The New Funding Model for the UC System

It looks like UCOP will allow the campuses to keep all of the revenue they generate and then charge each campus unit a 1.6% tax on all fund sources; however, the UC has not decided how to distribute state funds. One reason why it is easier to let the campus keep their tuition and fees than it is to let them keep their state funds is that UCOP has been giving certain campuses a much greater share of state funds compared to other campuses. In fact, in 2007-8, UCLA got $10,602 in student fees/tuition per student, but Santa Cruz only got $7,658. However, if we look at state funds per student, the spread is even larger: UCLA got $18,754 and Santa Cruz received $7,763. In other words, an even distribution of state funds would hurt campuses like UCLA more than an even distribution of student fees and tuition. It should also be pointed out that UCSF got over $61,00 per student from the state in 2007-8 (this is the last year I have solid statistics for, but there is no indication that anything has changed).

While the administration has sought to keep everyone’s focus on the reduction of state funding, a bigger issue is how the Office of the President redistributes state funds. It is also clear that the campuses receiving the largest state funding per student (UCLA – $18,754, UCD - $16,055, and UCB – $14,788) will use their power and size to fight to retain their extra funding. Moreover, if the state cuts the UC budget by $1 billion next year, the fight over the shrinking pie will become even more intense. While the figures used above are only slightly higher than the funding per student in 2010-11, a state cut of $1 billion would reduce state funding per student by 25%. In turn, if tuition and fees make up for the loss of state funds, and campuses keep all of their revenue, the campuses bringing in the most nonresident students will be able to increase their funding relative to the other campuses.

One thing the current funding system reveals is that undergraduate students at UCSC, UCR, UCI, and UCSB have been subsidizing graduate students and research at UCLA, UCB, UCSD, and UCD. While the university likes to claim that undergraduate students benefit from the research done on their campuses, it is unclear how students at UCSC benefit from research performed at UC Davis.

I predict that UCOP will use the current state funding reductions to stall on distributing state funds in a more equitable manner, and the result will be that wealthier campuses will become even wealthier, and they will use their power and income to prevent a fairer distribution of funds. It appears that everything falls to the top in our trickle-up economy.