Tuesday, February 22, 2011

A UC-AFT Report from Wisconsin

Sandy Baringer, the UC-AFT staffer for Riverside has gone to Wisconsin to support the protests against union bashing and public employees. Here is her report from the frontlines:

“I'm reporting from the teachers' computer lounge at Madison Area Technical College, one block from the Wisconsin Capitol building, where thousands of teachers and public workers are rallying peacefully in the streets, in February in a cold climate, for 6 days going on 7: excuse the caps; I am being emphatic here.

First thing. NO ONE is trying to block the people's access to their Capitol - unlike the Orange County District Attorney attempting to indict UCI students for FELONY CRIMINAL CONSPIRACY for occupying one of their university buildings, and unlike certain UC administrators who direct their campus law enforcement personnel to block student access to university buildings. There are bedrolls around the rotunda, camping chairs, shared food, music, people with laptops. Law enforcement crowd control is very respectul and professional: one door is the designated entrance, and other doors are exit-only, which keeps the population inside with the parameters of fire safety. Signs are allowed inside, but no sticks. A very creative and invigorating collection of signs are taped to the inside walls around the rotunda. Many windows in the Capitol have large signs posted supporting the protest. The Tea Partiers seem to have disappeared. There was snow yesterday, and children of protesters are using posters to sled down the north side of the Capitol lawn. There was a 1 1/2 hour speaker lineup at noon, utilizing a very excellent outdoor sound system under a tarp, plugged into the Capitol building electrical outlets. There will be a lineup of a half dozen musicians with acoustic guitars at the 5pm rally, headlined by Tom Morello, formerly of Rage Against the Machine.

Second thing. Even though it is THIRTY DEGREES OUTSIDE NOT COUNTING WIND CHILL, there are still THOUSANDS of people here. I cannot estimate its size because it is larger than any UC rally I have ever attended, including the UCLA rally in November 2009, even though the ENTIRE STATE of Wisconsin has a population of approximately 5.7 million people (Los Angeles County has 9.5 million).

Third thing. These protesters are not all college students. Approximately a third to a half of them have gray hair. Judging from the union affiliations on the signs people are holding, approximately half of them are teachers, and they are not afraid to holler and act undignified. MARCH 2 is coming up a week from this Wednesday - that's 9 days from now. I hope our faculty will be outside where they can be SEEN and HEARD.”

Tuesday, February 15, 2011

Understanding the History and Structure of the UC Budget

Virtually every representation of the UC budget is either misguided or misinformed because people do not understand the history and structure of this complicated funding system. The first thing to stress is that as the state has reduced its commitment to the university, the system has sought multiple sources of revenue, which, in turn, have expanded the missions of the campuses. On a most basic level, the reduction of state funding has resulted in an increase in tuition and a growing emphasis on externally funded research and auxiliaries like housing, dining, parking, extension, summer, and medical services. Thus, when the administration states that student fees are now threatening to surpass state funding, one can read this as either indicating a loss of state funding or as an increase in non-state funding, like tuition.

One of the central problems with this system is that it is impossible to have any type of budget transparency because money moves in and out of different systems. For instance, the state pays the salary of a research professor, but then the professor gets a grant that buys him out of his teaching duties. At this point, the external research budget becomes co-mingled with the state-funded instructional budget, and so the clear line between state-funded and non-state-funded positions breaks down.

It is also important to stress that no one can say if research grants make or lose money because each grant is supposed to pay indirect costs to support administration, equipment, staff, facilities, libraries, and maintenance. While President Yudof likes to say that a grant to research laser technologies cannot fund a professor in the English department, what he does not say is that money from the English department and the laser grant do get mixed together to pay his salary. In other words, administrators are paid out of multiple sources, and this means that it is impossible to trace all of the money or to see if a particular grant is paying its fair share. Furthermore, while we know that some other schools do charge a higher indirect cost for grants, we do not know where this money goes and how it is spent.

What we do know is that money coming in from students and the state to support instruction and departmental research far exceeds the amount of money the campuses spend on these activities. Therefore, undergraduates are subsidizing something, but, it is hard to say exactly what. For example, we have recently discovered that most NCAA athletic departments in the country lose money, and UC Berkeley has been using general funds to subsidize its athletic program for years. We also know that parking on some campuses brings in much more money than it spends (see here for proof). However, all of these profits are hard to trace because UC is a non-profit institution that has to hide its extra revenue.

As I have pointed out in the past, the main way that the UC conceals its unrestricted funds is by declaring a multi-billion dollar retiree healthcare liability, while only paying a couple of hundred million dollars a year to cover these costs. Yet, UC is doing nothing wrong here because it is required by law to declare this liability; however, it does hide money by not telling its employees the real reason why its unrestricted funds are so low.

The UC also pools much of its operating cash and funds from diverse sources in order to invest the money together to receive higher rates of return. These pooled assets allow the university to get better bond ratings and thus lower interest rates for borrowing. Once again, while this structure may make fiscal sense, it creates budgetary opacity.

This short budget primer tells us certain important facts: 1) no one knows where the money is going or how it is being spent; 2) if someone tells you that they know how the university spends its money, they are misrepresenting the facts; 3) since money flows in and out of the different revenue streams, there is no such thing as a self-sustaining unit; 4) some parts of the system are covertly subsidizing other parts; and 5), it is untrue to state that a decrease in state funds means that state-funded positions have to be reduced. Everything in the budget is determined by priorities, and it our role to change these priorities.

Thursday, February 3, 2011

A Growth Model for the UC

While a recent Los Angeles Times editorial argued that the solution to the University of California’s budget problems is to reduce enrollments, this suggestion would not only limit access when it is most needed, but it would also hurt the funding of the entire system. Currently, undergraduate tuition is the only stable source of funding for the UC system, and the revenue generated by in-state and nonresident students subsidizes research, administration, and most other UC activities. In fact, the university receives on average $23,000 from each undergraduate student (this includes state and student revenue) but only spends $8,000 on direct instructional costs. In other words, the university will generate more income if it enrolls more students.

By increasing the number of international students and maintaining the level of resident enrollees, the UC could bring in hundreds of millions of dollars, while it supports the goals of access, affordability, and excellence. This growth model would require hiring more assistant professors and lecturers, and for people who worry about undermining the research mission, it should be stressed that the more income generated by tuition, the more we can support research.

Some have argued that the system does not have enough classrooms or facilities, but this is a false excuse. If the universities expand their hours of operations and have more evening courses, more students can be accommodated. Also, housing and dining are self-supporting and often produce profits so they can handle an influx of students, and let’s not forget that there are plenty of empty houses and buildings around our campuses.

A key to this growth model would be a better balance between teaching and research, and this could be accomplished in two cost efficient ways. The first step is to avoid the costly move to online education and to provide more opportunities for faculty members to teach undergraduate courses in their areas of specialization. The UCLA English Department has already moved in this direction. Another move would be to replace large courses with smaller seminars that allow for more student-faculty interaction. While this change looks like it would cost more money, it is often cheaper to have smaller classes due to the added cost of sections attached to large lecture classes.

If the UC can increase its instructional quality, while bringing in more revenue, it can become a national leader in how to save our research universities. All of the other options on the table call for a massive reduction of enrollments, layoffs, decreased opportunity, and financial self-destruction. We can have improved access, affordability, and quality, if we make undergraduate education an essential priority.