Here is a letter that I plan to send to the members of the UC Board of Regents:
While I am happy that I have been appointed to the Investment Advisory Group, I am concerned that the Regents are making important budgetary decisions based on inaccurate information. After meeting with Governor Brown and the Department of Finance in an effort to increase the state's support for the University of California, it became clear that one of the biggest areas of misunderstanding concerns state support for the UC system. The Office of the President continues to tell the Regents that since 1990, state support has been reduced by over 50%, and the state only gives $7,230 per student. These numbers are highly misleading: for the 2011-12 year, the UC is budgeted to receive $2.5 billion from the state, and there are currently under 200,000 resident undergraduate and graduate students (UC now has over 23,00 nonresident and international students). In other words, the UC is receiving $13,000 from the state for each resident student, but UCOP applies an inflation adjustment to decrease the real amount by 40%; moreover, the UC does not apply the same inflation adjustment to student fees or general funds. The end result of this misinformation is that it looks like we can simply stop relying on state funding. It also should be pointed out that the state supports UC with over $500 million in Cal Grants.
Another related issue is the marginal cost of instruction for each additional student. While the state has recently stopped using this calculation, salary and class size data shows that the direct instructional cost for each student is under $8,000 (this calculation includes the salaries and benefits for all employees currently teaching undergraduate students and the parts of professor’s salaries supporting departmental research). Since currently, UC receives close to $23,000 from tuition and state funds per student (after subtracting financial aid), undergraduates bring in a huge surplus ($15,000 per student) that is used to pay for administration, research, and other related and unrelated university activities. One of the results of this budgetary reality is that it makes no sense to consider reducing undergraduate enrollments; moreover, the only real financial solution is for the campuses to increase undergraduate admissions.
It is also important to stress that the “core budget” only concerns about 29% of the total UC budget, but core funds are asked to support all aspects of the university. For instance, faculty and staff supported by core funds perform the vast majority of the research supported by external grants. Moreover, many of the employees in the medical centers are at least in part state-funded, and state funds have financed the buildings for auxiliaries and services, and these “self-sustaining” units rely on the system’s bond ratings, central administration, shared benefits, and debt capacity. In other words, there is no such thing as a self-sustaining unit, and these profit-making sectors should be asked to share their revenue with the “state-funded” units.
The bottom line is that the UC’s total revenue continues to increase, and what is needed is a more effective system for sharing funds. While it is often said that a grant for laser research cannot fund the salary of an English professor, it turns out that inexpensive English classes do help to fund expensive scientific research. Moreover, state-funded professors regularly use external grants to buy themselves out of their teaching duties, and so there is no fixed border between the state-funded instructional budget and the grant-funded research budget. Furthermore, the UC is now investing its research money, operating cash, and general funds through STIP and TRIP, which means that there is a whole pot of money being generated out of the co-mingling of funds.
If the Regents are relying on faulty and inaccurate information, there is no way you can make effective decisions. To improve this situation, the Regents should fight for more state support and ask UCOP to report on actual enrollment numbers for resident students, the direct cost of undergraduate instruction, and the actual state support per undergraduate resident student. Please let me know if you would like to discuss this information in more detail. Sincerely, Bob Samuels, President, UC-AFT