneeded, but they take away funding and power from the faculty. Twenty years ago, there were more faculty than staff, and now the faculty only represent a quarter of all employees. Moreover, administrators and bureaucrats have some of the highest salaries in the system.

It is time for the faculty and the students in the UC system to stop buying the administration’s line and to force the university to respect shared governance by providing accurate and transparent budget information.

44 comments:

  1. Bob, you say that it is "possible" that the furloughs will bring in more than the advertised $195 million; it is in fact not just possible, but certain, as the University admitted in a memo on the furlough program a while ago. The amount it expects to save is close to $500 million. This was obvious from the beginning: there are almost 200,000 UC employees in California, to save $200M it would have sufficed to cut (on average) $1,000 from each yearly salary -- we know that the cuts are much larger than that.

    And, by the way, nobody knows what UC is going to do with the extra $300 million. So much for transparency.

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  2. Bob, even without the higher education inflation stuff there is an argument that in real dollars UC gets less per student than they got in 1990. According to the Department of Labor's inflation index (which is not the higher education index and is generally used for these sorts of calculations) 13,000 in 1990 dollars would have been 21,414 in 2008 dollars.

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  3. There are two issues. One is that they only use the inflation index to reduce the state contribution figure, and the other issue is that costs have been driven down by the reliance on non-tenured faculty to teach the majority of undergrad courses.

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  4. I agree that there are two issues--but I don't think that we should make claims about the first that don't really make sense given real dollars. Instead the real question as you say is whether or not the spending per student has gone down and then trying to push UC to spend more per student rather than cutting further from their education..

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  5. March Madness! UC Berkeley Next to Last in Graduation Rates Among NCAA Participants!

    http://cloudminder.blogspot.com/

    Please view the video on the top of the page -- why does Sandy Barbour et al in Cal Athletics make multi millions of dollars annually…
    someone explain it to me?! this seems another form of racism to me…

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  6. Under Myth #1, you haven't mentioned anything about staff costs (secretaries, technology support, libraries, janitors etc.) all of which seem to be necessary for instruction to take place. I realize that this might not bring your estimate anywhere near $25,000, but it seems that in order to teach classes at the University, there have to be staff to reserve classrooms, janitors to clean them, and librarians and technology staff to help instructors get and present course materials. How might these figures effect your estimates?

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  7. This comment has been removed by the author.

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  8. There are certainly other costs, but the question is how much do these go up for each additional student. Also, students pay separately for housing, dining, and other services. My main argument is that the university could bring in more revenue by increasing enrollments.

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  9. Robert Nisbet, in his remarkably prescient book "The Degradation of the Academic Dogma: The University in America. 1945-1970 (New York: Basic Books, 1971, bemoaned the ascendancy of the research mission over instruction at the University of California. As a former Berkeley undergrad had a special appreciation for good instruction at UC, and he was took early notice of its declining status in the face of the new dogma of sponsored research. He dedicated a chapter of this book to the subject. One point he makes is that faculty instruction per se, (unlike sponsored research, does not require a lot of administrative overhead.

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  10. Bob, what a childishly unhelpful tally. Where are you accounting for classrooms, parking structures, labs? Computers, fume hoods, rats and mice? Library books, electricity, gyms, sports fields, environmental health and safety programs? Counseling, healthcare, and food services for the students? If you really want to suppress the role of research, and pretend that UC is just a teaching institution, then you still have to acknowledge that all of the above is part of the undergraduate education. Of course, that's a silly notion; the teaching assistants you omit, the graduate students who help run labs and discussion sections and lecture courses, are intrinsic parts of the institution's contribution to the public good.

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  11. Hello Bob. I am working on a statistics project about UC funding for my Statistics degree at UCLA. Can you provide me with the sources for your figures, especially where you got "If you actually crunch the numbers, as I have done, the UC got $13,000 per student in 1990, and in 2008-09, they got over $15,000." and any other years you have?

    Thanks a lot,
    -Scott

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  12. Hey Bob.
    I was at the "Alternative Ideas" meeting tonight in Humanities and highly enjoyed the material.

    That was me commenting above (as 'Blackout') and I am wondering if you can give me the references for the amount of money the UC has received in the past, as quoted in this article. I'm using it for a tuition project for my Senior Statistics class.

    Thanks a lot
    -Scott

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