Monday, September 8, 2014

The UC Campus Funding Imbalance



Two years ago, the UC system changed the way it distributes state funds and tuition revenue to the campuses.  In the past, all tuition dollars and state dollars were sent to the Office of the President and redistributed according to unknown formulas.  After a state audit showed that some campuses were being hurt by this process, the UC decided to let the campuses keep their own tuition dollars, and state dollars were redistributed through a method called “rebenching” to help out the campuses that were historically underfunded.  However, the statistics below will show that the problems have only gotten worse for the underfunded campuses.

Looking at the most recent enrollment statistics, we can multiply the number of non-resident students by $26,000 to see how much extra tuition each campus will generate next year (each non-resident student pays an additional $23,000, and they do not receive tuition discounts, which average 30% for in-state students).  For each campus, I have listed the number of non-resident students, the additional tuition dollars non-resident students generate, the amount of funds each campus will get this year through rebenching, the combination of additional non-resident tuition dollars and rebenching funds, and the amount the state auditor said each campus was overfunded or underfunded in 2009-10 before the change to the new system (Merced and UCSF are excluded for historical reasons):
Click image to enlarge
In most cases, the new system is making things much worse for the campuses that have been historically underfunded.   In fact, the auditor only looked at one year of imbalances, and if she had taken into account all of the state funds, the imbalance would have been much worse. 

One way of interpreting this data is combine all of the numbers to get a general sense of the funding distribution before and after the non-resident tuition gold rush.  For example, in 2009-10, if each campus received the same state and tuition dollars per student, UCSB would have received an additional $94 million dollars and UCLA would have gotten $99 million less.  To help rectify this situation, the rebenching gives UCSB close to $9 million in 2014-15 , and UCLA does not get any additional funding, but UCLA remains $184 million ahead, and this figure takes into account enrollment differences.  If we then add non-resident tuition to the mix, UCSB remains $210 million behind UCLA, and this is after years of imbalances.

It should be clear that the UC system needs to rethink its enrollment and funding model.  As the state auditor argued, the campuses that have been historically underfunded are the same campuses with the highest level of under-represented minority students.  The result is that as these students pay more for their education, they are being systematically underfunded.  UC should move to a transparent revenue sharing model for non-resident tuition. 

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